Companies unprepared for cyber, financial crime and regulatory threats, WEF hears

Journalists covering the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland. (Reuters)
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Updated 21 January 2020

Companies unprepared for cyber, financial crime and regulatory threats, WEF hears

  • FTI Consulting found less than half of all executives surveyed are managing cyber-attacks proactively
  • The survey also found that 64 percent of companies experienced a form of financial crime over the past year

LONDON: Global companies remain largely unprepared for events that can impact revenue, valuation and reputation, a survey has found.
The FTI Consulting Resilience Barometer released at the World Economic Forum in Davos interviewed more than 2,200 executives from private and publicly traded companies across all G-20 countries and measured their preparedness against 18 regulatory, operational, cultural, leadership and technological threats.
It found the average resilience score rose from 40 out of 100 in 2019 to 43 out of 100 in 2020.
Five of the countries with the top 10 resilience scores (led by India, with a score of 60) were from emerging markets, while the US, UK, Australia, Germany, France and Japan all saw scores decrease year over year.
“Companies across the G-20 face more complex risks from technology transformation, geopolitical tensions and the polarization of the political landscape,” said Kevin Hewitt, EMEA chairman at FTI Consulting. “The 2020 elections in the United States, the looming UK exit from the EU, cyber-attacks and increasing regulatory actions are just a few examples of challenges we see companies grappling with each day.
“It is not a matter of if a company will face an inflection point or crisis, but when it will happen — meaning the senior executives and businesses that are most prepared are likely to remain the most resilient, competitive and viable.”
Cybersecurity remains a top concern for most organizations and even though cyber-attacks are identified as having the most negative impact on revenue, less than half of all executives surveyed are managing cyber-attacks proactively, and only 10 percent believe they have no cybersecurity gaps at all.
The survey also found that 64 percent of companies experienced a form of financial crime over the past year, with theft and fraud representing 24 percent of financial crimes identified over the past 12 months.
As a result, executives expect to increase their compliance spending by 22 percent in 2020.


Israel cenbank’s Abir says buying corporate bonds to prevent layoffs

Updated 08 July 2020

Israel cenbank’s Abir says buying corporate bonds to prevent layoffs

JERUSALEM: The Bank of Israel’s decision to start buying corporate bonds should enable companies to issue debt and prevent further layoffs as a result of the coronavirus pandemic, deputy governor Andrew Abir said.
On Monday, the bank held its benchmark interest rate at 0.1 percent but said it would buy 15 billion shekels ($4 billion) of higher-rated corporate bonds in the secondary market.
“It’s not that the corporate bond market was not functioning or because spreads have widened dramatically, but rather the understanding that over the next 6-12 months, there’s going to be a need for issuance in that market,” Abir told Reuters.
The central bank began purchases on March 15 of up to 50 billion shekels of government bonds, which has helped reverse a spike in government and corporate yields.
The index of bonds issued by Israel’s 20 largest firms has gained 1.4 percent following the central bank’s announcement, following three weeks of declines.
Noting that more than 40 percent of corporate credit comes from the bond market, Abir said that fear of being frozen out the market could lead to cash hoarding and cost-cutting, including jobs.
“We want to prevent a situation where a company is having question marks in its ability to fund themselves (and) lays off another 1,000 workers.”
Unemployment is already more than 20 percent and could worsen after some COVID-19 restrictions were reimposed.
Abir said risks to the central bank’s scenario of a record six percent economic contraction in 2020 will be “to the downside” if the infection rate stays high.
Analysts are split over whether the central bank will lower its key rate to zero percent or negative. The Bank of Israel has indicated it is reluctant to do so.
“We still have more measures that we can do. QE can be increased. We haven’t run out of our policy options,” Abir said.