In this blog, four of our top managers get together to share their views on why high net worth individuals and families choose enhanced protective security.
It all boils down to risk mitigation, lifestyle – and privacy.
Unlike other perks of wealth, nobody aspires to have personal protection
No matter how you stack Maslow’s hierarchy of needs, security is a fundamental requirement for people and families everywhere. Once we get beyond food, water and shelter, security is what matters most.
Maslow refers to safety and security in several ways, including avoiding accidents and illnesses; financial, health, and personal security. When we are “safe enough” we move on to meet higher needs. When we are not safe enough we experience stress or even trauma – serious impediments to other endeavors such as self-actualization and all the other nice stuff.
Often used as synonyms in everyday parlance, “safety” and “security” have related but different definitions in the context of close protection. “Safety” refers to a state free from physical or emotional harm. “Security” refers to processes designed to provide such a safe state. Close protection provides security to keep people safe.
For high net worth families the concept of security presents some special considerations.
Their affluence certainly ensures that they have relative financial security and will receive the best available medical care obtainable. Their circumstances preclude many of the misfortunes that might befall those who are less well-off.
Having a lot of money enables better personal security in obvious ways – such as the neighborhoods where one lives and the types of risks one faces there. But relative wealth – and especially the prominence that often accompanies it – also turns individuals and families into particularly attractive targets for all kinds of crimes including home invasions and kidnappings.
The three reasons high net worth families opt for enhanced protective security: Risk mitigation, lifestyle and privacy
Every family seeks to lead the kind of life that make them the happiest and most productive versions of themselves as possible – all while minimizing the risks that could threaten their wellbeing. High net worth families do so, too, of course, and their needs for security mirror those of all families in two important ways, risk mitigation and lifestyle preferences. Due to their prominence, however, they add a third: privacy. We’ll take a look at each in turn below.
1. Risk mitigation
Most folks get by with decent locks on their doors and some degree of street smarts. These things mitigate known risks just fine – until they don’t. The next steps might be an off-the-shelf alarm system or a dog, which could also work fine – until they don’t.
Depending on available resources, this escalation can continue ad infinitum. But not even the most draconian security setup could ever eliminate all risks. The only way to do that would be to lock the family inside a fortress, never let them out or anyone else in, and have the U.S. Airforce establish a no-fly zone around the residence. Hardly the kind of lifestyle most people want.
Effective protective security is all about mitigating identified risks to manageable levels with available resources.
This enables the security apparatus to stop a hostile act as early as possible in the attack cycle – sometimes still in the planning stages – and as far as possible from the protectees, thereby maximizing prevention and minimizing damage from what cannot be prevented.
While protective security cannot remove the chance of every possible harm, it does seek to identify and then minimize the likelihood of the most probable and critical risks. Risk mitigation thus seeks to establish an acceptable balance between:
- Minimizing the probability and impact of identified risks to an acceptable level, i.e., one that makes us feel safe
- The resources (costs, time) required to do so, and
- The impact of security procedures on one’s lifestyle
The starting point for any serious risk mitigation efforts is the Risk, Threat and Vulnerability Analysis, or RTVA. Unless you comprehend the threats facing you and your vulnerabilities to these threats, you have no way of assessing risk – or understanding how to mitigate it.
Security experts love to split hairs when defining “risk”, “threat” and “vulnerability.” Here is our attempt at some simple definitions and how the concepts work together when it comes to protective programs:
Threats are potentials for harm that are outside of our control. Persons, groups, communicable diseases, socio-economic trends or even ideas might all represent threats to someone depending on contexts, circumstances and perspectives. A terrorist attack could cause great harm; so could a hurricane. We can’t control either, but we can try to understand their probability and the criticality of their impact.
Vulnerability refers to our exposure to threats. How open are we to these sources of potential harm? How easily would our defenses be compromised by a determined adversary or just bad luck? Although we can do something about vulnerabilities, pretending to exercise complete control over every vulnerability is a fool’s errand.
Risk is what you get when you line up threats next to vulnerabilities. Risk determination begins with a clear-eyed understanding of relevant threats then proceeds to an honest assessment of our vulnerabilities to these threats. If the probability and likely impact of a threat are high, and our vulnerability to such threats is also high, then we are facing a risk that requires mitigation.
Comprehensive RTVAs are the foundation of effective and cost-efficient security.
The RTVA process results in a security master plan. It incorporates all available factors to produce a client-specific, risk-based security model. An often time-consuming and complex undertaking, the resulting security master plan will include physical and technological risk mitigation measures along with manpower specifications and procedures to prevent and limit damage from hostile acts.
RTVAs are based on probable and critical threats and are designed to negate correlating vulnerabilities. As eliminating all threats all the time is not possible, the RTVA process allows the security apparatus to focus resources on addressing vulnerabilities to the most probable and critical threats, thus mitigating risk as efficiently as possible in the given circumstances.
In most cases, we believe that at least some RTVA is better than no RTVA. The temptation to jump to conclusions without having gone through the effort of analyzing available facts is just as prevalent in the security field as it is in any other. Cookie-cutter solutions that give the illusion of security without actually mitigating risk abound, and plenty of companies sell them every day.
Solid RTVAs that are kept fresh through timely updates enable better decisions. Here are the basic questions they answer concerning security for high net worth families:
- What are the threats, or external factors not in our control, that might harm the family?
- Are there direct threats to the family or individuals? Has anyone provided overt or covert signs of intent to harm, extort, embarrass, etc.?
- Are there indirect threats not expressly targeting the family but present in places or contexts in which the family lives, works, travels?
- What would be the impact, or loss, should these threats be realized?
- What are the factors that cause or multiply threats? Prominence, opportunity, motivation?
- How vulnerable are we to these threats should they be realized?
- What can be done to reduce vulnerability?
- What is the status/evaluation of our current security and protection programs?
- How do we assess security vulnerabilities?
- Evaluation of current and past security and protection efforts: What lessons have we learned?
- What parts of the family office ecosystem are relevant to the protective effort? Who are the key stakeholders in program success?
- What are the principals’ personal preferences regarding protection, privacy, and his or her lifestyle?
- Gap analysis: Where we are now compared to our goals?
2. Lifestyle preferences
Security can enable one’s lifestyle or hamper it. Too much of the wrong kind of security impinges upon one’s quality of life. So does too little of the right kind. Like all other value propositions, the perceived value of enhanced security depends on the relationship between its costs and benefits. Are the results worth the tradeoffs? Again, it’s a question of balance.
If we perceive the emotional costs of more security (loss of personal freedom, sticking out socially) to be greater than the emotional benefits it brings (risk mitigation and peace of mind), then things are out of balance. We often meet new clients who want nothing to do with security because they don’t want any impositions on their preferred lifestyle. They see themselves as regular Joes (OK, a rather wealthy regular Joe) who enjoy their lives as they are and have no desire to be encumbered with more security. They see the emotional costs of security but perceive no need for its benefits.
As all the hassles and worries due to their growing prominence escalate, however, many come to change their mind. The tipping point comes when clients realize that they can no longer maintain their preferred lifestyle without security. The balance had changed. The family’s prominence results in an increasingly uncomfortable lack of privacy and sense of insecurity; the prominence is not going to go away anytime soon; ergo, something else must change. Families restore balance by adding security. The tradeoffs turn out to be manageable and, with the right partners, even completely acceptable.
Prominent individuals and families have a third motivation for security that sometimes trumps the others: privacy.
Whether they’ve made their fortune in high-profile fields such as entertainment or sports, are powerful players in closely scrutinized industries or scions of established families, they are well known if not outright “celebrities.” While this might seem an attractive perk to some, the more prominent a person or family, the more likely they are to be approached by strangers.
In almost all cases, such interactions are unwanted. They can range from slight to enormous invasions of privacy (chatting up the principal, photography of the principal and family at private events, getting “pied” at public events). They include troublesome but largely innocuous exchanges with strangers (you’re rich, I’m not – how about giving me some of your money?). They can also be hostile threats or outright crimes (assault, stalking, kidnapping of the principal or his/her family).
Who decides on what good security is? The family, of course
We admit it: no one truly wants protective services. At least not in the way people want other consequences of wealth like financial freedom, nice homes and wonderful vacations. But given the way our world works, some high net worth individuals and families truly need enhanced security.
Ultimately, it is the family that determines what “mitigating risk to an acceptable level” means and entails. They can do this from an informed point of view based on a solid RTVA or on impulse. They can get outside help. Or they can do it on gut feelings.
As security professionals, we can have beliefs and even expert opinions. We can argue for our viewpoints. But we don’t get to decide. The family decides.
What ultimately causes a high net worth person or family to initiate or increase close protection can be many things. It can be an unpleasant incident or repeated threats by a person of interest. A fresh RTVA might give reasons to re-evaluate the current setup. Corporate security might recommend it. A board of directors might mandate it.
”Person of interest”:
In law enforcement circles the term refers to someone who has not been charged with a crime, but is suspected to have done so; in close protection the term refers to persons we have reason to believe may have the motivation, ability and intent to harm our principal’s wellbeing.
In practically all cases, a tipping point has been reached, and there is an imbalance that needs to be corrected. Status quo security arrangements are no longer considered sufficient to mitigate perceived risks, protect privacy or enable the family’s preferred lifestyle.
When striking the optimal balance between a security program’s costs and benefits, it is important to remember that the emotional dimensions can be just as important – if not more so – than financial considerations. Feelings are also real.
As we learned from Maslow, the emotional benefits of having “good enough” security are profound and essential for us to pursue the kinds of lives we find most fulfilling. There are emotional costs involved with having too little security as well as having too much of the wrong kinds of security.
In financial terms, it’s no surprise that the highest quality security costs more than the lowest quality. Tailor-made alarm systems designed by the best and brightest will be more expensive than cookie-cutter solutions you can find at the local hardware store and install yourself. Expert protection by highly trained agents is costlier than a couple of guys from the local guard company making minimum wage.
But just as there is a market for both high-end luxury cars and low-end compacts, as long as there is a balance between perceived costs and perceived benefits, both will sell.
High net worth families don’t necessarily possess better emotional resources than anyone else, but they do have the financial resources to seek out and acquire the kinds of security that minimize lifestyle hassles and invasions of privacy while maximizing risk mitigation.
Stay tuned for some upcoming blogs that will take a closer look at how this can be done skillfully.