This Week in Risk Management — Dec #1
A cloud outage disrupts business processes across the US while the new Omicron variant threatens our collective health. Plus, a favorite coffee joint faces some steep allegations, and BlackRock plays financial advisor. This week’s clip provides a healthy dose of risk management happenings and juicy insights you won’t want to miss.
Major Cloud Outage Devastated Businesses Nationwide
December 7, 2021, proved to be a historic day for businesses reliant on the on-demand cloud computing platform Amazon Web Services (AWS). According to Forbes, a software problem caused an outage that lasted for several hours and crippled businesses scattered over the US.
App-based electronics (i.e., vacuums, pet feeders, etc.) failed. Grocers couldn’t process orders, and delivery personnel sang karaoke while waiting for orders to generate. Educational institutions missed exams. One e-commerce seller couldn’t ship 10,000 to 12,000 items due to the outage. In short, the AWS outage was a Kraken-sized problem for many businesses.
So, how can tech-enabled companies protect themselves from cloud outages and downtime? Here’s a hint, we have a new solution designed specifically to solve this problem. But for now, let’s talk about the largest coffeehouse chain in the world.
Starbucks Faces Ageism Practices and Culture Lawsuits
A nationwide class-action lawsuit was filed against Starbucks Corporation on November 9, 2021. The allegations spotlighted ageism in the company’s recruiting practices. More specifically, the lawsuit claims that “Starbucks’ culture and practices [was] systematically favoring applicants at the expense of their older counterparts.”
Strangely enough, this lawsuit surfaced only one month before Starbucks made headlines when a Buffalo location’s workers elected to unionize in a 19–8 vote. No doubt, this decision didn’t evoke any smiles from company leaders as they’ve fought diligently against unionization for many decades. And the reason for the ongoing battle? Starbucks thinks that working directly with its employees suits its stores best; however, it seems that some employees blatantly disagree.
Although this particular case is still in the early stages of litigation, it’s a stark reminder that companies must be mindful in reviewing their hiring and retention practices. Let’s be honest; we all want to attract and retain top talent, but not at the expense of a costly lawsuit.
Need Help Picking Stocks? BlackRock Offers Tips
BlackRock quickly became a favorite among high-profile female founders, particularly after Bumble’s IPO and Spanx’s $1.2 billion deal. It’s a common denominator (and major force) behind many successful companies. Now, BlackRock’s CIO, Nigel Bolton offers his advice for stock-picking in 2022.
According to Bolton, focussing on the value or recovery trade isn’t the wisest strategy. Neither is honing in on specific sectors, such as finance or energy. Instead, he encourages investors to take a more nuanced approach.
He goes on to say, “That is why I think the theme for next year is going to be stock picking. It’s going to be a good market, I believe, for individual stock pickers, less so for top-down macro theme guys.”
Will the Omicron Variant Impact Your Workplace?
If the pandemic hasn’t sucker-punched us enough, it’s now presented us with another variant — one that’s far more easily spread than previous variants. So, we don’t blame business leaders for scrambling to predict its workplace impact.
What’s wild is that we’re probably better prepared for Omicron than we think, thanks to the Delta variant. Very few US leaders believed that Delta would cause such a negative outcome. This time around, we’re more guarded.
Although many experts state there’s no reason to panic, we expect some things to change. For example, vaccine mandates for employees might surface more frequently. Plus, employers might require more Covid testing than before, and businesses might (once again) push back the in-office scheduling. These are only a few of the uncertainties.
To Jump on the SPAC Bandwagon or Not to Jump?
No one can deny that special purpose acquisition companies (SPACs) are a trending item on Wall Street. Over 240 companies have gone public via a SPAC, and most of them took the leap in 2019 and 2020. For many, the timing was epic, and passing it up would have been foolish.
For example, Hippo president Richard McCathron stated that it was the “right decision” to take the InsurTech MGA public through a $5 billion SPAC merger. Like many others, going public was critical to accomplishing its goals, such as gaining customers’ trust.
However, all good things must come to an end, and we wonder when the SPAC boom will turn from boom to bust. Maybe the SEC will strangle the trend with new and more stringent regulations?
As always, we’d love to hear your thoughts.
Until next time…
