RANERiskBook
.
April 5, 2020Today's Top Risk News + Analysis From the Editors at RANE
.
01
.
BUSINESS INTELLIGENCE
.
Deep Global Recession Expected for 2020 as Coronavirus Takes Toll on Economies

Fitch Ratings foresees a deep global recession in 2020, according to the latest update of its Global Economic Outlook. The pandemic’s rapid spread has necessitated huge cuts to Fitch’s GDP forecasts with expectations for world economic activity to decline by 1.9 percent this year, with the U.S., eurozone and UK down by 3.3 percent, 4.2 percent and 3.9 percent respectively. The global recession will sharply curtail China’s recovery from the disruption in the first quarter and its annual growth will be below 2 percent. Though there are many moving parts, the rating agency says it reckons that lockdowns could reduce GDP across the EU and Europe to around 30 percent annualized, an unprecedented peacetime one-quarter fall, similar to what it estimates occurred in China during the first quarter 2020. If the health crisis is broadly contained by the second half of the year, Fitch assumes a decent sequential recovery as inventories are rebuilt, lockdowns are removed and policy stimulus takes effect. Separately, the Wall Street Journal reports that, although ocean-going shipping companies are the backbone of the global supply chain, most can’t rely on financial relief from governments and some will not be able to weather the coronavirus-propelled storm. Though the industry keeps commerce moving around the world, many operators are in survival mode as demand caves and supply chains are in distress. Moody’s sent a grim warning sign of the troubles when it cut the ratings outlook for Denmark’s A.P. Moller-Maersk, the world’s biggest box-ship operator by capacity from stable to negative.

READFitch Ratings , The Wall Street Journal  
02
.
GEOPOLITICAL
.
Trump, Putin and Saudi Prince Offer Different Views of Possible Outcome in Oil Price Dispute

As markets tumbled in the wake of the oil production dispute between Russia and Saudi Arabia, President Trump said that the news was positive for the consumer and lowering gasoline prices. On Tuesday, Trump said falling gas prices amounted to the greatest tax cut “we have ever given.” In two tweets on Thursday, Trump touted joint cuts by both countries of as much as 15 million barrels. Prices for Brent crude initially jumped by nearly 50 percent after Trump’s tweets, but the New York Times reports they dipped again when it became unclear whether the announced breakthrough would happen. Neither Russian President Vladimir Putin and Saudi crown prince Mohammed bin Salman publicly committed to such a cut and Saudi Arabia issued a statement that called only for a meeting of oil-producing nations to reach a “fair agreement.” The Kremlin denied a claim that Trump made on Twitter that Putin had discussed the matter with bin Salman. A combination of slumping demand and the price war between the two oil-producing giants had pushed oil prices down by 55 percent in March alone, causing havoc in the oil industry. Meanwhile, officials from Exxon Mobil, Chevron, Occidental, Devon, Phillips 66, Energy Transfer and Continental Resources are set to meet today with Trump at the White House, said two industry insiders who know of the plans.

READThe New York Times  
Ready to Upgrade?
Customize the daily email for your Company
 LEARN MORE ABOUT
RANE RISK INTELLIGENCE BRIEFS
RANE
.
03
.
BUSINESS INTELLIGENCE
.
Pace of Corporate Bond Downgrades Gains Speed as COVID-19 Spreads

The pandemic’s threat to companies’ balance sheets can be seen in the speed with which U.S. corporate bonds are being downgraded, the Wall Street Journal reports. The ICE BofAML U.S. Corporate Index, a major corporate bond index, suffered $569 billion in downgrades since March 16, the fastest pace on record going back to 2002. Credit ratings firms downgraded a net $560 billion of investment-grade corporate bonds in March, according to BofA Global Research. Though total downgrades are still lower than at the same point during the financial crisis, the pace has accelerated in recent weeks as ratings firms and investors reassessed borrowers’ ability to repay their debts. The Bloomberg Barclays U.S. corporate investment grade index is down 3.9 percent in the 2020 first quarter out of fears that the crisis will spur bankruptcies and a prolonged recession. Analysts say more companies will fall down the ratings ladder as businesses remain closed and consumers are stuck at home. The Federal Reserve’s recent extraordinary efforts to support the corporate debt market can’t stem the negative actions credit ratings agencies have taken and will continue to take, one credit strategist says. Investors keep an eye on downgrades because they are one barometer of deteriorating conditions in the corporate sector.

READThe Wall Street Journal  
04
.
CYBER + INFORMATION
.
Microsoft Issues First-Ever Targeted Warning to Hospitals: Fix Your VPN Stat

Following its recent discovery that Iranian hackers have been targeting vulnerabilities in certain VPN servers, Microsoft says it has issued its first-ever targeted warning to several dozen hospitals using those servers. ZDNet reports that Microsoft spotted a ransomware gang targeting VPN servers from Pulse Secure, Palo Alto Networks, Fortinet and Citrix. With the COVID-19 outbreak lockdowns, companies increasingly are relying on VPN servers to support remote workers, which makes that part of the network a soft spot for attackers to hit. Hospitals with already strained resources are particularly attractive targets. While the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency warned all organizations last month to patch VPN services, hospitals’ vulnerability to ransomware has particularly raised concern for Microsoft. The warning told hospitals how attackers can exploit the flaws and provided a strong warning that hospitals need to apply security updates to protect them. One group Microsoft has been tracking is the REvil, aka Sodinokibi, ransomware gang, which CyberScoop reports also struck a California-based biotech company last month that makes tools researchers are using to learn about the coronavirus. In its financial disclosure form filed Wednesday to the Securities and Exchange Commission, 10x Genomics said it had been subject to an attempted ransomware attack that also involved theft of company data.

READZDNet , CyberScoop 
05
.
LEGAL, REGULATORY + COMPLIANCE
.
Banks Still Awaiting Guidance from SBA for Small Business Lending Program That Starts Today

The White House says today’s the day for the launch of its small business lending program set to dole out at least $350 billion in loans to small businesses struggling amid the coronavirus pandemic, but none of the banks CNBC interviewed thought they would be ready. From massive global institutions to regional banks and small local lenders, all said they were awaiting guidance from the Small Business Administration (SBA) and the U.S. Treasury on how they are to administer the program. JPMorgan Chase emailed customers late Thursday to tell say that the company will not be able to start accepting applications today as hoped. The program is a crucial component of the $2 trillion stimulus package President Trump signed into law last week. The government asked banks to begin disbursing $350 million in forgivable loans just after midnight today, but banks only began getting an outline of the information they need to create web portals for the program on Wednesday. Bloomberg reports that the SBA has increased to one percent the interest rate lenders can charge small businesses under the relief program after the banks complained that the previous approved rate of 0.5 percent was below even their own cost of funds. The program includes provisions for small businesses to apply for as much as $10 million in loans with payments deferred for six months. A senior administration official told Bloomberg that millions of applications will be made when the program goes live today, with the expectation that the funds will be disbursed quickly. The lenders said that will not be possible.

READCNBC , Bloomberg  
.
 
DAILY CORONAVIRUS INTELLIGENCE BRIEF

Given the fast-moving global developments around the COVID-19 outbreak, RANE has launched a special daily coronavirus intelligence brief to track key developments around the virus’s transmission, economic impact, geopolitical response, and operational effects. The new digest will provide critical news and analysis for organizations that require high-quality information to form a broad range of effective policies and procedures.

.LEARN MORE
 
06
.
MEDICAL + PSYCHOLOGICAL
.
Top Virus Hunters Say COVID-19 Pathogen Could Have Been Spreading in Humans for Years

An investigation by some of the world’s top virus hunters reveals that the coronavirus that causes COVID-19 might have jumped from animal to humans long before it was first detected in Wuhan, China, the South China Morning Post reports. The findings by the international team of scientists significantly reduce the possibility of the virus having a laboratory origin, the director of the U.S. National Institute of Health says. Researchers from the U.S., Britain and Australia analyzed piles of data scientists around the world have released, searching for clues of the virus’ evolutionary past. They found that the coronavirus carried a unique mutation that had not been found in suspected animal hosts but was likely to occur during repeated small-cluster infections in humans. The study, published in the scientific journal Nature Medicine, suggested a possible scenario in which the virus crossed from animals into people before it became capable of causing disease in humans. The article said the virus might have gradually evolved over years or perhaps decades before becoming capable of causing serious, life-threatening disease. Scientists have not been able to find the precise mutation among any presumed animal hosts that would have provided the virus its capacity to invade the human body in the way it has. The gap between human and animal coronavirus types was too large to generate the specific “spike protein” needed to bind with human hosts. That led the researchers to consider the possibility that the virus had been evolving in humans — in China and elsewhere — before developing into the pathogen it now is.

READSouth China Morning Post  , Nature Medicine 
07
.
LEGAL, REGULATORY + COMPLIANCE
.
New Jersey Pushes Back Fiscal Year End Date to Deal With Coronavirus Fallout

As it works to deal with the health and economic fallout from the spread of coronavirus, New Jersey on Wednesday announced that it is extending the end date of its fiscal year by three months. Reuters reports that New Jersey is so far the first state to take this step, according to Shelby Kerns, executive director of the National Association of State Budget Officers. New Jersey reported 22,255 cases of the virus and 355 deaths as of midday Wednesday as Democratic Governor Phil Murphy and legislative leaders announced an agreement to push the end date for fiscal 2020 to September 30, 2020, three months beyond its normal termination on June 30. Officials said the action will allow them to focus fully on leading New Jersey out of the crisis and to allow for a “robust, comprehensive and well-informed budget process” later in the year. States are bracing for a dramatic drop in revenue as they face the domino effect of skyrocketing unemployment and falling consumer spending related to businesses and services having shuttered in many parts of the nation.

READReuters  
08
.
LEGAL, REGULATORY + COMPLIANCE
.
Coalition of EU Techies and Scientists Work to Preserve Privacy of COVID-19 Contact Tracing

China’s approach to individual-level location-tracking of people by states via their smartphones is hard to imagine in Europe, even for a public health purpose. However, TechCrunch reports, the coronavirus pandemic is putting pressure on the EU’s data protection model as governments increasingly turn to data and mobile technologies for assistance in tracking the virus’ spread. European privacy not-for-profit nyob is keeping an updated list of approaches as scores of apps aimed at using personal data to combat the virus pop up across Europe, led by governments and private-sector projects. So far, examples include tracing contacts, enforcement of lockdown or quarantine and self-assessments of COVID-19. The British government has called in tech giants including Google, Microsoft and Palantir to help the National Health Service determine where to send resources during the pandemic. The European Commission has leaned on regional telcos to hand over aggregated and anonymized user location data to track the virus. The new Pan-European Privacy-Preserving Proximity Tracing Project is offering what it describes as a fully privacy-preserving approach to COVID-19 contacts tracing by notifying people who have come in close contact with an infected person whose smartphones have been near enough to carry out a Bluetooth handshake. The project is attempting to carry this off without resorting to China’s surveillance-state approach to its citizens.

READTechCrunch  
09
.
BUSINESS INTELLIGENCE
.
Asian Economies’ Growth Expected to Slow to Pace Not Seen in Decades

The coronavirus pandemic has shut down business activity in much of the world and is expected to slow the growth of emerging Asian economies to their slowest pace in 22 years, Nikkei Asian Review reports. The Asian Development Bank (ABD) warned today in a report of financial crises to come and estimated the pandemic is likely to knock some $2 trillion to $4.1 trillion — or 2.3 percent to 4.8 percent — off the world’s GDP this year. In developing Asia, the bank predicted growth will fall to 2.2 percent this year the slowest since 1998, a year after the Asian financial crisis. Countries with robust trade ties to China are heading for a sharp deceleration as China itself faces slow growth of an estimated 2.3 percent this year, down from 6.1 percent in 2019. Tourism and commodity industries have been hammered by travel bans and lockdowns. Vietnam is predicted to outperform with 4.8 percent growth this year and surge to 6.8 percent in 2021. Though COVID-19 has not spread extensively in India, measures to contain the virus and a weaker global environment will kick up headwinds on its economy, the ABD said.

READNikkei Asian Review  
10
.
CYBER + INFORMATION
.
Despite Security Concerns, States to Expand Mobile Voting in Response to Pandemic

Even as cybersecurity experts warn mobile systems are unproven and vulnerable to hacking, some states are planning to dramatically expand their use in response to the pandemic, the Washington Post reports. Sheila Nix, president of Tusk Philanthropies, which is funding the effort to offer voters with disabilities the mobile phone option, says the option will extend to voters in the military or state residents based overseas. Nix would not name the states or voting vendor they’ll be using, pending memorandums of understanding. They will join West Virginia, which was the first state to try statewide motile voting for military and overseas voters in 2018 and has announced that it will expand the option to voters with disabilities for its June 9 primary. Nix says she is talking with another half dozen or so other states about the possibility of using mobile voting for some residents. The system has only been tried for a handful of counties since 2018 and typically just for military and overseas voters. States are scrambling to expand voting by mail and early voting days to reduce crowding into polling sites and mobile voting could be an additional solution. However, cybersecurity experts say that mobile voting lacks basic protections to ensure votes have not been manipulated by hackers. Officials have worked for years to restore a sense of security around the 2020 contest after Russia’s interference efforts in 2016 and the mobile voting trade-off could undermine that precarious gain.

READThe Washington Post  
11
.
SAFETY + SECURITY
.
Top Experts Predict Major Activity During 2020 Hurricane Season

Top hurricane forecasters from Colorado State University on Thursday said another destructive hurricane season can be expected this year, USA Today reports. The forecast said the 2020 Atlantic basin hurricane season will see above-normal activity and will present an above-average probability for making landfall along the continental U.S. The Atlantic hurricane season begins June 1 and continues through November 30, though storms sometimes occur outside those dates. A major determining factor in hurricane forecasting is the presence of an El Niño or La Niña climate pattern, the forecasters said. El Niño is a natural warming of tropical Pacific Ocean water that tends to suppress the development of Atlantic hurricanes, unlike its opposite, La Niña, whose cooler ocean water tends to stir up Atlantic hurricanes. El Niño generally increases vertical wind shear in the Atlantic, which tears apart hurricanes, but forecasters say this is not likely to be an El Niño year. The Colorado State team’s predictions provide the best estimate of activity during the upcoming season, not an exact measure, and insurance companies, emergency managers and the media use their predictions to prepare Americans for potential threats. The team predicts 16 named tropical storms this season, of which 8 will become hurricanes, half of which are expected to spin into major hurricanes with sustained wind speeds of 111 mph or greater.

READUSA Today 
12
.
MEDICAL + PSYCHOLOGICAL
.
Nearly Half of U.S. Residents Feel Coronavirus Crisis is Harming Their Mental Health

A recent survey by the Kaiser Family Foundation found that nearly half the people in the U.S. feel the coronavirus crisis is affecting their mental health, with nearly 20 percent saying it has had a major impact, the Washington Post reports. Kathy HoganBruen, a Washington clinical psychologist specializing in anxiety disorders said the massive number is not surprising given all the huge concerns surrounding joblessness, social distancing and the numbers of people getting sick and dying. Experts say it’s normal for people to be worried and anxious in the midst of a highly disruptive health emergency laced with uncertainties. Mental health experts recommend coping mechanisms such as writing down your fears on a piece of paper or computer then stepping away from them or communicating them to another caring person directly. HoganBruen encouraged people to avoid behaviors such as overeating or excessive alcohol consumption and to focus on coping skills that have worked in the past. The Kaiser Family Foundation poll found that 57 percent of adults worried that they would be exposed to the virus because they have to work and can’t afford to stay home — an increase from two weeks earlier. Fear of infection has dropped slightly, a sign that people feel that the nationwide effort in social distancing is lowering their household risk.

READThe Washington Post  
SHARE
 
 
 INVITE A COLLEAGUE TO RECEIVE
THE DAILY RISKBOOK
RANE
.
RANE
© 2020 RANE Network Inc.
510 Fifth Avenue • New York, NY 10036
Unsubscribe from RiskBook
.