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The Morning Risk Report: Enterprise Risk Management, Long Used by Companies, Takes Hold in Government
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'When something goes off track in the government, it is more likely to end up on the front page of a newspaper,' said Tom Brandt, chief risk officer at the Internal Revenue Service. PHOTO: SUSAN WALSH/ASSOCIATED PRESS
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Good morning. Federal agencies are taking a cue from the corporate world, appointing chief risk officers and putting in place more processes to identify and manage operational risks, Risk & Compliance Journal’s Kristin Broughton reports.
A big reason, according to government risk managers: Many agencies haven’t had strong controls in place to guard against reputational and other nonfinancial risks, and there is increasing sensitivity to how those risks can affect public confidence in the government.
[Continued below...]
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Enterprise risk management is a method used by organizations to identify and prioritize threats that span across business lines and could affect their ability to operate. Many big companies have adopted more mature risk management programs in recent decades, following high-profile accounting scandals and the global economic crisis.
The focus on managing enterprisewide risks in the government has been a more recent development, however. The Office of Management and Budget in 2016 revised a key policy on financial controls, urging agencies to establish enterprise risk management programs. The OMB’s revision to what is known as Circular A-123 followed high-profile controversies, including allegations of political targeting at the IRS and the troubled rollout of HealthCare.gov following the passage of the 2010 Affordable Care Act.
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Industrial conglomerate 3M said in a securities filing that it was conducting an internal investigation. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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3M Co. said it was conducting an internal investigation into possible violations of U.S. anticorruption laws after discovering suspect travel and record-keeping related to marketing its products in China. The company said in a financial filing on Friday that it had retained outside counsel and a forensic accounting firm to help conduct the investigation. 3M said it disclosed the investigation to the Justice Department and the Securities and Exchange Commission on July 23.
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The Justice Department approved T-Mobile US Inc.’s merger with Sprint Corp. after the companies agreed to create a new wireless carrier by selling assets to satellite-TV provider Dish Network Corp.
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The Trump administration extended a license to let Chevron Corp. remain in Venezuela until late October, siding with officials who argued that the company’s absence would put U.S. energy companies at a disadvantage and not significantly advance Washington’s goal of ousting Venezuela’s president.
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The Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning about penalties for failing to report income and pay tax on transactions involving virtual currencies.
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President Trump said his administration won’t give Apple Inc. waivers from tariffs nor any type of relief for the parts of its Mac Pro computers made in China, saying the only way the tech giant can avoid the penalty is to make them in the U.S.
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Jervois Mining Ltd., an Australian company’s acquisition of eCobalt Solutions, an Idaho cobalt mine, is being challenged by the state’s former governor, who wants the U.S. government to scrutinize the deal for possible hidden Chinese links.
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The U.S. Food and Drug Administration is requiring that health warnings be added to Pfizer Inc.’s drug Xeljanz, advising patients they could experience a higher risk of blood clots or death with a specific dose.
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https://www.wsj.com/articles/irs-sending-warning-letters-to-more-than-10-000-cryptocurrency-holders-11564159523
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A government proposal to exempt more companies from audit requirements would give relief to 11 companies that restated financial results in 2018 and wiped out more than $290 million in market value.
The Securities and Exchange Commission’s proposal, which is open for public comment until Monday, has drawn criticism from accountants and praise from businesses. A key aspect of the plan is that more public companies wouldn’t need to undergo the audit that probes for weaknesses that could allow fraud or accounting blunders to go undetected.
One company in the group is Insys Therapeutics Inc., an opioid manufacturer whose market value peaked at $3.2 billion in 2015 and sought bankruptcy protection in June after pleading guilty to bribing doctors to boost use of its spray version of fentanyl, a synthetic opioid. It agreed to pay $225 million in fines and forfeiture.
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President Trump said on Friday the U.S. will take ‘substantial reciprocal action’ against France for a new tax on American tech companies. PHOTO: JIM LO SCALZO/SHUTTERSTOCK
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President Trump promised to take “substantial reciprocal action” against France after the nation’s President Emmanuel Macron this week signed into law a tax on American tech giants like Alphabet Inc.’s Google and Amazon.com Inc.
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President Trump took aim at China again ahead of trade talks in Shanghai next week, pressing the World Trade Organization to change how it defines developing countries—which he says gives China and other countries an unfair advantage.
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The controversy over Cambridge Analytica sparked investigations in the U.S. and U.K. Here, Facebook CEO Mark Zuckerberg testifies in Congress. PHOTO: ZACH GIBSON/GETTY IMAGES
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More than a year after Cambridge Analytica’s mining of Facebook Inc. user data triggered regulatory probes of the social-media giant—leading to this week’s $5 billion fine—a new Netflix documentary highlights how poorly understood the impact of that data mining still is on American politics and society.
Netflix Inc.’s “The Great Hack” could reinvigorate debate about Cambridge Analytica’s tactics and their implications for social media, data privacy and democracy, just as the U.S. enters the 2020 election cycle. The nearly two-hour film was released on Netflix Wednesday, the same day Facebook reported second-quarter earnings and finalized settlements with two regulatory agencies.
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Deepfakes are becoming more difficult to detect as the technology used to create them advances, said Hany Farid, a computer science professor at the University of California, Berkeley. PHOTO: BEN MARGOT/ASSOCIATED PRESS
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Startup companies, government agencies and academics are racing to combat so-called deepfakes, amid fears that doctored videos and photographs will be used to sow discord ahead of next year’s U.S. presidential election.
It is a difficult problem to solve because the technology needed to manipulate images is advancing rapidly and getting easier to use, according to experts. And the threat is spreading, as smartphones have made cameras ubiquitous and social media has turned individuals into broadcasters, leaving companies that run those platforms unsure how to handle the issue.
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Banker Andrea Orcel, pictured in 2017, is taking Banco Santander to court over a withdrawn job offer. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
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When Banco Santander SA Executive Chairman Ana Botín withdrew the appointment of high-profile UBS Group AG banker Andrea Orcel as her bank’s chief executive earlier this year, she hoped for a quiet resolution. Now, the two are caught in a messy legal fight involving accusations of secret recordings, broken contracts, a lack of ethics and damaged reputations.
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Shares in Anglo American PLC fell 5% Friday after Volcan Investments Ltd., a company controlled by Indian tycoon Anil Agarwal, said it would sell its roughly 20% stake in the mining giant.
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Transportation Security Administration agents at O'Hare International Airport in Chicago last year. Clear doesn’t replace security screening at TSA checkpoints, but can make the process faster and more predictable. PHOTO: NAM Y. HUH/ASSOCIATED PRESS
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London Stock Exchange Group PLC said early Saturday it is in advanced talks to buy financial-information and terminal business Refinitiv Holdings Ltd. from a Blackstone Group Inc.-led consortium for almost $15 billion, in one of the biggest bets yet on data as a new source of growth for global exchange operators.
Stock-exchange operators face growing pressure on fees they generate from the buying and selling of stocks amid new competition and computerized trading. That has historically pushed exchange businesses to buy up rivals to boost revenue and cut costs. But the European Union’s decision in 2017 to block the LSE’s $30 billion merger plan with Germany’s Deutsche Börse AG—one of several big exchange deals to be upended in recent years—shows this consolidation strategy can be difficult to execute.
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United Airlines Holdings Inc. wants to help its passengers get through security faster. United said on Monday that it is taking an equity stake in Clear, a technology company that uses fingerprints and iris scans to verify a traveler’s identity at security checks.
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Many carriers plowed last year’s profits and gains from a tax cut into new equipment, resulting in a growing supply of big rigs as shipping demand softens. PHOTO: SCOTT OLSON/GETTY IMAGES
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Trucking companies are wrestling with the hangover from last year’s freight boom as greater availability of big rigs and softening demand weigh on earnings ahead of peak shipping season. Many carriers plowed 2018 profits and the gains from the 2017 corporate tax cut into record orders for new equipment, resulting in a growing supply of trucks while cargo volumes in U.S. distribution channels have been sliding.
More than four months after the grounding of Boeing Co.’s best-selling 737 MAX, the passenger jet’s absence is hitting profits, crimping growth and throwing service schedules into disarray at airlines around the world. Southwest Airlines Co., Boeing’s biggest MAX customer, said Thursday it would stop flying out of New Jersey’s Newark Liberty International Airport this fall as it tries to offset the impact of the prolonged grounding. It also extended planned cancellations through Jan. 5.
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