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The Morning Risk Report: U.S. Plans Sanctions, Export Controls Against Russia if It Invades Ukraine |
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Good morning. The U.S. is prepared to impose export controls on critical sectors of the Russian economy if President Vladimir Putin invades Ukraine, and is working to soften market shocks if Russia withholds energy supplies in retaliation, officials said. Taking a page out of the Trump administration playbook to pressure Chinese telecom giant Huawei Technologies Co., senior administration officials on Tuesday said the U.S. could ban the export to Russia of various products that use microelectronics based on U.S. equipment, software or technology. [Continued below...] |
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While the officials didn’t specify the products, they said that the goal would be to hit critical Russian industrial sectors such as artificial intelligence, quantum computing and aerospace, denying Russian industry high-tech components the country cannot replace domestically or through alternate suppliers. “The export control options we’re considering alongside our allies and partners would hit Putin’s strategic ambitions to industrialize his economy quite hard, and it would impair areas that are of importance to him,” a senior administration official said. |
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Allied Universal Hires Ryan Manning as New Compliance Chief |
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Allied Universal, a security and personnel systems provider, has hired Ryan Manning as chief compliance officer. Mr. Manning, who will be based in the company’s Santa Ana, Calif., office, will be responsible for overseeing global compliance efforts for the company. He worked for more than 16 years at law firm Newmeyer & Dillion, where he served as a partner, litigating and advising clients on issues such as legal compliance and risk management. Allied, backed by private-equity firm Warburg Pincus and Canadian pension fund Caisse de dépôt et placement du Québec, expanded globally with the £3.8 billion acquisition of U.K. rival G4S PLC in April 2021. Allied has more than 800,000 employees and approximately $20 billion in revenue. —David Smagalla |
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Pay for Risk Professionals Has Soared, Study Finds |
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Risk professionals in the U.S. at all levels saw their pay rise more than 14% over the past two years, according to the risk management society RIMS. The median annual base salary for U.S.-based risk management professionals shot up to $135,000 in 2021 from $118,000 in 2019, RIMS said on Tuesday in a report based on findings from a compensation survey. "With business leaders leaning heavily on their risk management teams to address volatility, disruption and uncertainty, the importance of investing in this critical business function has never been more apparent,” RIMS Chief Executive Mary Roth said. RIMS based its median salary estimates on a survey of about 1,000 full-time risk professionals in the U.S. and 175 in Canada. The society conducts the survey every two years. —Richard Vanderford |
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| Nearly 74% of U.S. adults had been fully vaccinated as of Monday. PHOTO: FREDERIC J. BROWN/AGENCE FRANCE-PRESSE/GETTY IMAGES |
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The Biden administration is withdrawing an emergency private-sector vaccination mandate against Covid-19 after the Supreme Court blocked its implementation. The Occupational Safety and Health Administration said on Tuesday it would continue to work on imposing the vaccination requirement through the regular—and lengthier—rule-making process. The emergency rule, issued in November, mandated that employers with 100 or more employees require their workers to be vaccinated against Covid-19 or submit to weekly testing and wear a mask while indoors. The rule, most of which was set to take effect earlier this month, prompted a lawsuit by business groups. On Jan. 13, the Supreme Court stopped the rule from going into effect while it deliberated over the lawsuit. The rule would have affected roughly 84 million workers. |
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PHOTO: JP/SPORT PRESS PHOTO/ZUMA PRESS |
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Credit Suisse Group AG said its profits for the fourth quarter of last year would be hit by setting aside provisions for legal costs of around 500 million Swiss francs, equivalent to $545 million, mostly related to legacy matters in its investment bank. The charge will be partially offset by real estate sales worth 225 million Swiss francs. |
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The profit warning is the latest in a series of blows for the bank. Chairman António Horta-Osório stepped down from his perch earlier this month in the wake of internal reviews into his personal travel and breaches of quarantine rules, The Wall Street Journal has reported. |
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An appellate judge reinstated New York’s indoor mask mandate on Tuesday after the state Health Department appealed a ruling that struck down pandemic-related requirements for schools and businesses. The Environmental Protection Agency is preparing to advance tougher regulations on power plants in coming months as part of President Biden’s plan to cut greenhouse-gas emissions. The Federal Trade Commission on Tuesday filed an antitrust lawsuit that seeks to block Lockheed Martin Corp.’s planned $4.4 billion purchase of Aerojet Rocketdyne Holdings Inc., arguing the deal would harm rival defense contractors and lead to unacceptable consolidation in markets critical to national security and defense. Google is overhauling its plans for targeted online advertising after pushback from privacy advocates, aiming to give marketers less-granular information about web users than under the tech giant’s initial proposal. A federal appeals court on Tuesday upheld the conviction of Mexican drug lord Joaquín “El Chapo” Guzmán Loera, rejecting claims of juror misconduct and arguments that his pretrial treatment in jail hampered his defense. |
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| The IMF estimates the economic damage from supply-chain disruptions has already been extensive. PHOTO: DAMIAN DOVARGANES/ASSOCIATED PRESS |
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The pace of economic growth both in the U.S. and globally is likely to decline more sharply than previously expected, the International Monetary Fund says in its latest forecast, citing inflation, fallout from the Omicron variant and chronic supply-chain problems. The global economy will expand a predicted 4.4% this year, the IMF said on Tuesday in its World Economic Outlook. That figure is down from an estimated 5.9% in 2021 and is a downgrade of one-half of a percentage point from its last projection in October. The decline will be steeper in the U.S.—4% in the coming year, a 1.2 percentage-point downgrade from the October estimate—the largest downgrade for any major country or major group of countries for which the IMF provides forecasts. |
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U.S. manufacturers and other companies that use semiconductors are down to less than five days of inventory for key chips, the Commerce Department said on Tuesday, citing the results of a new survey. One asset holding up through the early 2022 market turmoil: gold. OPEC and its Russia-led partners have promised to increase oil production to pre-pandemic levels this year, but are falling short of those public commitments, stoking fast-rising global crude markets. North Korea launched two suspected cruise missiles on Tuesday, South Korea’s military said, in what would be the Kim Jong Un regime’s fifth weapons test of the month. The International Monetary Fund urged El Salvador to strip bitcoin of its status as legal tender because of its large risks to financial stability, the latest twist in protracted talks between the fund and the highly indebted Central American country to secure a $1.3 billion loan. Warren Buffett’s “Woodstock for Capitalists” event is coming back in-person this year. |
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| Canadian National also reported a 3% increase in revenue and an 11% increase in operating earnings in the fourth quarter. PHOTO: CHRISTINNE MUSCHI/BLOOMBERG NEWS |
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Canadian National Railway Co. named a new chief executive officer and made changes to its board Tuesday, moves that will allow the railroad operator to avert a proxy fight. The Canadian railroad operator named longtime railroad executive Tracy Robinson as CEO and president. Also, U.K.-based activist TCI Fund Management Ltd. agreed to drop its proxy contest at Canadian National, which named a new independent director and plans to appoint two new independent directors with North American railroad experience by its annual meeting. TCI has criticized Canadian National for offering to buy Kansas City Southern for around $30 billion and nominated four people to its board. Rival Canadian Pacific Railway Ltd. ultimately clinched a $27 billion deal to take over Kansas City Southern. TCI and others had pushed for the ouster of Canadian National CEO Jean-Jacques Ruest. |
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One of the year’s first shareholder votes on climate change points to a sharpened focus on supply chains among investors. Costco Wholesale Corp. shareholders voted Thursday for a proposal that called on the retailer to set out plans to reach net-zero greenhouse-gas emissions by 2050 or sooner. |
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| Researchers make a 3-D scan of a forest near Puerto Maldonado, Peru, for carbon-offset rating startup Sylvera. PHOTO: MIRO DEMOL/SYLVERA |
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Technology startups are trying to bring quality control to the carbon-offset market as more companies seek to compensate for their greenhouse-gas emissions. Sylvera Ltd., a London-based company that provides ratings for carbon offsets similar to credit scores, said on Tuesday that it raised $32.6 million to expand its service. Sylvera analyzes satellite images, 3-D laser scans and other data to estimate how much carbon is stored in trees. It crunches that information using machine-learning technology to grade the likely effectiveness of offset projects that plant or protect forests. The company has signed up clients including Delta Air Lines Inc., grain trader Cargill Inc. and consulting firm Bain & Co. since it launched in 2020. |
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Workers, flush with power as employers raise wages and scramble to fill open jobs, say they care even more about flexible schedules than whether or not they go into an office. Unilever PLC said it would restructure its operations into five stand-alone divisions, reshuffle top executives and cut jobs in a sweeping reorganization aimed at accelerating sales growth as the Dove soap owner girds itself against an activist investor and looks to quell shareholder dissatisfaction. Verizon Communications Inc. said limits on its 5G expansion haven’t hurt its ability to connect customers, though the wireless company is still waiting for firm government rules on where its signals can reach in the months ahead. Imports are tumbling at the nation’s busiest container port complex even as the backup of ships waiting to unload there breaks records. |
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MicroStrategy Inc. plans to continue investing in bitcoin despite recent declines in the value of the cryptocurrency asset and a call by U.S. securities regulators to revise its disclosure in future filings. General Motors Co. confirmed plans for a multibillion-dollar investment to produce electric pickup trucks in Michigan, giving the Great Lakes region a boost as competition intensifies between states to win a bigger role in the industry’s shift to battery-powered cars. |
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| A patient receiving treatment last week in the acute care Covid-19 unit at Seattle’s Harborview Medical Center. PHOTO: KAREN DUCEY/GETTY IMAGES |
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Covid-19 deaths in the U.S. have reached the highest level since early last year, eclipsing daily averages from the recent Delta-fueled surge, after the newer Omicron variant spread wildly through the country and caused record-shattering case counts. The seven-day average for newly reported Covid-19 deaths reached 2,191 a day by Monday, up about 1,000 from daily death counts two months ago, before Omicron was first detected, data from Johns Hopkins University show. While emerging evidence shows Omicron is less likely to kill the people it infects, because the variant spreads with unmatched speed the avalanche of cases can overwhelm any mitigating factors, epidemiologists say. |
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Hospitalizations with Covid-19 in the U.S. continued to decline, following the downward trend in new cases of the virus identified in the country since the middle of this month. |
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