Notepad: Risk in Review – November

 
 

Hurricane Michael Hits the Southeast U.S.

hurricane michaelIn October, Hurricane Michael, a Category 4 storm with winds reaching up to 155 miles per hour, became the strongest hurricane to strike the continental United States since Hurricane Andrew in 1992. Heavy winds and storm surge ravaged the Florida Panhandle, Georgia, the Carolinas and Virginia, killing at least 28 and causing $8 billion in insured damages, according to estimates by Karen Clark & Co. It was the second major hurricane of the 2018 Atlantic storm season after Hurricane Florence struck North Carolina in September, causing widespread flooding, more than 50 deaths and as much as $50 billion in economic damages.

Indonesian Earthquake and Tsunami Kill 2,000

On Sept. 28, a magnitude 7.5 earthquake and subsequent tsunami devastated the Indonesian province of Central Sulawesi. More than 2,000 people were killed in the disasters, primarily in the city of Palu, while as many as 5,000 were still missing two weeks later. The tsunami also triggered mudslides that engulfed neighborhoods and villages and destroyed more than 70,000 homes, forcing thousands of survivors to live in tents and makeshift shelters awaiting aid. Total economic damages are expected to reach up to $1 billion. According to reports, the death toll may have been exacerbated by the fact that a project designed to update the region’s tsunami early-warning system had stalled due to bureaucratic delays and inadequate funding. This was the most severe earthquake to strike Indonesia in an active 2018. In early August, a magnitude 6.9 quake struck the island of Lombok, destroying thousands of houses and buildings, including 80% of the structures in certain areas, and killing almost 600 people.

UN Report Issues Dire Warning About Global Warming

un global warmingIf global warming continues at its current pace, the average global temperature could reach the crucial threshold of 1.5°C above pre-industrial levels as soon as 2030, significantly increasing the risk of extreme weather, flooding, drought, food shortages, health problems, and animal and plant species loss, according to a recent report by the United Nations’ Intergovernmental Panel on Climate Change (IPCC). Global temperatures have already risen about 1°C. To limit any further increases, global net emissions of carbon dioxide would need to be reduced by about 45% from 2010 levels by 2030 and reach “net zero” by 2050. But this would require “rapid, and far-reaching” transitions in energy, land, infrastructure, transportation and industrial system use. “Limiting warming to 1.5°C is possible within the laws of chemistry and physics, but doing so would require unprecedented changes,” said Jim Skea, co-chair of one of the three IPCC working groups responsible for the report.

Google+ to Shut Down Following Data Breach

Google announced in October that it would be shutting down its social media platform Google+ after discovering a security flaw that exposed the private profile data of some 500,000 users since 2015. According to the Wall Street Journal, Google found the bug in March but elected not to disclose it in order to avoid regulatory scrutiny. Google+ debuted in 2011 as an alternative to Facebook, but never gained much traction with consumers—indeed, in announcing the shutdown, Google said that the service had low usage and engagement, with 90% of user sessions lasting less than five seconds. Google+ will be phased out for consumers over a 10-month period, but will still be available for certain commercial applications. Earlier this year, Google faced additional criticism about its privacy practices when another Wall Street Journal report revealed how easy it was for third-party app developers to scan and share data from users’ Gmail messages.

 

Elon Musk and Tesla Settle SEC Fraud Charges

elon musk sec

Tesla and its chairman and CEO Elon Musk agreed to pay separate $20 million penalties and make governance changes to settle securities fraud charges brought by the SEC in late September. The charges stemmed from an incident on Aug. 7 in which Musk tweeted that he was considering taking Tesla private and had already secured funding for the move when, in fact, no such deal was in place. The misleading tweets caused Tesla’s stock to jump 6% and led to significant market disruption, the SEC said. In addition to the fraud charges against Musk, Tesla was also charged with failing to have required ­disclosure controls and procedures relating to his tweets. As part of the settlement, Musk agreed to step down as chairman within 45 days (although he will remain CEO) and will be unable to assume that role again for three years. Tesla was also required to appoint two new independent directors to its board and put additional controls and procedures in place to monitor Musk’s public communications.

Court Nixes $4.3 Billion Drug Company Merger

A Delaware court ruled in October that German pharmaceutical company Fresenius could walk away from a $4.3 billion deal to purchase American generic drug manufacturer Akorn. The parties had initially agreed to the merger in April 2017, but Fresenius decided to pull out after Akorn’s financial performance took a significant downturn and serious compliance and quality control problems came to light. Chief among them were whistleblower reports that Akorn executives had falsified test data submitted to the FDA as part of a new drug application and that lax computer system security at the company’s facilities allowed anyone on the premises to access and alter data. FDA inspectors also found that an anesthetic product produced at Akorn’s plant in Somerset, New Jersey, was tainted with metal shavings, while sterile eye drops had to be recalled after failing quality tests. In court testimony, Fresenius estimated that it would take more than $250 million to clean up operational issues at Akorn’s plants. After the ruling, Akorn’s stock plummeted more than 50%.

 
Morgan O'Rourke

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About the Author

Morgan O’Rourke is editor in chief of Risk Management and director of publications for the Risk & Insurance Management Society, Inc. (RIMS)

 
 
 

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