What are the biggest risks CEOs face today? That’s the question I asked MMC CEO Dan Glaser at his Manhattan office yesterday. Glaser’s company is a leader in risk management, so not surprisingly, he had an answer. Actually, three answers. Each beginning with “C”.
— Cybersecurity: “Most boards are looking at cybersecurity as the biggest risk, partly because it is so hard to understand,” Glaser said. “CEOs are frustrated because it’s incredibly costly, and you can never say you are done.” He also said it spooks companies because “there is a blame the victim mentality.”
— Climate: This is no longer theoretical; the impact of extreme weather is increasingly real, Glaser says. Flooding losses are up three times from the 1980s. More broadly, climate change is “very difficult for companies to deal with, because it is gradual losses.” Why should shareholders today pay to prevent losses a decade or two from now?
— Culture: Change is happening faster than ever, and companies are struggling with how to get “more purpose and less hierarchy” into their organizations to adapt to the new environment. “If you don’t have the right culture, you will have an erosion of talent and a lack of innovation.”
Surprisingly, recession didn’t make Glaser’s top three. He thinks the economy is slowing, but probably won’t go negative.
More news below, and enjoy the long weekend. Clay Chandler, as usual, will handle tomorrow’s note from China. We’ll take Monday off in honor of Labor Day, and be back Tuesday morning.
Saudi Aramco’s long-planned IPO—the world’s largest—looks set to shun London and Hong Kong due to political instability in those places. Instead, the split IPO will straddle the Saudi stock exchange and most likely Tokyo, the Wall Street Journal reports. WSJ
U.K. Prime Minister Boris Johnson’s move to suspend Parliament caused widespread outrage, and to ward off the threat of rebellion within his Conservative Party, Johnson is now promising to “step up the tempo” of talks with the EU. The idea is that pushing for a new deal, rather than a no-deal Brexit, will dissuade Tory rebels from siding with the opposition Labour Party in bids to remove Johnson from power or block a no-deal Brexit with legislation. Financial Times
President Trump has now established Space Command—but not his promised Space Force. What’s the difference? Space Command coordinates things like satellite-based navigation and communications for troops on the ground; Space Force, which still doesn’t have congressional approval, would be a distinct military service. Fortune
The Federal Trade Commission is probing the marketing materials of e-cigarette firm Juul, to see if it deliberately targeted teenagers in its advertising. The FTC also wants to know if Juul used social media influencers to try getting teens hooked. Juul: “We regret that the campaign was executed in a way that was perceived as appealing to minors. To avoid any misconceptions, we changed our approach to advertising in a way that offers no room for misinterpretation about the mission of our company or our intended customers.” KPIX 5
AROUND THE WATER COOLER
Didi Chuxing is preparing to run a Shanghai pilot in which passengers are ferried around by self-driving vehicles. Well, there will also be a human driver in there for now, but it should mark a step toward commercialization of the long-awaited technology. It’s unclear how big the pilot will be or when it will start, but Shanghai authorities apparently gave the go-ahead on Wednesday. Reuters
The U.S. investigation of Huawei is reportedly expanding to take in further allegations of intellectual property theft, as well as Huawei’s recruitment practices. The Journal raised the allegation a few months ago. WSJ
A federal judge stymied House Democrats’ attempt to fast-track the release of Trump’s tax returns. D.C. Judge Trevor McFadden said: “it may be appropriate to expedite this matter at some point, but not now.” CNN
An interesting Bloomberg piece by Karl Smith posits parallels between George H.W. Bush and Donald Trump—in terms not of their style or policies, but economic problems and broken promises that point to a one-term presidency. Bush promised no new taxes; Trump promised an easy-to-win trade war. Bush had to raise taxes; Trump’s tariffs on Chinese imports, if they fully take effect, amount to a wallet-bothering new tax on American consumers. Bloomberg