Category: Politics

Four emerging risks for corporations

The Corporate Executive Board’s “Risk Integration Strategy Council (RISC)” has released the January 2011 “Emerging Risks Update,” (pdf) noting the following risks on the horizon for enterprise risk managers:

Leaks of sensitive corporate information like strategic planning documents or embarrassing memos (think Wikileaks, which is on its way to becoming a verb, like Google). Strategy: Bolster information security, especially as “new technologies and platforms like cloud computing, SaaS, and social networking gain prominence.”

Shortage of rare earth minerals, an essential component of clean energy technology, computers and electronics (e.g., mobile phones). China controls 97%. Strategy: Other countries (including the U.S.) with deposits of rare earth minerals can open or re-open their mines, “but it can take up to [10] years for a new mine to begin operations.” Meanwhile, “world leaders” must discourage China from unfairly exploiting its position. Continue reading “Four emerging risks for corporations”

17 questions to ask about that gee-whiz tech development

Science-fiction author David Brin explains his method of examining the future:

“The top method is simply to stay keenly attuned to trends in the laboratories and research centres around the world, taking note of even things that seem impractical or useless,” says Brin. “You then ask yourself: ‘What if they found a way to do that thing ten thousand times as quickly/powerfully/well? What if someone weaponised it? Monopolised it? Or commercialised it, enabling millions of people to do this new thing, routinely? What would society look like, if everybody took this new thing for granted?'”

Those are good questions, as far as they go. My methodology for examining new developments (especially technologies) is to ask additional questions, some with a decidedly negative slant:

  • What if it runs into legal or political problems?
  • What if it can be used by criminals?
  • What if it raises ethical or religious objections?
  • What if people prefer doing it the “old way”?
  • What if a cheaper alternative overtakes it?
  • What if it’s too expensive to make or distribute (in volume)?
  • What if it lacks the necessary ecosystem or support infrastructure?
  • What if it runs smack into a counter-trend?
  • What if entrenched interests squelch it?
  • What if it has unintended consequences?
  • What if the roll-out is botched, glitchy, underfunded, embarrassing?

And, when will it emerge from the Hype Cycle‘s “peak of inflated expectations” and “trough of disillusionment”?

Five political surprises for 2011

The Washington Post asked several political pundits: “What will be the biggest political surprise of 2011?” Here are some of the wild cards of U.S. politics this year:

  • Public-sector labor strikes and demonstrations as state/local governments cut budgets. “The same kind of protests that have rocked Paris, London and Rome could erupt in California, New York and Illinois.”
  • Efforts to repeal the big health care reform legislation will have the unintended effect of educating the public about the good things in it.
  • The consensus that marked the lame-duck congressional session will continue in the new year (e.g., the DREAM immigration act could be passed).
  • The emergence of a potentially serious third-party candidate for president in 2012.
  • President Obama will definitely end the war in Afghanistan, while Republicans will have the unpopular position of supporting open-ended commitment.

The future of unemployment

It’s not looking good, especially for the next few years. A recent poll of economists found that, on average, they don’t expect the U.S. unemployment rate to fall below 6% until 2013. (The unemployment rate at this writing is 9.8%.)

“Never before has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance,” said Allen Sinai at Decision Economics. Continue reading “The future of unemployment”

OK, the 401(k) retirement system didn’t work. What’s next?

For years the conventional wisdom has been to plow money into 401(k) plans for retirement. Anyone who didn’t was considered a financial dunce. Well, so much for conventional wisdom. The 401(k) system has “serious shortcomings,” says The Wall Street Journal (“Big slide in 401(k)s spurs calls for change,” 8 January 2009). Employees have seen their retirement accounts drop, 20%, 30%, 44% in the economic downturn.

“This is the biggest test that the 401(k) plan has seen to date, and it has failed,” says Robyn Credico, head of defined-contribution consulting at Watson Wyatt Worldwide, noting that many baby boomers are ready to retire. “We’ve put people close to retirement in a very challenging position.”

The timing couldn’t have been worse.

[E]ven when workers make good choices, a market meltdown near the end of their working careers can still blow their savings to smithereens.

“That seems like such a fundamental flaw,” says Alicia Munnell, director of Boston College’s Center for Retirement Research. “It’s so crazy to have a system where people can lose half their assets right before they retire.”

The U.S. Congress is beginning to take a look at retirement and 401(k) policy, starting with an October 2008 committee hearing with a variety of witnesses.

Some proposed setting up “universal” retirement accounts, which would cover all workers. One such plan called for establishing accounts that would receive annual contributions from the federal government, and would offer a guaranteed, but relatively low, rate of return. Another proposed automatically investing contributions in an index fund that holds stocks and bonds, with the mix getting more conservative as workers approach retirement.

U.S. Rep. George Miller (D-Calif.), the chairman of the House Education and Labor Committee, recently issued the following principles for future 401(k) reform:

  • Expose excess fees that Wall Street middlemen take from workers accounts.
  • Bring young and low-wage workers into the system at a higher rate through automatic enrollment for employers already offering 401(k)s.
  • Ensure that retirement accounts have diversified investment options with low fees, including low-cost index funds.
  • Ensure workers have access to reliable independent investment advice.
  • Reduce vesting periods and improve portability of 401(k) accounts.

But is this just minor tinkering with a system still dependent upon the wildly fluctuating stock market (not much different from gambling)? Do we need more radical reform that provides a solid financial foundation for retirement?

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