A nuclear doctrine revision | Weeks of 10 - 24 Nov '24
Threat concerns this week: Russia revisits its nuclear doctrine. FBI warns of fake police emails. Carr to lead the US FCC.
🎙️ A summary of this fortnight’s risks
Hello 👋 get a brew on because these are the top 3 emerging risks between Nov 10th, and Nov 24th, 2024…
Geopolitical | Russia's invasion of Ukraine on February 24, 2022, has led to widespread global and economic repercussions, with recent escalations, including the use of U.S. and UK-sourced missiles on Russian territory, prompting the Kremlin to revise its nuclear doctrine. While the likelihood of nuclear action remains low, the potential impacts are severe, particularly if China aligns with Russia in retaliation against the West. The 2022 invasion disrupted global markets, with sanctions affecting food, fertilizer, and energy supplies, as Russia and Ukraine are key exporters of agricultural goods and fertilizers. A similar scenario with China, a dominant force in global trade, manufacturing, technology, and energy, would create even more profound ripple effects, destabilizing supply chains, inflating costs, and hindering industries from electronics to agriculture. China's pivotal role in the global economy makes any sanctions far-reaching, and potential allied responses could reshape geopolitical and economic alliances, amplifying risks and uncertainty on a global scale.
Technological | The FBI has issued a warning about cybercriminals exploiting emergency data request procedures to obtain private user information from major U.S. tech companies. These hackers gain access to compromised government and police email accounts, allowing them to send fraudulent requests that appear legitimate. These emergency requests, meant to address immediate life-threatening situations, bypass the need for court orders. Cybercriminals have used this method to extract sensitive data like usernames, emails, phone numbers, and account information by fabricating false emergencies, such as human trafficking or threats of imminent harm. While not all attempts succeed, the compromised data is often used for doxing, harassment, or financial fraud.
This misuse of emergency data requests is not new but has escalated, with the FBI observing an increase in criminal activity surrounding these schemes in 2023 and 2024. Tech giants like Apple, Google, Meta, and Snap, which receive thousands of such requests annually, have been targeted. Some incidents date back to 2021 and involved high-profile hacker groups like Lapsus$. The FBI urges law enforcement to strengthen cybersecurity measures, such as using multi-factor authentication, and recommends companies exercise greater scrutiny over emergency requests to counter these sophisticated frauds. More on this here.Economic | President-elect Donald Trump has appointed Brendan Carr as the new chairman of the Federal Communications Commission (FCC). A senior Republican and vocal critic of major tech companies, Carr opposes net neutrality protections and advocates for reforming Section 230 of the Communications Decency Act, which shields tech firms from liability for user-generated content. His appointment signals a potential shift in U.S. telecommunications regulation, aligning with Trump’s agenda to reduce regulatory burdens and promote free speech. Carr has also been critical of content moderation practices by companies like Apple and Meta, and his recent defense of Elon Musk’s Starlink—following the FCC’s revocation of an $885 million subsidy—underscores his focus on deregulation and challenging big tech’s dominance. (source, source)
Carr’s proposed changes could have far-reaching consequences for businesses and the economy. Reforms to Section 230 might expose tech companies to increased legal risks, potentially prompting changes in platform policies that impact billions of users and the small businesses that depend on them. His opposition to net neutrality could result in unequal access to internet services, stifling innovation and creating disparities for startups and smaller enterprises. As the FCC under Carr reorients its priorities, the resulting regulatory shifts could disrupt the interconnected digital ecosystem that underpins much of today’s economy, leaving businesses to navigate heightened uncertainty and emerging risks.
Our thoughts
Biden's questionable move to give Ukraine the freedom to use US funded Atacms missiles on Russian territory - and now the UK's Storm Shadow strike - has prompted concerns for all out nuclear war. The Kremlin has waved its nuclear arsenal around throughout the Ukrainian conflict, likely to scare off Western involvement. Despite the bluster, U.S. officials report no unusual activity at Russian nuclear storage sites indicating no shift in the positioning of tactical warheads. Most experts agree that Russia using nuclear weapons is unlikely for now but warn against complacency. Pavel Podvig, a senior researcher at the UN Institute for Disarmament Research, believes a nuclear strike in Ukraine isn’t on Moscow’s radar.
“It wouldn’t achieve any military goals, and Russia is already advancing,” he said.
Using a nuclear weapon for the first time since 1945 would also risk uniting much of the world against Russia in unpredictable ways, Podvig explained.
“It would be a serious gamble,” he added, but cautioned against ruling it out entirely.
“If Moscow feels it might face a weak response, it could take its chances. But we just don’t know.”
He shared his thoughts on the Bluesky social media platform. Despite the likelihood being low, the impacts are extremely high. So we jump into this story further below.
Finally, in a landmark antitrust case, the government asked a judge to force Google to sell its popular Chrome browser amongst its links to Android and other partnerships. The U.S. Department of Justice has proposed significant measures to curb Google's dominance in online search, including requiring the company to sell its Chrome browser and share search data with competitors. These actions aim to dismantle Google's alleged monopoly and foster competition in the tech industry. But Google has criticized the proposals as overly broad and harmful to consumers, indicating plans to appeal. A trial is scheduled for April 2025, with a final decision expected by August. These hurdles for tech giants like Google may get much larger once Carr is running the FCC. It's an interesting case in how political powers are trying to get a strong grip of these powerhouses.
It certainly feels like things are heating up around the world (literally).
Want to discuss how these risks might effect your business?
Book 30 minutes with us, free ↗
The link between reputation and Russian allies
Category: Geopolitical
Review our report’s terminology here ↗
In summary: On February 24, 2022, Russia invaded Ukraine, and the impact on the Ukrainian people remains profoundly unjust. This week, tensions escalated further with the use of U.S. and UK-sourced missiles on Russian territory. In response, Putin's Kremlin made the troubling decision to revise its nuclear doctrine. While the likelihood of further developments remains low, the potential impacts are significant. While many eyes remain fixed on Putin, it’s also crucial to examine his allies.
First and foremost, global markets faced severe disruptions, particularly in food, fertilizer, and energy when Ukraine was invaded. The Black Sea region—a critical “breadbasket”—saw Russia and Ukraine dominate exports of wheat, barley, sunflower oil, and corn. Together, they accounted for 28% of global wheat, nearly a third of barley, and over 70% of sunflower oil and meal. Russia was also a leading producer of energy and fertilizers, including nitrogen, phosphate, and potassium. It ranked as the top exporter of nitrogen fertilizers and was among the largest for phosphate and potash. Swift sanctions from the West allegedly contributed to the breakdown of these supply chains.
If Putin decides to escalate Russia’s nuclear agenda further, and China aligns with Russia in retaliation against the West, we could witness additional global market disruptions from sanctions and market exits targeting China. However, China’s outsized role in global trade and manufacturing would make its exit significantly more impactful. For trade partners like New Zealand, whose China-export market represents 5.1% of GDP, reputational impacts may be a risk worth weighing carefully.
Let’s examine what disruptions might look like if China were to face sanctions or trade exits:
Potential Disruptions
Technology and Electronics: China dominates the production of semiconductors, consumer electronics, and components critical to multiple industries. Sanctions on these could cripple global supply chains, delay production, and drive up costs in sectors such as electronics, automotive, and telecommunications.
Energy and Rare Earths: As a major player in the global energy market and the leading producer of rare earth minerals, China’s role is crucial to renewable energy, defence technologies, and electronics. Restrictions could severely hinder advancements in green energy and high-tech industries worldwide.
Global Trade: As the world’s largest exporter, China’s involvement in global trade is unparalleled. Sanctions could significantly slow trade, disrupting industries reliant on Chinese manufacturing and exports. Challenges in shipping and trade logistics would likely worsen inflation and strain supply chains.
Agriculture and Fertilizers: China is a major supplier of fertilizers and a top importer of soybeans and corn. Sanctions could reduce fertilizer supplies globally, leading to higher food prices and potential shortages, particularly in regions already struggling with agricultural challenges.
Financial Markets: Targeted sanctions on Chinese banks or restrictions on the yuan in international transactions could destabilize global financial markets, given China’s economic scale and integration.
Allied Responses: Sanctions could encourage closer alignment between China, Russia, and other nations under Western sanctions. This might lead to the formation of alternative trade blocs, reducing Western influence in global markets.
The wider implications
The scale and interdependence of China’s economy with the rest of the world make sanctions on China far more disruptive than those on Russia alone. The geopolitical and economic ripple effects would be profound.
As demonstrated, there are many reasons for countries to avoid severing trade agreements with China, even if it were to join Russia’s war efforts. The Kremlin is well aware of this dynamic and recognizes the strategic leverage China brings to the table.
Sources:
You should be concerned if…
Key sectors such as technology, automotive, and energy would face severe impacts due to China’s dominance in semiconductors, EV batteries, and renewable energy components.
Agriculture and fertilizers would experience shortages and price increases, while retail, logistics, and shipping would struggle with widespread supply chain disruptions.
Financial services, construction, pharmaceuticals, and healthcare would also be affected, with reduced access to critical materials, ingredients, or capital.
Additionally, consumer goods, luxury markets, and tourism—reliant on Chinese production or consumption—would suffer significant declines, triggering ripple effects throughout the global economy.
These items are generic assumptions. We recommend considering your own unique threat landscape against your critical dependencies. If you don’t know what they are, get in touch.
Disruption Risk
Supplier / 3rd Party Negligence
Delays in receiving essential materials or services.
Preventative actions
Diversifying Supply Chains
Source materials and components from multiple countries to reduce reliance on China.
Build relationships with suppliers in other regions, such as Southeast Asia, India, and Latin America.
Stockpiling Critical Inventory
Increase reserves of essential materials, components, or finished goods to buffer against supply chain disruptions.
Strengthening Localized Production
Invest in nearshoring or on-shoring to reduce dependency on global supply chains.
Explore regional manufacturing hubs closer to primary markets.
Investing in Alternative Materials and Technologies
Identify substitutes for Chinese-sourced inputs, such as rare earths or specific electronics.
Innovate to reduce reliance on scarce resources or develop self-sufficient technologies.
Enhancing Risk Management
Conduct scenario planning to anticipate potential impacts of sanctions and disruptions.
Develop contingency plans, including backup suppliers and alternative trade routes.
Building Strategic Partnerships
Collaborate with governments and industry groups to advocate for policies that support supply chain resilience.
Partner with businesses in less geopolitically volatile regions to diversify operations.
Monitoring Geopolitical Developments
Stay informed about global events, sanctions, and regulatory changes to respond swiftly.
Utilize tools for real-time tracking of trade policies and supply chain risks.
Strengthening Financial Resilience
Maintain cash reserves and access to credit to handle unexpected costs.
Hedge currency and commodity price risks to manage financial volatility.
Adopting Digital Supply Chain Tools
Leverage AI and analytics for real-time visibility into supply chains.
Use digital tools to forecast demand, optimize inventory, and identify vulnerabilities.
Training and Workforce Adaptation
Upskill employees to manage shifts in production, supply chain logistics, and compliance requirements.
Build internal expertise in sanctions compliance and risk mitigation.
Need support?
At Fixinc, we are passionate about helping people get through disasters. That’s why our team of Advisors bring you this resource free of charge. If you need help understanding these threats and building a plan against them, the same Advisors are here to help over a 30-minute online call. Once complete, if you like what was provided, you can choose to provide a donation or subscribe to Unreasonable Ventures to support this channel.
 | A guest post by
|
 | A guest post by
|