Will this beta-branched secondary alkyl halide undergo SN1 or SN2?
Secondary alkyl halides are on the borderline of $\ce{S_{N}2}$ and $\ce{S_{N}1}$, so either could be operating. Branching at the position beta to the halide will further hinder the backside attack necessary for $\ce{S_{N}2}$. Furthermore, the solvent is polar protic, favoring $\ce{S_{N}1}$. In this case, the secondary carbocation can rearrange to a more stable tertiary carbocation, which leads to the observed product.

Full mechanism:


I am of the opinion that it's a difficult question given the conflicting factors, and I don't like it as an exam question because the relative influence of those factors isn't usually taught or easily predicted.
I imagine that the solvent plays a large role here. Cyanide is a typical nucleophile for $\ce{S_{N}2}$, but in water its nucleophilicity will be reduced by hydrogen bonding. In order for the $\ce{S_{N}2}$ mechanism to take place for this hindered electrophile, the nucleophile will need to be as strong as possible.