Speaking of Cybersecurity

Governments at all levels are poised to tighten rules on disclosures of cybersecurity incidents and have penalized some companies for unacceptable data protection.  

Proposed SEC rules could be finalized in Q1, which would require companies to publicly reveal when they are victimized by cyberattacks. Rulemaking is also proceeding for the critical infrastructure protection law that would require companies to report cyber incidents and ransom payments to the federal government.

Although some public disclosure protections may be included, these changes would upend the status quo, in which companies have some discretion about whether to report incidents to the FBI and other federal agencies – and whether they become public.

New York’s Department of Financial Services is also weighing new reporting requirements for companies designated as “Class A.” The new steps further complicate companies’ communications options by adding to the rising tide of current required disclosure regimes like the Health and Human Services database of health-related breaches and several state attorneys general who list incidents on their websites.

Collectively, these measures will dramatically reshape the way companies communicate following an incident, as the “say-nothing” approach becomes more obsolete. To prepare, smart companies should:

  • Prepare specialty cyber incident communications plans
  • Integrate those into broader crisis response and continuity of operations training, and
  • Command the narrative on their own terms before hackers or required government disclosures spark damaging media coverage and reputational exposure.

Davos Dissected

Collaboration is key. That was one of the main takeaways of the 53rd Annual Meeting of the World Economic Forum in Davos. 

Here were some of the event’s other core themes:

  • A New System for Dialogue and Cooperation in a Multipolar World: Last week’s discussions more than once promoted a stakeholder-oriented approach where collaboration plays a central role in coping with a multitude of significant crises. Companies are now recognizing that they can no longer prioritize profits over all other considerations.
  • A New System for Energy, Climate and Nature: Sustainability, energy resilience and achieving net-zero targets took center stage, with panel sessions covering topics like green investment, climate reporting and accounting, greenwashing and new climate projects. The need for a collective and collaborative approach—with strong emphasis on public-private partnerships and involving those most affected by climate change and migration—were underscored. But data reliability and mounting regulatory pressures around ESG remain headwinds.
  • A New System for Investment, Trade and Infrastructure: The global economy is in turmoil, with many experts, including Christine Lagarde, seeing no short-term end to the current inflationary environment and continued restrictive measures. With geopolitical tensions back at an all-time high and President Biden’s Inflation Reduction Act a potential pathway to protectionism, “opening up to the world is a must, not an expediency”, said Liu He, Vice Premier of China.
  • A New System for Harnessing Frontier Technologies for Private Sector Innovation and Resilience: Discussions centered on how AI and machine learning, especially ChatGPT, can drive productivity gains; the importance of preparing companies against cyberattacks; what role cleantech (with a surprising focus on green hydrogen) and fertilizers play in fueling the transformation and how data processing and blockchain can aid companies in assessing, analyzing, and improving their environmental impact.

Despite ongoing criticism, the WEF is expected to again serve as the major corporate and political gathering in 2024.

Welcoming the Rabbit

It’s time again: The Tiger is passing the baton to the Rabbit, a perfect time to send holiday wishes to your Chinese business partners and friends. In Chinese culture, the Rabbit is a symbol of longevity, peace, prosperity and hope. All over China, people will take a break to celebrate. 

Our Shanghai office shares some tips on what to know and how to share holiday wishes with your Chinese business partners, clients, colleagues and friends:

  • As many as 400 million Chinese are expected to travel to their hometowns in the first year travel is possible since 2020. This year is expected to see more than 2 billion passenger trips, up 99.5% from 2022 levels.
  • But China is not the only country celebrating: One in four people on this planet celebrate the Lunar or Chinese New Year. Countries taking public holidays also are Indonesia, the Philippines, Vietnam, South Korea, Malaysia, North Korea, Singapore and Brunei.
  • The holiday in China only lasts 3 days. But the Chinese government extends the holiday to seven days to encourage the tourism industry, then mandates make-up working days on weekends afterwards.
  • If like your CIC editors you were born in 1951, 1963, 1975 (🙋‍♀️ – Nedra), 1987 (🙋‍♀️ – Irene), 1999 or 2011, you might share characteristics with Albert Einstein, Michael Jordan, Angelina Jolie, Anita Mui and David Beckham. You are believed to be vigilant, witty, quick-minded, and ingenious. (We’re blushing.)
  • If you want to wish anyone in China a happy new year in Chinese, you can say “Xin Nian Kuai Le” or write “祝您新年快乐,万事如意” in simplified Chinese (Mainland) or “祝您新年快樂,萬事如意” in traditional Chinese (Hong Kong and Taiwan). One joke is that “rabbit” in Chinese 兔, pronounced “Tu” is used to replace “to” in English: “Happy New Year TO(兔; rabbit) you!”

The Year of Rabbit ends on Feb 9, 2024, when we will call for “crouching bunny, hidden dragon”. Want to know what’s ahead in the Year of the Rabbit? Click here.

In that spirit we wish you all a very happy, healthy and hopeful Year of the Rabbit.

The Buck Stops Here

Despite some positive inflation news to kick off the new year, inflation remains top of mind for business leaders. That was a key finding from FGS Global’s latest Business Policy Survey, our quarterly survey of key business stakeholders—business decisionmakers, investors and private sector employees—that measures and tracks attitudes toward major public policy issues.  

Here’s what we found:

  • Inflation remains the number one concern. Among the various priorities that business stakeholders want the federal government to focus on, inflation ranks first on the list for the fourth quarter in a row. The proportion of stakeholders selecting inflation as a priority has climbed steadily since Q1 2022. In addition, over half feel the Biden administration’s policies don’t go far enough in reducing inflation.
  • The new Congress is expected to be good for business. Half or more of employees, business decision-makers and investors think the new Congress will be more favorable toward corporate America than the previous Congress. Stakeholders from both parties expect the new Congress to have a net positive impact on business-related policies.
  • Cautious optimism for 2023. A plurality of stakeholders expect growth in the economy and financial markets for 2023, though they are less optimistic than they were for 2022.

Read the full report here.

Owning the Inevitable

It’s an unavoidable truth that corporate media coverage impacts the stock market. News articles that either question or support a company’s credibility have the power to influence opinions and share prices. 

With such inevitabilities, companies should make sure to include financial analysts in the target group of their media strategy. A study conducted by the FGS Global research team provides insights into the media habits of DAX40 analysts. It found five ways to make analyst-focused media relations work: 

  • Make use of both essential mediachannels and niche outlets. Of the analysts surveyed, 100% read newswires on a daily basis and 59% rely on trade press coverage, especially when investigating an entire industry.
  • Set the tone and own the conversation. Analysts are open minded when using media for research. Take advantage of this by positioning executive management and your company as thought leaders. Find your niche with new, refreshing topics and set your own proactive agenda.
  • Be mindful of intra-stakeholder dynamics. According to our study, journalists and analysts exchange information and opinions “all the time,” resulting in two key stakeholder groups that mutually influence perception of the company. Take this into account when interacting with either group.
  • Manage expectations with calculated responses. Corporate credibility is influenced by the way companies handle issues covered by the media. By addressing critical scenarios proactively, you can prevent negative spirals. Similarly, positive media should be leveraged by initiating speaking opportunities.
  • Use social media where it counts. The financial community largely doesn’t use social media in equity research, however online networks can be used to bolster corporate communications. Use well-positioned executives’ accounts to showcase expertise, engage in stakeholder-dialogue and shape corporate perception.

It’s a Hybrid World

Nearly three years into the pandemic, it looks like hybrid work is here to stay. Here are a few reminders for building a hybrid work environment where everyone can thrive: 

  • Adopt a flexible policy. Listen to your employees and be open to evolving your policy based on their needs. An authoritarian approach will only receive pushback and ultimately drive people away from the company.
  • Create an inclusive environment. Nearly 60% of women in a hybrid arrangement say they’ve been excluded from important meetings. Pay special attention to the needs of employee groups more likely to feel excluded and face career repercussions.
  • Update your space. For employees, the value of spending time in the office comes from opportunities for collaboration and connecting with colleagues. A hybrid office should focus on flexible work spaces geared toward team gatherings and social interactions.
  • Establish hybrid meeting guidelines.  Meetings that include in-person and remote participants can be particularly challenging. Establish rules of conduct that define procedures around taking turns and what the moderator’s tasks include.
  • Invest in the right technology. Hybrid workers need tools that enable effective communication and collaboration. Beyond standard document sharing tools and Zoom, there is also a need for technologies that support virtual social interactions, workspace booking and unique collaboration.

Home Alone

Rep. Kevin McCarthy (R-CA) finally clinched the House Speakership Saturday, but the repercussions will shape the next Congress.

Our Government Relations team weighs in on what the extended fight—and McCarthy’s concessions—mean for the rest of the congressional term:

  • Freedom Caucus—and Democrats?—empowered. A key win for voting holdouts was three Freedom Caucus members on the powerful Rules Committee, which comprises eight Republicans and four Democrats. Freedom Caucus members could create headaches for leadership in getting bills to the floor if they team up with Democrats to oppose rules they don’t like—though this GOP infighting may stay behind the scenes.
  • Expect a spending showdown. McCarthy agreed to bring a 10-year budget that caps spending at 2022 levels, which would cut defense spending by 10%. It will be nearly impossible for this bill to pass in the House. Many Republican defense hawks and defense appropriators will be opposed to it, and some have already voiced concerns.
  • McCarthy on a tightrope. The most significant Rules Committee concession allows just one member to introduce a privileged resolution to “vacate the leadership.” If enough Freedom Caucus members–as few as five–become disillusioned with McCarthy, they will probably want to unseat him. Moderate/mainstream conservative Republicans may also push back against McCarthy if they feel he is bending too much to Freedom Caucus members at their expense. But don’t expect them to use the same threats and tools as the Freedom Caucus.
  • The discord puts a premium on McCarthy’s ability to advance issues that unite the conference, most obviously Biden administration oversight and anti-China legislative efforts. Last week’s events have underscored how much McCarthy will need to foreground those issues with his conference’s near unanimous support. A Biden announcement on intent to seek re-election would supercharge the oversight efforts.
  • The environment that allowed for major successful bipartisan legislation last Congress no longer exists. Last term, centrist senators were able to broker Senate deals knowing the Biden White House would likely be able to help those deals pass the House. That’s no longer the case.  We may still see Senate “gangs” with some of the same players, but they will be cutting deals without expecting those deals to actually survive the House. As a result, these senators will have less incentive to take the political risks that bipartisan deal-making necessarily entails. For example, it’s hard to imagine Senator John Cornyn (R-TX) championing the bipartisan gun safety bill last year with a Republican House. At the same time, the two must pass items for this session – debt limit and funding the government—and perhaps the two most important things for the economy and voters—will REQUIRE bipartisan support.