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The latest news headlines on issues and developments affecting the internal audit profession.

May 28, 2021

Government Agencies and NGOs are Latest Victims of SolarWinds Hackers, Microsoft Says

More than 150 government agencies, think tanks, consultants, and nongovernmental organizations were victims of cyberattacks this week, targeted by the same group responsible for the SolarWinds hack, Reuters reports (paywall). Microsoft announced this latest wave of cyberattacks in a blog post, saying that the hacks involved about 3,000 email accounts at organizations from at least 24 countries, although the U.S. "received the largest share of attacks." The alleged threat actor behind the attacks is Nobelium, which the U.S. and the U.K. believe is backed by Russia's Foreign Intelligence Service. Microsoft says Nobelium initiated the attack by breaking into an email marketing account used by the U.S. Agency for International Development and from there launching phishing attacks on other organizations.

Big Oil Under Pressure To Meet Paris Agreement Goals

A series of landmark boardroom and courtroom defeats involving Chevron, ExxonMobil, and Royal Dutch Shell shows the growing pressure on big oil companies to set short-, medium-, and long-term targets that are consistent with the Paris Agreement on Climate Change, according to CNBC. More than five years after nearly 200 countries ratified the climate agreement, none of the world's largest oil and gas companies has said how they will reach the accord's target of net-zero emissions by 2050. The votes at Chevron's and Exxon's shareholder meetings underscore that 2021 has been a record-breaking year for environmental, social, and governance proposals, notes a report in Agenda (paywall).

The Frequency of Workplace Shootings on the Rise, Data Shows

One of the more sobering realities of recent times is the spike in mass shootings in the U.S., especially in the workplace. The killing of nine people at a California rail yard is the third workplace shooting in the nation in less than two months, NBC News reports. Between 2006 and February 2020, the number of such shootings averaged roughly one a year. Experts cite several reasons why this rise might be occurring, including an influx of people returning to workplaces as organizations reopen offices and the added time potential shooters had to plan their actions during the pandemic. "One of the things that we know about shooters, especially those who target schools or other specific public spaces, is that they don't usually wake up and snap," said Jaclyn Schildkraut, associate professor of criminal justice at the State University of New York at Oswego, in an NPR interview. Regardless of the reasons, however, each shooting seems to follow a similar pattern: The shooters use multiple weapons acquired shortly before the shooting, and they feel ostracized, bullied, or slighted such as being passed up for a promotion. This trend, as terrifying as it may be, should be considered when developing a crisis management plan and ensuring that employees are educated about the appropriate actions to take if such violence occurs in the workplace.

Citigroup Reconsidering Shareholder Proposal On Racial Audits

Citigroup said it is reconsidering a shareholder proposal requiring its board to oversee an independent audit analyzing the bank's adverse impacts on communities of color, Mint reports. The proposal failed, although nearly 40% of Citigroup shareholders voted in favor of it during the firm's annual meeting last month. Citigroup's board had recommended a vote against the proposal. However, CEO Jane Fraser told a hearing of the U.S. House Committee on Financial Services that the bank is considering the proposal once again. JPMorgan CEO Jamie Dimon said during the hearing that he remains staunchly opposed to such an audit.

May 26, 2021

Denmark Is the No. 1 Country for Business Resiliency, Report Says

When it comes to fostering business resiliency, Denmark ranks highest worldwide, according to a new report by international property insurance company, FM Global. The firm's 2021 FM Global Resilience Index is based on economic, supply chain, and risk quality data on nearly 130 countries. Examples of risk quality factors include exposure to natural hazards and inherent cyber risk, whereas productivity and political risk are weighed into the economic data, U.S. News reports. The top spots are dominated by Western and Central European countries, with Norway, Luxembourg, Germany, and Switzerland rounding out the top five. The only non-European countries to make the top 20 include the U.S. (9th), Singapore (12th), Canada (13th), Australia (14th), and New Zealand (18th). Eric Jones, vice president and global manager of business risk consulting at FM Global says the preponderance of European nations at the top of the index can be attributed to a "lack of natural hazards that exist, as well as various political factors that lead to a pretty resilient environment to do business in." For its scoring process, FM Global uses quantitative data compiled from the World Bank, International Monetary Fund, the United Nations, and other sources.

Tech Giants Face Increased Pressure From Shareholder Activists

Activists are pressuring technology giants, including Amazon, Facebook, Twitter, and Google parent Alphabet, to adopt proposals aimed at expanding whistleblower protections, investigating potential civil rights violations, and curbing hate speech online, The Hill reports. Activist shareholders are pushing for the proposals to be adopted during corporate annual meetings this week and next. The meetings are the first to be held after a year that included Black Lives Matter protests throughout the U.S., a deadly insurrection at the U.S. Capitol, and heightened awareness of working conditions for many workers in the tech industry.

U.S. State Legislatures Debate Right-to-repair Laws

An interesting development is happening in state legislatures throughout the U.S. regarding what have been dubbed "right-to-repair" laws. These laws would allow small, independent businesses to fix certain pieces of electronic equipment that have typically been restricted by the manufacturer, The Washington Post reports (paywall). For example, historically, Amazon, Apple, and Microsoft have highly restricted who is approved to repair their devices and who they grant access to critical parts and schematics. A need for a larger number of avenues for repairs has been exacerbated by the COVID-19 pandemic, which has seen many people rely increasingly on these devices for things such as education following the mass closure of schools. So far this year, 27 states have introduced right-to-repair legislation, but more than half have been voted down or dismissed. In opposition, technology companies argue that right-to-repair laws would let pirates steal intellectual property and expose consumers to security risks.

Cryptocurrency Coming Under Increased Federal Scrutiny Following Recent Volatility

Recent reports say the White House is examining U.S. rules regarding cryptocurrencies and seeing what can be done to reduce its market volatility, Cointelegraph reports. In just the last month, the total value of the digital asset market was halved. According to experts, this was due to a variety of factors, including a new proposal from the U.S. Treasury Department that would require cryptocurrency holders to report all transfers above $10,000 to the Internal Revenue Agency. The Biden administration also is examining how digital assets are being favored by hackers and terrorists to finance their activities. Although additional regulation has not been announced yet, the increased scrutiny is worthy of notice in the financial sector.

May 24, 2021

Pandemic Supply Chain Woes Speed Adoption of Freight-tracking Software

Supply chain shortfalls during the pandemic have sped the digitization of the global freight industry, Reuters reports (paywall). Scenarios such as the Suez Canal blockage and shipping container shortages in China have pushed more companies to explore digital freight-tracking technology solutions — much of which has been developed by startup companies. "We have seen a massive acceleration in products that normally wouldn't have been adopted for three, four, or five years from now because people have had to figure out how to operate remotely," says Sune Stilling, former head of growth at global shipping company Maersk. New types of logistics software provide companies with more transparency over each step of the supply chain process, such as alerting merchants when suppliers fail to pick up freight containers to fill an order. Some software also integrates with existing transportation management systems. Reuters says some traditional freight giants also are digitizing their services, and it expects consolidation among the nearly 250 global digital freight startups.

U.S. Proxy Season: Record Number of Investors Reject CEO Compensation

Consulting firm ISS Corporate Solutions says that 14 S&P 500 companies had more than half of investors reject executive pay packages so far this year, Reuters reports (paywall). That record number is expected to rise in the coming weeks, as hundreds of proxy meetings occur. Investors in U.S.-listed companies have rejected executive compensation plans in nonbinding votes, objecting to pay rises and the easing of performance targets in the wake of the COVID-19 pandemic. The idea that protecting executive pay in a downturn is a necessary incentive has come under scrutiny from investors, who say shifting performance targets is unwarranted and demoralizes employees who are not shielded in the same way.

Lack Of Federal Guidance Raises Concerns About Vaccination Incentives

Instead of mandating that their workers get a COVID-19 vaccination, more U.S. companies are offering employees cash, paid time off, and other financial incentives to get the shot, according to Axios. However, those incentives could run afoul of federal law if the rewards are too big. The problem is that there is no clear standard for how large those rewards can be without violating federal disability, anti-discrimination, and privacy laws, because the U.S. Equal Employment Opportunity Commission continues to lag on issuing guidance.

Survey Finds Most Employees Would Prefer Working From Home to $30,000 Raise

A survey conducted by anonymous employee posting app Blind illustrates just how far views have shifted on remote work and how valuable the situation has become, Forbes reports. Of the 3,000 responses from employees at many top tier U.S. companies, 64% indicated they would prefer to continue working from home over a hypothetical $30,000 raise. Percentages did vary some by company (64% of Amazon workers preferred permanent work from home, as did 62% of Microsoft employees, 67% of Google employees, 69% of Apple employees, and 76% of Salesforce employees), but the preference was consistent across the business spectrum. In fact, of the 45 companies represented in the survey, only two — JPMorgan and Qualcomm — had a higher percentage of employees prefer the raise to working from home. Although this is just one survey, it does give credence to the idea that work from home policies, for many, will be here to stay in some capacity. According to The Washington Post (paywall), even the federal government is considering allowing more employees the option of working from home.

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