There are two ways to set up displacement in KtoA. The first, if you only need one shader node (such as an image node for height displacement) is to create a Material node. You can then add an arnoldDisplacementShader (and also an arnoldSurfaceShader for the surface shading):
The other way is to create a network. Create a NetworkMaterial node, and add a terminal for surface shading (Arnold => surface) for your surface shading network, and also add a terminal for displacement shading (Arnold => displacement). You can then create ArnoldShadingNode nodes and set the shader type to whatever you need (such as image, noise, plug them through a range shader, etc). The last shader in the displacement network connects to the arnoldDisplacement port on the NetworkMaterial node:
After that, you can use a MaterialAssign node to assign the material (network or regular) to the polymesh or subdmesh locations you want to have the displacement.