About Emily Holbrook

Emily Holbrook is a former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writing at EmilyHolbrook.com.
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Top 10 Risks for 2010

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Well, according to Eurasia Group, the number one risk for 2010 is U.S.-China relations.

In their annual “Top Risks” report, the firm’s president, Ian Bremmer, and head of research, David Gordon, announced their top risks today, which states that “2010 is likely to be much more turbulent geopolitically than 2009, when the world was preoccupied with coping with the global financial crisis, but saw no big geopolitical crisis.”

  1. U.S.-China relations — The firm sees the relationship between these two powerhouses deteriorating significantly due to China’s reluctance to take more of a leadership role, as was seen during the Copenhagen climate conference. Other issues affecting the relationship include Beijing’s economic partnership with the U.
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    S., the resulting higher tariffs on Chinese exports, differences in cap and trade beliefs and issues involving cyber-security, among others.

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  2. Iran — Eurasia Group points to Iran as the biggest “purely geopolitical risk in 2010.” The report focuses on the country’s struggling government, its nuclear program and its reaction to ensuing sanctions. “The Iranian regime looks increasingly like a cornered, wounded animal,” the report states. “In 2010, it’s likely to act like one.
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  3. European fiscal divergence — It seems the fiscal challenges in Greece, Ireland, Spain, Portugal and Italy have created a massive area of financial risk in Europe. Eastern Europe faces escalating risks as well, especially if European Central Bank liquidity measures are curtailed.
  4. U.S. financial regulation — Eurasia Group feels 2010 will prove to be a more difficult year for Obama than 2009. The firm points to unemployment remaining high, very challenging financial regulatory reform and mid-term elections affecting this reform. “Both the Americans and Europeans are aware of the risk of driving the financial industry into the ground with too much (or too drastic) regulation or taxation,” the report states. “But as reform becomes an election-year domestic battleground, the need to serve political interests will be increasingly at odds with the need to create an efficient framework for regulatory reform.”
  5. Japan — Japan has had to endure sweeping political change and the new Democratic Party of Japan’s (DPJ) efforts to “limit the influence of bureaucrats and industrialists” has created an atmosphere of higher policy risk. Other concerns regard the uncertainty of the DPJ and the party’s less favorable disposition toward the business community, which is likely to harm financial confidence, further affecting economic woes.

The remainder of their top 10 list can be viewed here. It’s interesting to note the “red herrings” section listed at the bottom, which includes information on Iraq, the Persian Gulf, Russia, the dollar and New York and London.

Heartland Hacker Pleads Guilty

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You remember the January 2009 data breach of Heartland Payment Systems that exposed 130 million personal records, right? You should — it was the largest data breach of all time.

To give you a little background, Heartland Payment Systems processes 100  million credit and debit card transactions per month for 175,000 merchants. In late 2008, a hacker accessed the computers Heartland uses on a daily basis, jeopardizing 130 million customer records.

And finally, after almost one year of investigations, officials charged 28-year-old Albert Gonzalez of Miami. He pleaded guilty to two counts of conspiracy to gain unauthorized access to the payment card networks operated by Heartland, among other payment processing companies. But this was not Gonzalez’s first run-in with the law for hacking-related activities.

Gonzalez pleaded guilty in September 2009 in Boston to 19 counts of conspiracy, computer fraud, wire fraud, access device fraud and aggravated identity theft relating to hacks into numerous major U.S. retailers including TJX Companies, BJ’s Wholesale Club, OfficeMax, Boston Market, Barnes & Noble and Sports Authority. Gonzalez also pleaded guilty in September 2009 in Boston to one count of conspiracy to commit wire fraud relating to hacks into the Dave & Buster’s restaurant chain, which were the subject of a May 2008 indictment in the Eastern District of New York.

Who knows where this cyber-scoundrel would have attacked next, had he not been caught. He faces sentencing in March for his crimes and will likely be sentenced to 17 to 25 years in prison.

Let’s take a look at the largest data breach incidents on record, listed by number of records breached, date and organizations affected.

[TABLE=7]

As hackers become more sophisticated, more pressure is put on IT risk managers. And with budgets tight and resources lacking, we will undoubtedly see our share of data breaches well into the future.

130,000,000 2009-01-20 Heartland Payment Systems
94,000,000 2007-01-17 TJX Companies Inc.
90,000,000 1984-06-01 TRW, Sears Roebuck
76,000,000 2009-10-05 National Archives and Records Administration
40,000,000 2005-06-19 CardSystems, Visa, MasterCard, American Express
30,000,000 2004-06-24 America Online
26,500,000 2006-05-22 U.S. Department of Veterans Affairs
25,000,000 2007-11-20 HM Revenue and Customs, TNT
17,000,000 2008-10-06 T-Mobile, Deutsche Telekom
16,000,000 1986-11-01 Canada Revenue Agency

Risk Management Links of the Day: 12.28.09

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  • Five U.S. mortgage insurance companies are downgraded. You may have seen this coming, but Standard & Poor’s Rating Services downgraded five mortgage insurance groups, along with their core and dependent foreign subsidiaries. The article stated that “a backlog in foreclosures due to high unemployment and the economic crisis has slowed claims payments, but extended loses over a longer period than initially expected.”
  • Is the dollar headed for a rebound? According to today’s BusinessWeek article citing Marc Faber’s Gloom Boom & Doom newsletter, it is. Faber claims the dollar “may appreciate another five to 10% against the euro in the ‘near term’ as bearish betting on the greenback becomes too crowded.” The report stated that the dollar has gained 4.2% to $1.4396 per euro this month.
  • A beef recall has been initiated in six states. The U.S. Agriculture Department traced the E. coli bacteria in the meat to National Steak and Poultry, an Oklahoma-based meat packing company. The company then began a voluntary recall of 248,000 pounds of beef products in Colorado, Iowa, Kansas, Michigan, South Dakota and Washington state.
  • The U.S. is now more tsunami-ready than ever before. According to the Insurance Information Institute, since the devastating Indonesian tsunami in 2004, the U.S. has “significantly expanded its tsunami detection capabilities and broadened municipal awareness of this natural disaster.”

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