No one in the office | Risk Updates for Weeks of 10

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No one in the office | Risk Updates for Weeks of 10 - 24 Mar '25

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No one in the office | Risk Updates for Weeks of 10 - 24 Mar '25

Threat concerns this week: Real estate in crisis. Bluetooth data risks. Pokémon Go off to Saudi Arabia.

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Mar 24, 2025

Hello 👋 get a brew on because these are the top 3 emerging risks between March 10th and 24th, 2025…

Review our report’s terminology here ↗

Our main risk this fortnight is…

1. Economic: The Deteriorating Landscape of Commercial Real Estate

Growing stress in commercial real estate debt markets outside major financial news cycles: Regional banks and smaller lenders are increasingly exposed to defaults as commercial real estate valuations adjust to higher interest rates and changing work patterns.

Regional Bank and Market Vulnerability: Smaller banks and credit unions hold a large share of commercial real estate (CRE) debt, making them highly exposed to declining property values. Secondary and tertiary markets, with lower liquidity and less economic diversification, are under heightened stress.
Work-From-Home and Property Valuation Declines: The shift to remote work has reduced demand for office space, particularly in older buildings, leading to rising vacancies, falling property values, and financial strain on landlords and lenders.
Interest Rate and Loan Refinancing Pressures: Rising interest rates are making refinancing significantly more expensive, increasing the risk of defaults and foreclosures. A large volume of CRE loans is set to mature in the coming years, creating a “maturity wall” that will further strain borrowers.
Transaction Declines and Market Uncertainty: Fewer real estate transactions make it difficult to accurately value properties, increasing uncertainty and risk for lenders, investors, and businesses reliant on CRE.
Global and Sectoral Exposure: U.S. cities with high concentrations of older office buildings, like Houston, Dallas, and parts of California, are especially vulnerable. In Europe, the UK and Germany are seeing similar challenges with rising office vacancies. Businesses that depend on office space, such as professional services firms, may face higher rental costs, while construction and development projects could slow due to tighter financing conditions.

News information cited:

You should be concerned if…

You are involved with regional and community banks with significant CRE loan portfolios.
You are a commercial real estate developer and investor, especially one with high leverage.
Businesses in sectors heavily reliant on office space, particularly in metropolitan areas with high vacancy rates.
Municipalities and local governments that rely on property tax revenues from commercial real estate.
Commercial real estate insurance providers.
Investors that hold commercial mortgage backed securities.

These items are generic assumptions. We recommend considering your own unique risk landscape against your critical dependencies. If you don’t know what they are, get in touch.

Preventative actions

For Lenders:

Stress-test loan portfolios against various economic scenarios, including further declines in property values.
Increase loan loss reserves to prepare for potential defaults.
Work with borrowers to restructure loans or find alternative financing options.

For Businesses:

Reassess office space needs and consider down-sizing or relocating to more cost-effective locations.
Negotiate flexible lease terms with landlords to mitigate potential rent increases.
Diversify real estate investments to reduce exposure to specific markets or property types.

For investors

Careful and in depth due diligence of any CRE related investment.
Diversify investment portfolios to include assets less correlated with commercial real estate.
Closely monitor market trends and adjust investment strategies accordingly.

2. Technology: Data Privacy Risks in the Acquisition of Niantic's Gaming Division by Saudi Arabia

Saudi Arabia’s PIF, via Savvy Games' Scopely, is acquiring Niantic’s gaming division for $3.5B, raising concerns over extensive user data transfers, including minors' information.
Niantic, a Google spin-off, built success on geospatial AR tech, collecting significant location and personal data from Pokémon Go users, including age verification for COPPA compliance.
Transferring this data to Saudi Arabia poses risks due to regulatory differences between GDPR, COPPA, and Saudi’s new PDPL, affecting legal grounds, user rights, and cross-border transfers.
Business leaders must ensure due diligence in global acquisitions, especially in regions with distinct data laws, to mitigate legal, reputational, and operational risks.

News information cited:

3. Technology: Undocumented Bluetooth Commands in ESP32 Chips: Implications for Device Security

Researchers discovered 29 undocumented commands in the ESP32 Bluetooth chip, enabling memory manipulation, MAC address spoofing, and packet injection.
These commands could allow attackers to impersonate trusted devices, steal sensitive data, and compromise network security.
Over a billion devices use the ESP32 chip, making the potential attack surface vast, including IoT, medical, and industrial systems.
Espressif, the chip’s manufacturer, claims these commands were for internal debugging but has promised a software update to remove them.
Businesses should assess risks, apply firmware updates, and strengthen security with encryption and network segmentation.
The discovery underscores the persistent security challenges in widely used hardware and the need for continuous cybersecurity vigilance.

News information cited:

Want to discuss how these risks might effect your business?
Book 30 minutes with us, free ↗

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.

Book your 30min call here

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