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The Morning Risk Report: McDonald’s Ruling Shifts Oversight Liability Focus to Corporate Officers
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Good morning. A judge’s decision to allow a shareholder lawsuit against a former McDonald’s Corp. human resources chief has put corporate executives on alert that they can be held personally liable for failing to oversee the biggest risks confronted by their companies, Risk & Compliance Journal’s Dylan Tokar reports.
The ruling follows a series of Delaware Court of Chancery decisions that have set off alarm bells in corporate boardrooms, by making clear that directors can be sued for serious compliance failures.
The latest decision, which centers on a period of tumult at the fast-food company that led to the firing of former McDonald’s CEO Steve Easterbrook, clarifies that the legal scrutiny doesn’t stop with the board.
It remains unclear how the McDonald’s case will play out, but the judge’s ruling highlights how recent Delaware court decisions have played an increasingly important role in pushing corporate leaders to pay attention to so-called mission-critical risks.
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Lisa Hayes, TikTok’s head of safety and public policy in the Americas, at the company’s Transparency and Accountability Center in Culver City, Calif.
PHOTO: GEORGIA WELLS/THE WALL STREET JOURNAL
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TikTok opens up. TikTok is trying to win Washington’s trust with a playbook recalling the unsuccessful strategy that another Chinese-owned company, Huawei Technologies Co., took in the U.S. and swaths of Europe.
As part of its push to demonstrate openness to U.S. authorities, TikTok this week gave journalists a tour of what it calls its Transparency and Accountability Center.
The tour comes as TikTok has been publicizing its plan to silo off its U.S. operations and have third parties monitor them. The proposal was designed to assuage U.S. officials and lawmakers, who have said they are concerned the Chinese government could force the app’s owner, Beijing-based ByteDance Ltd., to spy on American users or to influence which videos they see.
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A man who authorities say publicly admitted to manipulating trading on decentralized exchange Mango Markets and draining more than $110 million of cryptocurrency is now facing U.S. charges, Risk & Compliance Journal’s Mengqi Sun reports.
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Members of the Federal Trade Commission rejected a complaint from Meta Platforms Inc. asking them to disqualify the agency’s chair from judging the company’s proposed acquisition of virtual-reality company Within Unlimited Inc.
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Pentagon Press Secretary Brig. Gen. Pat Ryder said the U.S. is tracking the high altitude surveillance balloon over the continental U.S. PHOTO: KEVIN DIETSCH/GETTY IMAGES
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China-U.S. tussle via balloons and bases. The U.S. tracked a suspected Chinese reconnaissance balloon over the continental U.S. this week, officials said.
The incident, which occurred in the last two days, marked one of the most aggressive Chinese intelligence gathering maneuvers in recent years.
Meanwhile, the U.S. reached an agreement that gives it access to four more military bases in the Philippines, broadening Washington’s efforts to counter China’s influence and strengthening an alliance that a few years ago appeared in danger of collapse.
And Kenya is asking the U.S. to pay for the expansion of a joint counterterrorism base, raising concerns in Washington that the East African country could turn to China if the Americans balk, according to U.S. officials.
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Risk of civil unrest jumps, report says. As 2023 begins, global political risk levels, including the risks of civil unrest and government instability, are at a five-year high, according to an analysis released Thursday by Verisk Maplecroft, a risk intelligence company. Verisk Maplecroft, which conducts analyses and compiles numerical risk scores, pointed to high inflation and growing socioeconomic pressures.
The company’s 2022 civil unrest index registered a significant uptick in risk in 48 countries, from Europe to emerging markets.
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Construction of new warehouses is slowing as developers grapple with rising interest rates and declining leasing activity, potentially prolonging an ongoing shortfall in logistics space.
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The market’s big comeback in January is indicative of one thing: Investors don’t believe the Federal Reserve is going to keep interest rates high for long.
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Ukrainian President Volodymyr Zelensky on Thursday pressed his visiting European Union counterpart to advance his country’s accession to the bloc, while the EU said it would double the number of Ukrainian troops it trains to 30,000.
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Hundreds of thousands of Texans remained without power as utility crews worked to fix power lines and poles downed or iced over by storms this week.
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North Korea said the U.S. had pushed tensions on the Korean Peninsula to an “extreme red line,” threatening “overwhelming nuclear force.”
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Europe’s dependence on Russian energy is drawing to a close, ending a decadeslong power imbalance and leaving the continent racing to squirrel away fuels and find alternative supplies. On Sunday, the EU and the U.K. will bar imports of Russian fuels such as diesel and gasoline.
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China declined to say whether it sent a spy balloon over the continental U.S. but said it wanted to handle the allegation calmly with Washington.
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An investor said 3M’s revenue and earnings have been disappointing since Mike Roman became CEO. PHOTO: CHRISTOPHER GOODNEY/BLOOMBERG NEWS
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3M leader faces questions over ‘disappointing’ revenues. One of 3M Co.’s largest investors has raised concerns about Chief Executive Mike Roman’s leadership and questioned whether a change may be needed at the top of the manufacturing giant.
The co-founder and senior portfolio manager of German mutual-fund firm Flossbach von Storch AG, said 3M’s revenue and earnings have been disappointing since Mr. Roman became CEO in 2018
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London Heathrow Airport said its longtime chief executive, John Holland-Kaye, would step down this year after helming the hub during one of the most turbulent summers in its history.
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An office building on New York City’s Third Ave. in August.
PHOTO: AMIR HAMJA/BLOOMBERG NEWS
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America’s bosses are starting to feel bossy again. Many executives say that they are no longer scrambling to retain workers, after several years of doing whatever it took to keep people on staff. Pay increases are slowing. For some jobs, hiring is getting easier. Executives are seizing on this moment to streamline operations or cut projects, shedding staff that until recently they couldn’t afford to lose.
Inside many organizations, there is a shift in sentiment. Employers who felt they had less leverage in the tight labor market of the past couple of years say they have more power in negotiations. Many feel less pressure to hire quickly. Others are enforcing in-office attendance mandates.
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Democrats are renewing their push for a national paid time off policy for medical reasons and caregiving, despite long odds of passing such legislation in the newly divided Congress.
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Corporate technology leaders are leaning on artificial intelligence and other software automation tools to help companies grow without hiring additional workers anytime soon.
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On Thursday, Apple Inc. announced its first quarterly revenue decline in nearly four years as manufacturing disruptions in China curbed its ability to deliver premium iPhones.
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