TCR Volume 3 Number 18 by The CenSEI Report

Strategic Analysis and Research by the CeNTeR FOR STRATeGy, eNTeRPRISe & INTeLLIGeNCe If you can see the rubble caused by the earthquake… If you see it, you would really cry. These are the symbols not only of our culture but also the faith of our people.

cenSEI

I crawled down to our kitchen; my mother and nephews were there. Then we crawled out of the house. We left everything. Belongings don’t matter as long as we can save our lives.

~ Bishop Leonardo Medroso on churches destroyed by earthquake on the Philippines’ Bohol island

POINT & CLICK Access online research via your Internet connection by clicking pictures, graphics, and words in blue

~ Bohol resident Gay Flores recalling her escape before her two-story house collapsed

14 15

October 21-November 3, 2013

CYBER-SECURITY Search Without Fear With Uncle Sam watching for suspicious words and sites, secure search engines protect privacy

POINT & CLICK Access online research via your Internet connection by clicking pictures, graphics, and words in blue

Breaking Into Adobe Hackers steal data on 2.9 million Adobe customers, possibly spawning viruses and malware

02 03

MANAGEMENT The Quest for Mr. and Ms. Right Finding and nurturing the people who can

18 19

WORLD Recovery At Risk From U.S. debt woes to China’s new risks and needs good governance to manage them

TECHNOLOGY Way Ahead of Stormy Weather As climate change looms, weather forecasting technology can be a big plus for business

Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media. For subscriptions, research, and advisory services, please e-mail report@censeisolutions.com or call/fax +63-2-5311182. Links to online material on public websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future.

For advertising, corporate promotions and free trial subscription, please email report@censeisolutions.com or call/fax us at +632-5311182.

The Month of Living Dangerously Are you scared yet? Among the delights of October is Halloween, the end-of-the-month tradition recalling ghosts, ghouls, goblins and other prowlers of the night, with children dressing up like them and going around asking neighbors for candy and other treats. Well, guess what: the Trick or Treat gang at the U.S. Congress got going several weeks early this year. Since the start of the month, all non-essential services and activities of the United States federal government ceased after legislators

As if that world recovery-damping gridlock weren’t enough to spook businesses, consumers and investors foreign and domestic, Republican and Democratic leaders continued their brinkmanship with a feared catastrophic U.S. government debt default if the legal limit on federal borrowings was not raised by Oct. 17. That would have made it impossible to pay all obligations starting November, possibly including billions of dollars in Treasury bills falling due. If such T-bills were thus made less creditworthy through missed payments, it would have devalued trillions of dollars in bonds

U.S. Government Shutdown 2013: The Adults Restore Order, If Only For Now After the United States federal government ground to a partial halt on October 1, held hostage by a small group of Republican congressmen who insisted on delaying implementation of

Of course, these days, an endorsement in Washington, given a Pew Research

conception of politics as permanent

reform law as a condition for passing a budget bill, the Senate fashioned a compromise and got a budget bill passed that would keep the U.S. government funded for another three months while raising the federal debt ceiling through early February.

the Republican party have just about doubled since 2010 (from 25% to

sabotage President Obama.

.” great fundraising operation … But you

institutions, corporations and investors across the planet. The expected consequences for the world’s economy and capital markets could make the 2008 global recession and maybe even the 1930s Great Depression a picnic. Mercifully, American lawmakers weren’t in the mood for picnics of that sort. Hours before the fateful Thursday, the Senate forged a deal to end the shutdown and lift the debt ceiling. The House of Representatives went along, and President Barack lenders, just in town for the Oct. 11-13 annual meetings of the World Bank and the International Monetary Fund, along with millions of market players in global capital markets, can stop holding their breaths. So could analysts and editors at the Center for Strategy, Enterprise and Intelligence. With the game-changing, if not gameover economic consequences of missing the Oct. 17 deadline, it made sense to delay The CenSEI Report’s latest issue, which includes a world economy update, till after Capitol Hill’s Halloween episode. That fortnight delay, which will adjust all subscriptions accordingly, allowed CenSEI to assess closer to the date whether the Report would run its usual second-half assessment and next-year outlook — or a global economic obituary. Thankfully, America was just playing Trick or Treat — this time.

President Obama said in summing , per an Associated Press report. ,” Senate Majority Leader Harry Reid was quoted as saying in a Oct. 17 report looking back on the last days of the latest shutdown. “

It remains to be seen whether the Republican principals behind the shutdown got the message. Republican House Speaker John Boehner declared, insisting that,

The Week reaction included an analysis from political analyst and blogger Eric Grenier the shutdown because they had nothing to lose, given that the nation detested them well before the shutdown began. “A political class so despised by and disconnected from the American people can hardly damage itself any further as a result of the shutdown of the U.S. government. .” Put another way, hope may spring eternal for the prospects of bipartisanship and compromise, but

appears to be cratering outside of per a separate AP report. group of 14 senators has formed As the Senate legislation was being

the house against the recurrence of this sorry spectacle in another three months, when funding runs out again.

ideological bids to disrupt the daily efforts with a speech law in the Senate before the shutdown began, was attacking it while praising

government, per a

“Unfortunately once again, it appears that the Washington establishment is refusing to listen to the American people … I want to commend the House of Representatives …

to staying together to address other issues of importance and to tell the American people that there are at least 14 of us … that

,” over Bloomberg.

promote bipartisanship.

In an Oct. 4 report, The Week provided a sampling of foreign reaction at the start of the U.S. government shutdown. A Le Monde editorial (link is to the

cenSEI

October 21-November 3, 2013

MANAGEMENT

4 POINT & CLICK Access online research via your Internet connection by clicking pictures, graphics, and words in blue

Identifying Must-Have Employees How to cultivate their winning personality traits in others

reviously, The CenSEI Report looked

can cause disruption in your workplace by undermining the team’s morale and performance and poisoning your workplace atmosphere. In this piece, we explore the kinds of employees that bring success to the organization, as well as the means to cultivate these traits in their co-workers.

The Collaborative Team Player “Today, the social implications of a multigenerational workforce joining with the informational implications of new technology make collaboration a priority in many organizations,” says a July article in the website of the Lead Change Group, a non-

Employees who are creative, collaborative, and happy can bring success to an

development. The piece reiterates that collaborations, alliances, and partnerships are marks of great organizations and communities of the future. When each member brings his or her talents and skills to the table, it adds value to the overall synergy of the team.

affect the people they work with Workers perform better when they are engaged in what

The article discusses the qualities that set collaborative team members apart. In terms of attitude, team players focus on achieving a common goal more than on individual accomplishments. They believe that other people have as much potential as the rest, hence, they learn to trust the abilities of others. They know the importance of highlighting and celebrating the accomplishments of the people in their team. Moreover, collaborative team players encourage new ideas and solutions to come about, making everyone feel that their voice is heard.

meaning in their work Leaders can cultivate these qualities in other workers by articulating the value of the work they do for by supporting their progress

In speaking to 1,709 CeOs, general

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

managers, and senior public sector leaders around the world, IBM determined how these leaders are responding to today’s connected era. The results, as published in a 2012 paper, “Leading Through Connections,” reveal business leaders are discovering the value of collaboration within the organization. “They are creating more open and collaborative cultures—encouraging employees to connect, learn from each other and thrive in a world of rapid change,” according to the highlights of the IBM CeO study. In a video from IBM, Charles F. Bolden, National Aeronautics and Space Administration (NASA) administrator, says he believes in the importance of collaboration among nations, educational and research institutions, and the private sector. Bolden points out that inclusion in the workforce and diversity in thought, as opposed to having a homogenous team, are vital in tackling critical challenges. “We strongly believe that when we put a diverse organization together on a complex problem, the answers that we get are going to be the best in the world,” he explains. In a July piece in Forbes, Jacob Morgan, author of “The Collaborative Organization: A Strategic Guide to Solving your Internal Business Challenges Using Social and Collaborative Tools,” presents common habits or success factors of collaborative organizations. When communicating collaboration to employees, for instance, it is important to stress how it will impact them individually, as in how it will make their jobs easier, more than its overall corporate value. Morgan stresses leaders must learn to get out of the way because “[b]y trying to enforce your organization.”

October 21-November 3, 2013

leaders know seven paramount how to value the personality traits, contributions of namely: individual members, but also reward orientation, or NASA administrator Charles F. Bolden talks about the teamwork. “If being imaginative importance of collaboration among nations in space exploration efforts IBM your organization and playful and with focuses on rewarding a wealth of ideas employees for individual performance as the main driver of success then it will become quite hard to conventions because of a need to do things no one encourage employees to share and communicate with else does each other,” says Morgan.

cannot be compelled to engage in meaningless work. “[e]veryone is more creative when driven by genuine interests and a hungry mind,” he says. Hence, applying this technique on other employees may unleash their creativity, as well. One other reminder is not to pressure them. Creativity is normally enhanced when people are given more a diverse team with both creative minds and people who are more conventional can fuel creativity. In a study published in the Journal of Applied Psychology

at work can have positive results, including an increase in creativity, because it gives people time to daydream. When participants were made to do a boring task, such as copying numbers out of a telephone directory, prior to completing a task that required creative thinking, they were more creative than the group who did not work can be seen not as something to be eliminated, rather to be embraced and channeled in such a way that it translates to creativity in other areas of work.

Mr./Ms. Happiness

goal-oriented, innovative attitude because workers are able to tap into internal experts, information, and resources that can be used to address customer needs. In addition, it allows employees to feel more connected to their jobs and co-workers.

performed more creatively than homogenous teams when they were asked to engage in perspective taking, but not when they were not instructed to take their team member’s perspectives.

attract attention and recognition of an issue

“Although every organization claims to care about innovation, very few are willing to do what it takes to keep their creative people happy, or at least, productive,” the article notes.

The Creative Type ideas and people. The creative types are normally those who are artsy, always full of wonder, and unconventional, from the way they dress to the way they think. They are usually sought after by companies who thrive on innovation and creativity—from advertising agencies to major competitive advantage in terms of products and services. Their ingenuity helps organizations solve complex issues, and their rebellious streak can drive a team to come up with original ideas. Granted that some individuals are more creative than others, what are the signs to look for when searching for creative geniuses? A study by Professor Øyvind L. Martinsen at BI Norwegian Business School aims to determine which personality traits characterize creative people, per an April report in Science Daily.

CONTeNTS

MANAGeMeNT

It should also be recognized, however, that managing creative people can be challenging at times. Some can be moody, eccentric, and erratic. Unless organizations learn to get the best out of their creative employees, says an April post on the Harvard Business Review’s Blog Network by Dr. Tomas Chamorro-Premuzic, a professor of business psychology at University College London. Dr. Chamorro-Premuzic discusses some rules to people.” This includes involving them in meaningful work. Since natural innovators tend to have more vision, they are more likely to see the bigger picture

TeCHNOLOGy CyBeR-SeCURITy

WORLD

A September article in Business Insider suggests six ways to inspire creative thinking at work, according to the research work of Teresa M. Amabile, professor at Harvard Business School. For one, managers must know their employees well enough to be able to match the right person with the right assignment. Moreover, clearly, but give employees the autonomy concerning the means of achieving these goals. Support and recognition by the bosses are, likewise, necessary for workers to feel that their work is important to the organization.

cited in a January report in Science Daily, being bored

cenSEI

This type of employee exudes positive vibes and treats other people with kindness and respect. A feature in The Houston Chronicle’s business section typically accomplishing duties and responsibilities with minimal direction and seeking professional development, whether through assuming additional tasks or participating in training activities. They also strive to develop and nurture relationships with a teamwork environment because they help foster mutual respect and support among colleagues.

Good Think, Inc. and author of “The Happiness Advantage: The Principles of Positive Psychology that Fuel Success and Performance at Work,” believes happiness breeds success. In his May 2011 TeD talk posted February, 2012, Achor revealed the secret to better work, based on his research on positive long-held formula for happiness and success, which is: “If I work harder, I’ll be more successful. And if I’m more successful, then I’ll be happier.” We need to change the idea that our external world is predictive of our internal happiness.

October 21-November 3, 2013

wow tech

A reports on the Matsushima, Miyagi prefecture. Instead, Achor suggests, “If you can raise somebody’s level of positivity in the present, then their brain experiences what we now call a happiness advantage, better than it does at negative, neutral or stressed.” He posits that intelligence, creativity, and energy levels rise with happiness, which can improve business outcomes.

A September article in Forbes discusses the ways in order to motivate employees, based on the insights of Leonard J. Glick, professor of management and organizational development at Boston’s Northeastern University. One is to build ownership among your crew, which can be achieved by allowing team members to become familiar with what the others are doing and encouraging them to bring their ideas to the table. Glick explains that while compensation packages and other perks motivate employees, the challenge and

According to purpose of the a September work, as well as the 2011 New York opportunity to learn Times piece and contribute, are by Harvard equally important. professor Teresa M. Amabile and Likewise, independent structuring the Positive psychology expert Shawn Achor talks about happiness and how it can bring about individual success and researcher company’s work improve business outcomes TED Steven Kramer, environment authors of is crucial to “The Progress developing happy Principle: Using Small Wins to Ignite Joy, and productive employees. In a July piece in The engagement, and Creativity at Work,” inner adapted from the book, “The work life “has a profound impact on workers’ Happiness Choice: The Five Decisions That Will creativity, productivity, commitment and Take you From Where you Are to Where you Want collegiality.” Moreover, data reveals workers to Be,” author Marilyn H. Tam, Ph.D., discusses perform better when they are happily engaged in what they do. an organization: money and other means of value exchange, relationships, body or health, community, “Managers can help ensure that people are happily and spirit. engaged at work. Doing so isn’t expensive,” the article says. “Workers’ well-being depends, in Tam says individuals and companies must have large part, on managers’ ability and willingness to facilitate workers’ accomplishments — by removing established purpose, she reiterates, one can manage obstacles, providing help and acknowledging strong and prioritize the energies and resources required to achieve that mission.

Ark Nova the Lucerne Festival hit by the March 2011 undersea earthquake and tsunami, serves as a mobile concert hall that can seat about 500 people, with seating and acoustic by the tsunami. Lucerne Festival Ark Nova ,” featuring an assortment international artists, along with kabuki theater, affected prefectures.

rate is still nearly 150 times over Move over, broadband copper telephone and television cables, move

Sept. reports that Elon many simultaneous uploads the system could handle, so on the Space Agency satellite,

, users of the system could be looking

promises upload and download speeds of up to 2,100 megabits per second, nearly 700 times over the global average internet connection speed Akamai survey the global average connection speed,

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

receiving data. But even with such a limitation, there are major government, industrial, and military users likely to need to send large packages of data to manufacturer suggests.

data on the harmful effects of solar storms on radio communications,

Which is just as well, given an earlier warning the potential disruptive effects of

Agency press release, the other part

cenSEI

communications infrastructure.

October 21-November 3, 2013

TECHNOLOGY

Weather Forecasting Advances Help Businesses Reduce and Manage Risks Using technology to stay a step ahead of increasingly extreme weather By Pia Rufino

POINT & CLICK Access online research via your Internet connection by clicking pictures, graphics, and words in blue

as reported in a February 2013 Technology commissioned by informationtechnology giant eMC.

far from it.

To keep businesses forewarned about upcoming extreme weather and prepared to reduce potential risks, companies are employing improved weather-forecasting technologies and techniques from better data collection and analysis.

yphoons that hit the Philippines typically result in business disruptions, including , damage to agriculture, , and power interruptions. But Philippine businesses are not

According to a report, â&#x20AC;&#x153;Weathering the Storm: Building Business Resilience to Climate Change,â&#x20AC;? issued in July by the Center for Climate and energy Solutions on energy and climate-change issues, â&#x20AC;&#x153;90% of the companies in the Standard & Poorâ&#x20AC;&#x2122;s Global 100 Index identify extreme weather and climate change as current or future risks to their business, that they have already experienced the adverse

Also in July, a report, â&#x20AC;&#x153;Climate Change Preparedness and the Small Business Sector,â&#x20AC;? from the Small Business Majority and the American Sustainable Business Council, found that U.S. small businesses, â&#x20AC;&#x153;lacking access to the capital and economic damage as the result of a single extreme weather event.â&#x20AC;? According to the report, an estimated 25% of small- to mid-sized businesses do not reopen following a major disaster.

An advanced weather forecast and outage prediction service enables a utility company to prepare for weather events that can disrupt the electrical distribution network, as illustrated in a 2010 IBM case study. Using advanced modeling from IBM and sensors from U.S.-based weather network WeatherBug, a North American electric utility companyâ&#x20AC;&#x201D;serving an area with about one million peopleâ&#x20AC;&#x201D;can predict the impact of weather events that can disrupt a power network, estimate the likelihood of outages, and provide lead time to enable proactive allocation and deployment of people and equipment. IBMâ&#x20AC;&#x2122;s data analytics service Deep Thunder â&#x20AC;&#x153;can be used to call repair crews into action and spot them to the nearest utility substation from where the damage might occur. The program will predict the number of jobs that will be needed up to 72 hours before a storm,â&#x20AC;? enabling the company to respond to customer needs and reap time and cost savings.

STRATEGY POINTS: Forrester Research and the Disaster Recovery Journal disasters as the most common cause of a major business disruption, followed closely by power

t &Ă˛PSUT UP JNQSPWF XFBUIFS GPSFDBTUJOH WJB CFUUFS EBUB DPMMFDUJPO BOE BOBMZTJT IBT MFE UP CFUUFS BDDVSBDZ BOE MPOHFS BEWBODF OPUJDF PG BEWFSTF XFBUIFS DPOEJUJPOT t 8FBUIFS QSFEJDUJWF BOBMZUJDT BOE BEWBODFT JO SFNPUF TFOTJOH UFDIOPMPHZ IFMQ CVTJOFTTFT JODMVEJOH GBSNT VUJMJUZ DPNQBOJFT BOE BJSMJOFT JEFOUJGZ BOE SFEVDF SJTLT

weather events cited as a major cause for concern,

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

Deep Thunder provides high-resolution and longer advanced notice of adverse weather conditions customized to business with weathersensitive operations and employs detailed measurements of weather such as wind speed, temperature and humidity from dozens of collecting stations from WeatherBug.

October 21-November 3, 2013

The service also provided advance notice of accurate prediction in cities. It predicted snowfall totals, and determined when the snow would start and stop, in New york City during a February snow storm, per a Feb. 2013 post by Steve Hamm on IBM’s Building a Smarter Planet blog. It also helped Brazil’s Rio de Janeiro city predict, up to 40 hours in advance, how much rain would fall in a particular location—with 90% accuracy.

three days in advance, with calculations from as a single mile and as granular as every 10 minutes.”

Predictive analytics Deep Thunder can also help farms make better planting, irrigation and harvesting decisions. According to a June piece in LiveScience’s Op-ed & Insights section by Lloyd Treinish, Chief Scientist at IBM Thomas J. Watson Research Center, Deep Thunder’s precision agriculture system collects real-time data on weather, soil and air quality, crop maturity and even equipment and labor costs and availability to help farms from Brunei to Brazil make better decisions on planting, fertilizing and harvesting crops.

models and simulations that can predict future conditions for farmers can then be created.

IBM explains how precision agriculture works: and humidity of the soil and air. Meanwhile, pictures drones. The images over time show crop maturity, and when coupled with predictive weather modeling

In the following youTube video from IBM, Treinish explains how precision farming, driven by better weather forecast, brings improvement in farm

visualization, to other operations.

The value of big data in managing climate risks for farms isn’t lost on the world’s biggest seed company. Agriculture giant Monsanto announced it would buy The Climate Corporation, a startup specializing in weather analytics and risk management for US$930 million, as reported in Quartz Oct. 2. The data-science company uses technology that “combines hyper-local weather monitoring, agronomic data modeling, and highresolution weather simulations” to provide insurance products and software services to reduce weather risks and boost crop yields for farmers.

CNeT reported in 2012. The company upgraded its Intuvue system software

Bad weather is bad business for the airline industry. U.S.-based global aviation supplier Honeywell is upgrading its weather-radar technology to help pilots spot and avoid severe weather, thus preventing injuries onboard and damage to equipment and aircraft,

every year. Business jet operators experience

information on hail and lightning in planes’ paths up to 10 minutes in advance, as well as on turbulence up to 70 miles ahead. Figures from Honeywell estimated that weather-related delays and cancellations cost turbulence-related incidents cost airlines on average $150,000 per incident. Meanwhile, the total cost to the industry exceeds $100 million

weather, costing an estimated US$340M. Turkey’s Pegasus Airlines europe to adopt the upgraded Intuvue system software, reported that the system reduces pilot workload, enabling them to concentrate safety, adding passenger comfort and fuel

“In practical terms,” Treinish writes, “a farmer armed with precise weather forecasting YouTube an area of a farm expecting heavy rains; or, he may irrigate only that portion of the farm that will not receive rainfall. With 70 percent of the world’s freshwater supply already going to agriculture, every drop counts.”

The Weather Company products and services—including broadcast and web programming, apps, a content deal with Twitter and a developing line providing weather data to foreign governments. Commercial weather, once limited to the government, “has grown to include 350 companies whose combined annual revenues in the last two years has increased by 50% to an estimated $3 billion a year,” the article notes.

The technology also shows how and when to deploy delivery trucks to ensure immediate shipment, especially in farms where the lack of paved roads can paralyze distribution. Additionally, farms can incidents cause 90 percent of all crop losses, according to the United States’ Department of Agriculture, as cited in the article. The service “can deliver hyper-localized weather conditions up to

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

An April piece from the University of Pennsylvania’s online business-analysis journal Knowledge at Wharton talks about how companies leverage

YouTube

WORLD

cenSEI

October 21-November 3, 2013

13 Don’t even think of drinking the water. An Oct. 1 post in Gizmodo by their contact with the water from Lake Natron in northern Tanzania. COMeT program of the University Corporation for Atmospheric Research, estimates gross sales at US$3 billion, and the worth of the entire climate- and weatherrelated industry at US$6 billion. entities range from small consulting companies to larger commercial forecast groups — including media

Lake Natron, it turns out, is a salt lake fed by a local river and mineral-rich hot springs in a dry climate with

years of data. It then compares those patterns to current conditions and uses predictive analytics to predict the weather up to 40 days in advance. The technology is derived from research at the University of California at San Diego’s Scripps Institution of Oceanography.

temperatures that reach up to 60 degrees Celsius (140 degrees Fahrenheit), and alkalinity that ranges from 9.0 to 10.5 pH (approaching the alkalinity of ammonia,

insurance and other sectors.

A number of companies are working to improve weather forecasting, as well as to prevent data gaps in satellite coverage, according to a June blog post in Forbes by Alex Knapp. U.S. space agencies, along with private companies, including sensors systems providers Raytheon, Northrop Grumman, ITT, exelis, and Ball Aerospace, are

Cofounder and CeO John Plavan says “Utilities corporations, energy traders, and energy producers are majorly impacted by big temperature changes and spend hundreds of millions of dollars trying to

in his new book, Across the Ravaged Land, were found unexpectedly along the shoreline of the lake, possibly

predict them. If they know there will be an extreme cold event a month from now, they can use that data to make an actionable decision, and these guys will do anything to gain a small edge.”

might have confused them and caused them to crash with the water preserved them perfectly as they dried. Brandt took the creatures and posed them for his striking photos.

A January 2011 BBC The satellite will “capture images in infrared, which

of the atmosphere, and temperature information. Other sensors provide better ozone concentration information, as well as microwave imaging of temperature and moisture information to complement the other sensors.” According to Knapp, satellite data company PlanetIQ wants to launch 12 small satellites in the orbit to gather weather data, while GeoMetWatch plans to launch a “4D weather satellite,” providing the national space agency with sophisticated and critical weather data not currently available. Meanwhile, San Diego-based software company earthRisk Technologies wants to revolutionize weather forecasting by using big data to predict the weather up to 40 days in advance, per a VentureBeat article. earthRisk Technologies has developed a new model for predicting extreme

article weather forecasting. Fedex express, one of the world’s biggest delivery companies, houses its own team meteorologists to forecast the weather “to see immediate risk to the business, so they can make necessary adjustments immediately, like diverting

In the BBC article, Dr. Matt Huddleston, principal consultant at the U.K.’s national weather service noted that businesses are incredibly impacted by weather events and noted that 2009 over US$50 billion (£32 billion) of losses in the insurance industry alone. “Vast amount of resources are lost because of bad weather so weather technology is hugely important to businesses because every single business, every location on the planet is exposed to the weather. By developing weather technology it enables businesses to manage their risks,” Huddleston observed. All images via © Nick Brandt 2013 Courtesy of Hasted Kraeutler Gallery, NY and Gizmodo

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

October 21-November 3, 2013

CYBER-SECURITY

Tor, Tor, Tor! In an Oct. 10 dispatch, reports on the launch of a new search engine that's bound to draw interest from users intent on protecting their privacy. is a search engine intended for users of

hampered searching for anything on the network.

Sept. 21 terrorist attack on a mall in

Before you rush away from here to start using cautions

In the Harvard Business Review

October edition, Jonathan Berman presents ,” i.e., a huge market opportunity (as in, it needs everything and is

uncultivated cropland. -

At the same time, nonetheless, a Reuters analysis following the attack reminds us of some very real obstacles to

Africa and the wider world.” not to fall into the “unfortunate tendency to treat the continent as one country,” which one consultant observed was

Oct. 4 dispatch in GigaOM. According to the GigaOM report, which was pegged to a slide show The Guardian (which carried its own report

While your favorite news and

still nice to know there are entire sites dedicated to culture, i.e., current or historical popular culture. One particular site that impresses

so as to compromise their web browsers.

effective secret communications system. As long as users observe the precautions, anyway. was originally sponsored by the U.S. Naval Research Laboratory under the aegis of the Department of Defense's Defense Advanced Research Projects Agency, and includes the Department of State, Broadcasting Board of Governors, and National Science Swedish government and others providing the rest. Meanwhile, NSA bashers might take some solace in the news, as reported in GigaOM Oct. 8, that the NSA's big, meta-data another year. Not that one can or should count on that setback to be permanent, you understand.

a vast array of books (audio books, eBooks, movies, online and courses, language lessons, business courses, et cetera. While mainly about “ cultural & educational media for the worldwide lifetime learning community warehouse for these items, as its home page contains blog posts on a variety of topics both current and

historical, including recent musings list of top 100 books fan letter to Ingmar Bergman. Another site that impresses ambitious in scope and prefers to deal with current and mostly American entertainment culture, is , the print and online publication of the satirical newspaper The Onion. (Its provenance notwithstanding, The A.V. Club is careful to note that

selected musical artists, directors,

are also invitations to artists and performers to tee off on songs they really hate. And, of course, reviews of books, movies, and music, along and sections dedicated to both new

whatever false impressions an occasional snarky headline might

The Seventh Seal PREVIOUS PAGE

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

October 21-November 3, 2013

Open Culture

Adobe Says 2.9M Accounts Hit in Cyber Attack STRATEGY POINTS

U.S.

hackers obtained data on 2.9 million customers, including encrypted passwords and payment card numbers

software giant Adobe recently disclosed that hackers accessed data on 2.9 million customers and source code for several of its products.

In a statement, Hold Security said it looked like the data breach occurred in early August, but it was also possible that the attack might have started earlier. While it’s unclear how the hackers obtained the source code and for what purposes, it is likely that the data was taken and viewed by

In a Oct. 3 blog post, Brad Arkin,

“This breach poses a serious concern to countless businesses and individuals. Adobe products are installed on most enduser devices and used on many corporate and government servers around the world.”

have opened a gateway for new viruses, malware, and exploits, warns

about installing counterfeit copies of popular programs or thirdparty programs or even greater their more popular counterparts

the stolen information includes customer IDs, encrypted passwords, payment card numbers, expiration dates, and names and other information on customer orders. Arkin said the company does not believe that the attackers removed decrypted credit or debit card numbers from its system. In an earlier post, he said that hackers accessed the source code for a number of Adobe products, including Adobe Acrobat, ColdFusion, and ColdFusion Builder, but the company was unaware of any increased risk to customers as a result of that particular attack. As a preventive measure, Adobe said it is resetting relevant customer

customers about measures against potential misuse of personal information. Meanwhile, it has advised banks to help protect customers’ accounts, and asked law-enforcement agencies to assist in its investigation. for an array of programs. including its Adobe Acrobat PDF (Portable Document Format) maker and reader, Photoshop photo-editing software, Dreamweaver Webpage development tool, Adobe Flash Player for multimedia SWF and FLV Brian Krebs, a well-respected security researcher, revealed in a blog post that he found the source-code leak a week before it was announced, when he and researcher Alex Holden of Hold Security LLC discovered a 40-GB source code trove on the same server thought to be used by hackers behind attacks on major data aggregators earlier this year, including LexisNexis, Dun & Bradstreet and Kroll. “The hacking team’s server contained huge repositories of uncompiled and compiled code that appeared to be source code for ColdFusion and Adobe Acrobat.”

CONTeNTS

MANAGeMeNT

source code, we fear that disclosure of encryption algorithms, other security schemes, and software vulnerabilities can be used to bypass protections for individual and corporate data. generation of viruses, malware, and exploits.” The source-code breach raises fears of cyber-attacks, from PCs to smartphones, per an Oct. 6 Financial Times report on the Adobe hack (registration required to access article). Using the leaked code, “criminals could spot vulnerabilities in the software and manipulate them to hack users’ machines, harvesting personal information and intellectual property that can be sold on the black market,” the FT report explains. Meanwhile, the Adobe hack is the latest sign that it is corporate IT networks, says eric Chiu of the cloud security company HyTrust, as cited in the FT report. He warns that companies “have to assume that the bad guy is already inside the system,” and suggests that employees should have restricted data access to prevent possible attacks. He observes, “We’re seeing breaches happening more often these days and breaches are getting bigger in terms of magnitude of what’s being stolen.”

If you wanna feel real nice, just ask the rockand-roll doctor’s advice.

those in the silent and silent-frequency rooms. As it for how to improve our own recovery from serious medical procedures. The work won the IgNobel Prize in Medicine in September, Konnikova reports.

music not only has charms to soothe the savage breast, it also has power to promote healing, according to Maria Konnikova, a The New Yorker.

was done on mice, Konnikova also reports on a 2005 review of over 80 studies on the use of

Konnikova discusses a 2012 experiment

which found that music had

Department of Surgery in Tokyo, Japan, involving

helping to regulate breathing and relaxing music leading to

of noise/sound in the recovery rooms: silence in

hormone secreted under stress

Traviata,” Mozart pieces as rendered by the Berlin

making people happier, more relaxed, less anxious, and less overwhelmed.

or a steady sound frequency between 100-20,000 hertz in others.

while those recovering in the rooms playing Verdi or Mozart lived an average 20 days longer, and those

From there, Konnikova discusses subsequent other studies involving the successful use of music for

open-heart surgery.

be a game screen away, according to Quartz science and technology correspondent Christopher Mims

could

To help mitigate attacks targeting older, unpatched, or the software maker reminds users “to run only supported versions of the software, apply all available security updates, and follow the advice in the Acrobat enterprise Toolkit and the ColdFusion Lockdown Guide.” This latest episode serves as a reminder that users should be careful about installing counterfeit copies of popular software, downloading popular software from unfamiliar sites, or even installing free third-party even enhanced functionality over popular software. Search for more information about unfamiliar sites and software before downloading.

TeCHNOLOGy CyBeR-SeCURITy

WORLD

whether

movies, and soon to come to smartphones -- because of the inability of our eyes to both converge and accommodate moving displays. he provides a link to a site from 3D movies. Ahhh, for the good old days

cenSEI

October 21-November 3, 2013

WORLD

Is the World Economy Back on Track? In sustaining growth and containing risk, governance is crucial — and often lacking

isk. That is the four-letter word that dominated the 2013 Annual World Bank-International Monetary Fund Meetings in Washington on the October 11-13 weekend. That the world economy will be a riskier place one can surmise from IMF Managing Director Christine Lagarde’s address when she and World Bank President Jim yong Kim opened their institutions’ weekend conferences in Washington on October 11-13. In her speech, “The Future Global economy and the Future Fund,” the IMF chief underscored three long-term trends elevating risk in the years ahead: “a more

By Ricardo Saludo

As if a globe of multiple trouble spots wired together by electronic cash weren’t enough to keep them awake, the World Bank and IMF CeOs have more adverse factors on their list. Lagarde’s “new frontiers of risk” include population imbalances, income disparities, and environmental sustainability. And Kim’s World Bank just published its World Development Report 2014, with the subtitle “Risk and Opportunity: Managing Risk for Development,” covering disruptive, if not deadly macroeconomic dislocation. The global economy in

integration,” and the “new frontiers of risk” that nations face. All three developments cannot but increase uncertainty and volatility in nations and economies. With more countries and regions impacting on the world, rather than just the West and Japan, the sources of disruption are multiplying. Take the current global

it has to deal with. “Five years ago, the global economy avoided a second Great Depression,” recounts Lagarde in her October 3 speech at George Washington University in the U.S. capital. “Five years on, the journey is not yet complete, but the fog of crisis is lifting ... In many of the advanced economies, we are

looking healthier.” the West and Japan, downturns in China, India and Brazil dim the optimism. somewhat, especially in the West, economies are still performing below potential. In the United States, the Fund chief sighed, “growth this year will still be too low

Compounding the nerves is Lagarde’s second risk The World Bank and IMF heads expound on their worries, including climate change IMF

rapidly spread a money crisis in one market to distant institutions, skew prices and exchange rates, and shake up economies and monetary systems that are otherwise far away from the trouble spots.

America can keep paying its IOUs

That’s why all the planet is on tenterhooks, waiting for the United States to end its government shutdown and avoid a globally catastrophic debt default by raising its ceiling on state borrowings by Oct. 17. For starters, every central bank’s currency reserves — held mostly in U.S. Treasury bills — could take a mammoth hit if Washington misses IOU payments.

political and environmental challenges preparation must supplant ad hoc responses

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

the current budgetless essentials-only regime due to political bickering by American legislators. And europe? months of euro zone recession ended in the April-June quarter. But 12% unemployment, with half of young europeans jobless, remains an excruciating burden. On Japan and the growth-lifting “Abenomics” of Prime Minister Shinzo Abe, Lagarde allowed: “The government’s aggressive stimulus policy seems to is coming to an end and a newfound optimism is in

October 21-November 3, 2013

the air.” But she cautioned that plans to arrest mammoth public debt by raising the sales tax should be carefully managed, as with other transitions in leading economies. There are more caveats ahead. The Conference Board is a New york-based business issues and research organization funded by leading companies around the world and tapping business experts and executives. Its latest Global economic Outlook 2013, updated last month from responses from the Board’s planet-wide membership, sees world output growing 2.9% this year, down from 3.0% last year (see The Road Ahead charts). It would have been worse if europe had not slipped out of recession to manage 0.3% expansion, reversing -0.2% contraction in 2012, based on polled estimates of hundreds of executives and economists in key regions. The U.S. is one main drag, its gross domestic product tipped to decelerate to a 1.6% rise, a big drop from 2.2% last year. The other damper: GDP growth in developing economies is tipped to dip to 5% from 5.5%, amid slowdowns in China

will continue to show mixed performance, by The Conference Board’s reckoning. Globally, growth will hardly budge, creeping up from 2.9% projected

Those gains in the rich world, however, could be

based on the Board members poll. That base scenario could accelerate by a full percentage point in an optimistic scenario, or slump to 2.2% if conditions go bad.

down from 5.0% expected this year.

developing economies. Their collective growth

China would be the main culprit, with the

As always, however, risks abound, and if they lead to bigger problems than expected, global growth could fall further in the coming years. The developed world could see a pessimistic projection of 1.4%, just slightly higher than this year’s 1.2% Conference Board forecast. The rest of the globe would fare even worse under the negative scenario: the 5.0% base. The big declines under the pessimistic

brinkmanship in Washington doesn’t precipitate a

two percentage points down from this year’s projection. The other downturn would be in Russia, Central Asia and Southeast europe, which includes the Balkan Peninsula and Turkey, but not Greece. That region’s base-scenario

cataclysmic U.S. bond default via an unbudging public debt ceiling, America could manage 2.3% expansion

2.9% forecast this year. In other emerging or

Business people surveyed by McKinsey & Co. last month have their concerns, too. Its report, “economic Conditions Snapshot, September 2013,” found more

Advanced economies are tipped to accelerate from just over 1% this year and last, to a base annual average

slightly higher.

this year), Russia, Central Asia and Southeast europe (1.2% from 2.9%), and developing Asia outside China and India (3.6% from 5.0% in 2013).

THE ROAD AHEAD

and India (4.2% from 5.5%). In the years up to major economies

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

October 21-November 3, 2013

WHAT KEEPS THE BOSS AWAKE respondents across the globe seeing a better situation now and in the next six months, with the most optimism in europe. But there are worries about jobs, prices and exchange rates, especially in the developing world, as well as economic, geopolitical, and governance issues (see the What Keeps the Boss Awake charts). That was before the gridlocked Democrat-Republican budget and debt-ceiling talks in Washington, which could become the world economy’s biggest boondoggle in coming weeks. Market watchers were also getting bearish even without Capitol Hill dysfunction. In a recent note, leading French bank Societe Generale saw a 15% drop in U.S. stock values early next year, followed by a year of stagnation. to justify, government policy also will give pause, according to the report titled “S&P 500: -15% in sight, then the big sleep” by SocGen’s global head of asset allocation, Alain Bokobza. The bearish prognosis does not even factor in any U.S. default if its borrowing limit isn’t raised by Congress on Oct. 17. Nor did the IMF’s latest Global Financial Stability Report, out during the annual meeting, carrying the subtitle “Transition Challenges to Stability.” But fearing another global downturn if America’s IOUs, the staple of hard currency reserves, lose creditworthiness, World Bank President Kim minced no words about the giant gorilla in the

“Just two years ago, in 2011, we saw that a near miss of a U.S. debt default had major impacts lasting for months,” warned the physician, anthropologist and former Dartmouth College head in his opening speech at the Bank-Fund meetings. “This time could be more serious. Uncertainty and volatility make

CONTeNTS

MANAGeMeNT

and negatively impact growth. And the poor and

News analyses have outlined the catastrophic consequences of the Capitol Hill deadlock triggering U.S. debt default, like those of BBC News, Bloomberg, NBC News, and the Council of Foreign Relations. From sharp reductions in government spending of as much as 4% of gross domestic markets and business investment worldwide, the doomsday scenarios abound. Forbes magazine contributor Richard Fingel argues in his recent column that there will be no default, since U.S. tax revenues of $2.3 trillion dwarf 2013 national debt obligations of $420 billion.

North America.

Investment Management Company, which manages the world’s biggest bond portfolio, sees zero risk of U.S. default in a talk with CNBC, while estimating a loss of one-tenth of 1% of GDP for every week of government shutdown. The network reports that market concern over Oct. 17, but for long-term U.S. government bonds are stable, indicating little concern of prolonged default. Still, political analysts wonder whether Washington, if it could no longer borrow, would drastically slash payments for needy American pensioners and veterans to pay moneyed Treasury bill investors, especially those abroad. If Uncle Sam did cut state spending, the resulting drop in economic output would trigger recession here and abroad. So would a panic-driven plunge in global investment and spending if businesses and consumers lose default and the resulting crash in U.S. Treasury bills, the world’s leading asset for currency reserves and liquid holdings.

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

October 21-November 3, 2013

WHERE CRISES HURT THE MOST

Amid the World Bank-IMF meetings, Fund chief Lagarde told NBC News that a U.S. default could spark global recession. “If there is that degree of disruption, that lack of certainty, that lack of trust in the U.S. signature, it would mean massive disruption the world over,” she warned. In fact, the IMF’s just-published Global Financial Stability Report has

till February 7. Nobel laureate New york University economics professor Michael Spence warns in his article “America the Reckless.” that Washington’s domestic politicking at the world’s expense will lead to a global shift away from the dollar as a reserve

in markets and liquidity, and in emerging economies (see Stay Close to the Center).

With still fresh memories of the worldwide dislocation wrought

Thankfully, Congress managed a deal hours before Oct. 17, and President Barack Obama signed it into

and forecasts by the World Bank, the IMF and the Asian Development Bank give ample attention to

law soon after. But like past last-minute pacts, the new measure doesn’t provide a lasting solution, but merely sets another reckoning, with federal funding assured only till mid-January and the debt ceiling

both spurring growth and minimizing its downside.

international economic governance. About time.

and debt troubles only underscores this recoveryand-risk perspective.

STAY CLOSE TO THE CENTER IMF Global Financial Stability Map The World Bank’s World Development Report 2014 devoted its eighth chapter to managing risks and

economic crises hurt low-income countries most, with and deep recessions lasting much longer (see Where Crises Hurt The Most). The Bank is far from arguing that risk should be avoided, however. On the contrary, in its Main Messages introductory note in the 2014 Report, it

identifying and assessing risks and obstacles to risk management; forward planning and preparation for than ad hoc actions; and the need for government and international coordination and cooperation in addressing major risk events, which would overwhelm individual coping mechanisms. The Fund’s latest Global economic Outlook, released during the meetings, spoke of transition risks as the U.S. winds down monetary expansion, Japan accelerates it to boost growth, and europe continues

page tome: “Taking on risks is necessary to pursue opportunities for development.” Meanwhile, emerging markets, explains the Outlook, However, as World Bank President Kim has often noted, one crisis or calamity can destroy years of development and wealth in an short period. Hence, it is imperative that nations and governments apply proven risk management policies and practices:

CONTeNTS

MANAGeMeNT

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

rates to adjust to economic conditions, anchoring less than credible monetary policies, safeguarding undertaking more structural reforms.

October 21-November 3, 2013

In keeping with the United National Basketball Association Asia in the form of four October

Supergraphic, which comes InfographicWorld, provides a neat little summary of the .

IMF

echoing the report’s stress on transition challenges, the International Monetary and Financial Committee, the IMF’s policy steering body, declared in its communique: “This requires carefully managing multiple transitions, including a shift in growth dynamics, normalizing global rebalancing of global demand, and moving to a more

After the IMFC meeting, its chair, Singapore Deputy Prime Minister Tharman Shanmugaratnam, stressed: “... during this transition phase, it is more important than ever that we get momentum into our structural reforms. The last thing we should do is leave the structural reforms to the time when it is critical. Start doing it now when we are still in peacetime. explain to our populations why they are necessary, and explain that this is really a path to higher incomes and better jobs in the future.” The critical importance of governance and reform also resonates in the Asian Development Bank’s just-released Asian Development Outlook Update, focusing on governance and public service delivery. With growth tipped to slow down from April forecasts, yet to gain from the incipient upswing in the West, developing economies in the region expansion. That means bracing and compensating

CONTeNTS

MANAGeMeNT

for deceleration in China and India, and managing vulnerabilities” (covered in pages 9-29).

Angeles Lakers, and come up all the way to 2011, when the Dallas Mavericks stunned the

In this delicate balancing act between driving Asia’s “governance gap” poses a daunting additional challenge. The ADB report’s governance section (from page 41) highlights how Developing Asia still lags in quality of state leadership and administration among other regions in the Third World, except Subsaharan Africa. This failing holds back progress in achieving targets in wealth distribution, poverty alleviation, public health and education, and democratic empowerment and public accountability. Not to mention moderating adverse economic trends and spurring business and investment.

includes capsule summaries of how the winning teams achieved their respective triumphs over favored rivals.

some interesting historical

the merger of the NBA and the American Basketball Association, and the culmination

Will the region’s national leaders and governments deliver growth, stability, and a better life for the broad population, not just a fortunate slice of it? Plainly, that question is proving to be the paramount challenge for the bigwigs running the world’s economies, from Asian potentates striving to spread growth’s gains, to American politicians struggling

the peg on which the late David Halberstam

collapse. Plainly, in driving recovery and managing risk, it’s the politics, stupid.

TeCHNOLOGy CyBeR-SeCURITy

WORLD

cenSEI

October 21-November 3, 2013