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The Morning Risk Report: Businesses Should Prepare for Risk of Civil Unrest From Food Scarcity
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Good morning. Food and fertilizer shortages, which are still stinging nearly six months after Russia invaded Ukraine, could drive countries already facing economic trouble into civil unrest, experts said. That turmoil could test the resiliency of Western companies with overseas operations in the coming months, Risk & Compliance Journal's Richard Vanderford reports.
“Food insecurity is one of our main topics and one of the things you really have to look out for—there’s no getting away from it,” said Srdjan Todorovic, the head of terrorism and hostile environment solutions at Allianz Global Corporate & Specialty. “This is absolutely a global problem.”
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Content from our Sponsor: DELOITTE
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Setting the Stage for Cyber AI at Scale
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A combination of data, analytics, and cloud computing means the building blocks are in place for zero trust-based security, says Adam Nucci, deputy director of strategic operations for the U.S. Army. Read More ›
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Many kinds of scarcity can provoke tumult, but food shortages—in addition to causing hardship—have a unique capacity to drive upheaval that could upend business operations. Prices are higher now than in 2007 and 2008, when then-record prices led to protests and riots in 48 countries, according to a United Nations report, and higher than in 2011, when they contributed to the wave of Arab Spring protests in the Middle East and North Africa.
Though food prices have dipped slightly from highs reached in the immediate aftermath of Russia’s invasion of Ukraine, prices were still about 44% higher in July than in 2020, according to a food-price index compiled by the Food and Agriculture Organization of the United Nations. Read more.
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WSJ Risk & Compliance Forum
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Sign up for the next WSJ Risk & Compliance Forum on Nov. 16 for discussions on the critical issues facing corporate risk & compliance professionals, including keeping up with sanctions, screening for forced labor, and proposed U.S. rules on climate change and cybersecurity. Register here for a discounted ticket.
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Crypto Criminals Laundered $540 Million Through RenBridge, Report Says
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Criminals have laundered at least $540 million through RenBridge, a blockchain bridge that enables cross-chain transactions, according to a new report published Wednesday from blockchain analytics firm Elliptic Enterprises Ltd.
Cross-chain bridges enable the exchange of information and cryptocurrency from one blockchain network to another without going through a centralized service like an exchange. Elliptic said such bridges also have emerged as facilitators of money laundering.
Elliptic said billions of dollars in assets have been exchanged between bitcoin, ethereum and other blockchains using such bridges, but the total amount of digital assets that were transferred and laundered through multiple chains were previously untrackable. Elliptic identified the data through a new screening tool.
Since 2020, bad actors have used RenBridge to launder crypto assets obtained from theft, fraud, ransomware and other types of illicit activities, Elliptic said. This includes more than $153 million in ransomware proceeds and digital assets that Elliptic said it believes were stolen by North Korea.
RenBridge didn’t immediately respond to a request for comment sent to its support email address.
The report came as the U.S. Treasury Department imposed sanctions this week on Tornado Cash, a so-called mixer platform that enables users to exchange cryptocurrencies with relative anonymity. The Treasury Department accused Tornado Cash of laundering billions of dollars in virtual currency, including $455 million allegedly stolen by North Korean hackers.
—Mengqi Sun
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The SEC and other agencies use data gathered in Form PF to publish aggregated statistics about the private-funds industry.
PHOTO: TING SHEN FOR THE WALL STREET JOURNAL
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The collapse in cryptocurrency prices this year has left U.S. regulators scrambling to understand the risks that digital-asset markets could pose to the broader economy. They may soon enlist hedge funds in the effort.
The Securities and Exchange Commission issued a proposal Wednesday that would require large hedge funds to report their cryptocurrency exposure through a confidential filing known as Form PF.
Created after the 2008 financial crisis, Form PF was designed to help regulators spot bubbles and other potential stability risks in the otherwise opaque ecosystem of private funds that manage money for wealthy individuals and institutions.
Also: Crypto Exchange CoinFLEX Files for Restructuring in Seychelles
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A federal jury in Chicago convicted two former traders of JPMorgan Chase & Co.’s precious metals desk who had been charged with manipulating gold prices, finding they used misleading orders to rig prices.
The convictions are the capstone of a seven-year Justice Department campaign to punish a style of deceptive trading in futures markets known as spoofing. The rapid-fire strategy was prevalent at some Wall Street banks before Congress outlawed it in 2010 and persisted even after its prohibition, according to prosecutors. JPMorgan paid $920 million in 2020 to settle regulatory and criminal charges against the bank over the traders’ conduct.
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Donald Trump said he declined to answer questions from the New York attorney general’s office during his deposition in its civil-fraud investigation into the financial dealings of the former president and his company.
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Federal prosecutors in Manhattan faced a test in a closely watched public corruption case Wednesday as lawyers for former New York Lt. Gov. Brian Benjamin pushed to have charges of bribery and other offenses dismissed.
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A top-ranking Democrat is calling on a federal regulator to take action against Equifax Inc. for its erroneous credit scores.
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Investors approved a two-year payment delay on roughly $20 billion of Ukraine’s foreign-currency debt, heeding calls from Washington and other allied governments to grant the embattled nation a financial reprieve as it burns through cash.
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The European Court of Justice is based in Luxembourg.
PHOTO: GEERT VANDEN WIJNGAERT/ASSOCIATED PRESS
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Companies will be under increased pressure after Europe’s top court ruled they must apply special protections to data that firms previously didn’t consider sensitive.
Under the European Union’s General Data Protection Regulation, information about health, religion, political views and sexual orientation are considered sensitive. Companies generally aren’t allowed to process it unless they apply special safeguards.
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A group of 18 tech and cyber companies said Wednesday they are building a common data standard for sharing cybersecurity information. They aim to fix a problem for corporate security chiefs who say that cyber products often don’t integrate, making it hard to fully assess hacking threats.
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Michael Lohscheller is a recent addition to Nikola Corp.
PHOTO: ANDREAS GEBERT/BLOOMBERG NEWS
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Nikola Corp. on Wednesday said that Chief Executive Mark Russell was retiring and would be succeeded by Nikola Motor President Michael Lohscheller.
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Elon Musk sold nearly $7 billion of Tesla Inc. stock in recent days, regulatory disclosures show, amid uncertainty over the fate of his $44 billion deal to buy Twitter Inc.
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Lingerie brand Lively named Kristin DiCunzolo president and chief executive. She had been vice president of marketing and direct at its parent company, Wacoal America Inc.
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Headline consumer prices in China rose by 2.7% in July.
PHOTO: ANDREA VERDELLI/BLOOMBERG NEWS
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China’s headline consumer inflation rate surged to its fastest pace in two years in July, but a drop in core inflation points to a different problem: weak domestic demand.
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Iran has begun training Russian officials to use its advanced drones, according to the Biden administration, the latest sign that Moscow plans to use Tehran’s military weapons to try to seize a new aerial advantage in Ukraine.
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Lights illuminating many of the German capital’s monuments are going dark. Across Europe, national and local governments are pushing to curtail energy usage as Russia cuts its gas shipments in response to Western sanctions during the war in Ukraine.
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Workers being tested for Covid-19 at a Foxconn plant in Wuhan, China. The company cited the pandemic among the possible risks to its outlook.
PHOTO: /ASSOCIATED PRESS
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Foxconn Technology Group, the world’s biggest iPhone assembler, said demand for smartphones and other consumer electronics is slowing, leading it to take a more cautious stance in the current quarter.
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Newell Brands Inc., the company behind Yankee Candle, Sharpie markers and other consumer products, is spending more on capital investments to support its supply chain this year in the expectation that it will lower shipping costs and deliver other savings.
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Wages for truck drivers rose at a double-digit pace last year as companies laid out hefty salaries, bonuses and benefits packages to recruit workers amid tight labor conditions and high freight demand.
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