Rising fuel prices have brought the trucker strike in Brazil to its ninth day. Over the past year fuel prices have risen 50%. Drivers have parked their vehicles and refused to deliver food for both humans and livestock, medicine, and other essentials. President Michel Temer has called for national security forces to unblock roads and has called on local governors to do the same. Petrobras workers plan to strike later this week adding complications to the trucker strike. There are 20 billion chickens and 20 million pigs that are at risk of starvation with over 150 poultry and pork processing plants shut down according to trade group ABPA.
Strikes are a form of business interruption that need special attention. ISO 22301 requires that organizations address risks and opportunities relating to business continuity and business interruption events. Strikes can involve your own workforce, your suppliers, or you may a bystander. Assessing the risk of strikes in your business is essential, but you should not ignore third-party risk. What if livestock feed became unavailable for your farm? Would your delivery business be able to function if a trucker strike had blocked all the roads? Assessing risks caused by other parties or events such as a trucker strike or soaring fuel prices that could lead to protests should be part of your continuity plans. You could mitigate the risk by using your current plans for severe weather or pandemic disease since the outcomes of reduced ability to travel or available workforce would be the same. Transferring the risk is also a financial strategy. Does your business interruption insurance policy cover strikes? In many cases you will need to buy added coverage for losses caused by a strike among your workers or for strikes at elsewhere that affect your business. Your policy review should include replacement of perishable goods, damaged equipment, and other losses.
Performing a risk assessment of your supply chain and including events caused by unrelated third parties is a crucial step to avoiding a disaster or continuity of operations event. Assessing the entire supply chain or key suppliers can be a complex project. Our consultants can assist you with assessing your supply chain, economic risk, and other factors that may lead to a disruption in your business. Contact us today and setup an appointment to discuss how
The US Commerce Department has prohibited component makers from selling to ZTE. The action has caused the stock of various component makers to drop. Acacia Communications Inc. (NASDAQ: ACIA) receives 30% of its total revenue from ZTE and saw its stock drop over 30%. Oclaro Inc (NASDAQ: OCLR), received 18% of its revenue from ZTE and experienced a drop of over 15%.
Implementing ISO 31000:2018 and assessing risk is one method of mitigating the effects of losing a supplier. Clause 6.4.2 tasks the organization with identifying uncertainties. Geopolitical activities would be indicators of emerging risks. The recent political change in the USA would need to be evaluated. Clause 6.5 discusses risk treatment. In this case diversification of the customer base to mitigate the loss of a single customer could be undertaken by the organizational leadership. Insurance against geopolitical events would also be a way of reducing the impact of losing customers.
Structural issues with the organization my continue for many years before a geopolitical event may disrupt your business. We recommend assessing risks and opportunities periodically during the business cycle and taking long and short term measures to exploit upside risk while minimizing downside risk.
HR 4717 prohibits the US government from procuring “covered telecommunications equipment or services”
Equipment made by Huawei Technologies Company or ZTE Corporation
an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.
A recently introduced bill in the US House of Representatives threatens to ban the use of ZTE and Huawei equipment by the government. It also prohibits contractors who use equipment made by those companies. Portfolio diversification is important in investing and business. A diverse portfolio of services would allow a supplier to continue doing business in the event of a product embargo. Supply chain risk should become part of your risk register for business continuity.
Contact us if you need assistance with establishing or updating your ISO 22301 program. Our certified professionals can assist with your business continuity needs.
Very-high threat: Mount Shasta, Lassen Volcanic Center and Long Valley Volcanic Region
High threat: Clear Lake Volcanic Field, Medicine Lake Volcano and Salton Buttes
Moderate threat: Ubehebe Crater and Coso Volcanic Field
The International Volcanology Assembly is meeting August 14-18 with planned fieldtrips to some volcanic hot spots along with symposia covering a broad variety of volcanological fields with plenary speakers emphasizing integrative and intersecting themes. There will be much discussion over the very high threat volcanoes in the area.
The eruption of Eyjafjallajökull in 2010 shut down European airspace for a week. The International Air Transport Association estimated that the impact was $200 million per day and the total loss for the industry was around $1.7 billion. Over 95,000 flights were cancelled during this time.
Can your business continue to function with air travel disruptions? Do you have alternate transportation available? These are questions that should be asked when establishing a Business Continuity Plan. California businesses should take this time to revise their list of BCP risks. An eruption could disrupt business travel and impact airlines and their supply chain.
If your small business does not have a Business Continuity Plan, now is a great time to get started. Contact us today to speak to one of our implementation specialists.
Cryptocurrencies and Blockchain hold many potential benefits in the economy of tomorrow. Businesses may choose to accept payment in Cryptocurrency as an alternative to credit cards, checks, or ACH. Ethereum is a decentralized computing platform and blockchain. Within Ethereum there is a crypto currency, Ether. There is also a way of issuing smart contracts.
Thieves love anything of value. Almost $50M in ETH has been stolen in multipleincidents. One recent trend is to exchange Cryptocurrency for future services in an Initial Coin Offering. The SEC announced today that ICOs are securities.
The SEC said in its report it has decided not to bring civil charges at the end of its probe into The DAO, but instead use the case as a cautionary tale for the market.
Cryptocurrencies and ICOs are a new frontier. This newness means that risks are still unknown. Where there is great risk there is great reward. Remember to tread carefully in this new territory.
Homeland Security has banned laptops in the cabins of US bound flights from 10 airports in the Middle East and Africa. Rumors are circulating that the ban will extend to European airports. This will be a major inconvenience to business travelers, but can also result in losses to companies.
Valuables such as laptops or camera equipment should not go in checked luggage. Airport employees, including those in security, are known for stealing from checked luggage. Trust European airport employees as you would their US counterparts. Theft of company equipment is annoying and costly for a large cap corporation, but could be crippling for a microcap company.
Another downside of a potential laptop ban is the loss of billable hours. Over half of employees prefer to work on the plane. The National Trade and Tourism Office reports 4.9 million passengers flew overseas and 1.9 million travelled to Europe. If they were unable to work on the plane, the total number of billable hours lost at an average of $76/hr. could be as high as $500M.
Productivity issues are small compared to FBI information that says economic espionage costs US businesses nearly $500B per year. Laptops transported in checked luggage are excellent targets for IP theft. The FBI and other officials know that US allies have a history of spying on private sector companies. The French version of the CIA enabled France to win a $1B contract to supply military equipment to India by learning about competing bids. Stealing bid pricing is convenient, but marketing plans, customer lists, supplier lists, and other material could give a competitor an edge or a new competitor could enter the market if certain information fell into the wrong hands.
No commercial measures are foolproof, but these are some hints to help you prevent foreign officials from accessing your data:
Do not have data on your computer that could someone could access in the luggage screening area
Your hard drive can be copied by authorities
If your drive is unencrypted they now have all your files
If your drive is encrypted they try to break the encryption or guess your password
Consider carrying a “burner” laptop for your business trip
Chromebooks or Windows 10S systems that use only a web browser are a better option
Do not have the browser remember your password
Do not check “remember me” when logging into a site
If authorities decide to keep your laptop it’s only a financial inconvenience
A Delta Airlines (NYSE: DAL) spokesperson informed CNN Money that supervisors will now offer up to $9,950, up from $,1350, for passengers who are bumped from overbooked flights. Gate agents may now offer up to $2,000, up from $800. The changes will benefit business and leisure travelers. More flyers will consider Delta as an option among the big carriers. This will contribute to seat shortages where travelers can cash in. If you’re a small business traveler and can score a quick $2000 on a return flight, do it! That is free money for future business travel or for vacation.
United has not announced any changes to compensation for travelers on overbooked flights. American Airlines (NYSE: AAL) spokesperson, Ross Feinstein, said American will work “to ensure we set compensation amounts properly … to obtain the correct number of volunteers.”
Delta’s quick response to the PR nightmare that United (NYSE: UAL) is suffering shows that management is in a clear position to manage upside risk. Some Wall Street analysts have upgraded Delta to “Strong Buy” because of Delta’s aggressive action.
The US Dollar and Japanese Yen continue their week long bullish run against the Korean Won. On April 3, US President Donald Trump stated that the US would act unilaterally if necessary. The statements and deployment of US warships to the region are worrying markets.
China and South Korea agreed to place sanctions on North Korea of it tests a nuclear or long range missile. US Secretary of state Rex Tillerson said a response is likely if other countries pose a danger. A Japanese defense ministry source said it is probably not realistic for the US attack. Per Japanese reports no coordination with US forces for military action has taken place.
We see the situation as headline worthy, but not disruptive to trade and business in the region. Barring any unusual activities by the Federal Reserve we also expect the Won to gain strength after the showdown is over.