Don't Wait...Mitigate: An Art Risk Expert on Keeping Your Collection Safe
The Clarion List Exclusive
By some estimates, between $4 billion and $6 billion dollars worth of art is stolen worldwide every year. The vast majority of stolen artworks are never recovered. Fires, floods and other man-made and natural disasters account for further loss, along with accidental damage, which can occur when a work of art is being transported, or even when it is “safe” at home. We’ve already written about the importance of having a good art insurance policy, but what proactive measures can a collector take to protect his or her collection?
Arnold got his start in law enforcement. He previously served as an Assistant District Attorney in the Manhattan District Attorney’s office. Working with the New York Police Department’s Major Case Squad, Arnold was responsible for helping to recover a stolen Salvador Dali work in 2012. Regarding the thief, Arnold said, “I questioned him after the arrest. After he confessed, I wanted to know: Why did he do it? He had a good job, a prior arrest for shoplifting, but no substantial criminal record...by and large a person that you wouldn’t expect to have committed this crime. So why did he do it? He said it was because he realized that he could."
As head of the K2 Intelligence’s Private Client Services and Strategic Risk and Security practices, Arnold continues to work with galleries, institutions and private individuals to ensure their personal safety, as well as the safety of their assets, including valuable works of art. He said, "We do a lot of security-related work and can look at how collections are maintained within the overall posture of a home. This is offered as a kind of service-within-a-service, as part of a home security assessment."
Once this risk assessment is complete, K2 Intelligence provides advice and assistance setting up the necessary protective measures against damage and, especially theft. Arnold said, "One of the key indicators of solvability is the time between the theft and discovery of the theft, so we encourage collectors to do regular audits and try to reduce that window."
In addition, Arnold said, "We help a lot of clients get their personal information taken out of online databases- what we would describe as the equivalent of internet white pages. We have a proprietary list of over 140 different sites. If someone is targeting a wealthy collector, it has never been easier to find that person and identify their touchpoints. Our clients need to be ever more mindful of that fact."
K2 Intelligence regularly partners with insurance brokers when disaster strikes. During recent hurricanes in Florida, Arnold’s firm was engaged by a major insurance company to provide home checks and, when necessary, physically stand guard and protect the contents of vulnerable homes.
The firm also collaborates with lawyers, financial advisors, as well as trusts and estates, to ensure that their clients make wise investment decisions. Arnold said, "When considering a purchase, we advocate not just looking at the piece to be acquired, but also at the person selling it. It's important to verify the provenance of the seller and make sure that they are a trustworthy individual or organization. We provide museum-quality provenance research, and can also look into the background of the person or company making a sale to look for past issues with fraud or misrepresentation. We also try and determine if the seller is experiencing some form of financial distress, which might put them in a desperate situation and make them more willing to take risks. We don't want the buyer to miss any red flags"
Unfortunately, the art market is full of forgeries and the forecast is grim. Arnold said, "The fraudster's toolkit has never been more powerful. If someone wants to fake a work of art, they now have more tools than ever before. If they want to fake not the work, but the absent provenance, it has also never been easier to create forged documents. With the rise of online and long-distance transactions, we encourage our clients to think about that vulnerability before they make a substantial purchase."
Though the risk of owning artwork seemingly continues to increase, Arnold has also noted a positive change amongst collectors. He said, “Instead of waiting for something to occur, people are making more of a proactive effort to mitigate risk," and that, “investing in a security risk assessment just makes good financial sense. The cost of resolving a case of fraud and paying for an investigation and/or recovery far outweighs the cost of pre-transaction due diligence and regular security audits."
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