EIU Report Lists the Possibility of a US-China Trade Conflict Morphing Into a Full-Blown Global Trade War as Its Top Risk in 2019

"The outlook for the global economy is worsening," asserts The Economist Intelligence Unit (The EIU). "Given concerns over slowing growth in key economies, including China and the EU, and the wider impact of a trade war between the US and China, The Economist Intelligence Unit expects global growth to decelerate from 2.9% in 2018 to 2.8% in 2019 and 2.6% in 2020. However, even when taking into account this downbeat assessment, there remain a number of risks emanating from three key areas that could drive growth even lower than we currently forecast in 2019-20."

In its latest report, The EIU identifies and assesses the top ten risks to the global political and economic order. Each of the risks is outlined and rated in terms of its likelihood and its potential impact on the global economy.

Source: The Economist Intelligence Unit

1. A US-China trade conflict morphs into a full-blown global trade war (Moderate risk; Very high impact; Risk intensity = 15)

"China and the US have started negotiations to resolve the current trade dispute, and the US government has decided to suspend further increases in tariffs on US$200bn-worth of Chinese goods. Talks are likely to yield a limited trade deal—involving Chinese purchases of US agricultural and energy products, but with only broad commitments to domestic economic reform, particularly over structural issues, including technology transfer and intellectual property. While this will avoid an escalation in tensions for now, a full-blown trade war between the US and China remains a significant risk to the global economy, owing mainly to the fact such a deal will lack the necessary enforcement measures to ensure Chinese commitment to the structural reforms demanded by US negotiators. Moreover, beyond bilateral protectionism, there remains a risk that trade conflicts will escalate on additional fronts in the coming years, to the extent that global trade could actually decline, with major knock-on effects for inflation, business sentiment, consumer sentiment and, ultimately, global economic growth."

2. US corporate debt burden turns downturn into a recession (Moderate risk; High impact; Risk intensity = 12)

"Falling consumer sentiment and manufacturing activity indicators highlight the worsening outlook for the US economy as it faces the effects of a trade war with China, the impact of a lengthy government shutdown in December-January and an eventual turn in the business cycle. Nonetheless, the economy’s fundamentals remain fairly robust, with economic growth at an estimated 2.9% in 2018, and inflation slowing to 1.9% year on year in December, despite gradually rising wage growth. In addition, the Federal Reserve (the central bank) moved to a more cautious approach to monetary policy in early 2019. Therefore, although we expect economic growth to slow to 2.3% in 2019 and to just 1.5% in 2020, our central forecast is that the US will avoid a damaging recession in 2019-20."

3. Contagion spreads to create a broad-based emerging-markets crisis (Moderate risk; High impact; Risk intensity = 12)

"Many emerging markets suffered currency volatility in 2018, primarily as a result of US monetary tightening and the strengthening US dollar. In a few instances, such as Turkey and Argentina, a combination of factors, including external imbalances, political instability and poor policymaking, led to full-blown currency crises. More recently, however, the pressure on most emerging markets' capital accounts has eased, as the US Federal Reserve has adopted a more cautious monetary policy stance. Nonetheless, market sentiment remains fragile, and pressure on emerging markets as a group could re-emerge if market risk appetite deteriorates further than we currently expect."

4. China suffers a disorderly and prolonged economic downturn (Low risk; Very high impact; Risk intensity = 10)

"In China, a shift towards looser macroeconomic policy settings is under way as a result of the escalating trade conflict with the US. This will support domestic demand in the short term, but in the process previous goals of lowering unsold housing stock and corporate deleveraging are receiving less emphasis. There is a risk that, in the government’s efforts to support the economy, policy missteps will be made."

5. Supply shortages lead to a globally damaging oil-price spike (Low risk; High impact; Risk intensity = 8)

"Market fears of oil-supply shortages have eased since the US granted six-month sanction waivers to eight of the key purchasers of Iranian oil in December. Along with higher output from Saudi Arabia and Russia, and global growth concerns, this has caused the price of dated Brent Blend to fall to close to US$60/barrel, compared with highs of over US$80/b in September. However, the risk of major supply disruptions remains."

6. Territorial or sovereignty disputes in the South or East China Sea lead to an outbreak of hostilities (Low risk; High impact; Risk intensity = 8)

"The national congress of the Chinese Communist Party in October 2017 was a milestone in terms of China’s overt declaration of its pursuit of great-power status, setting the goals for China to become a 'leading global power' and have a 'first-class' military force by 2050. The president, Xi Jinping, is keen to develop China's global influence, probably sensing opportunity during a period of US retrenchment. How China intends to deploy its expanding hard-power capabilities in support of its territorial and maritime claims is a source of growing concern for other countries in the region."

7. Cyber-attacks and data integrity concerns cripple large parts of the internet (Moderate risk; Low impact; Risk intensity = 6)

"Public, corporate and government faith in the internet as a source for global good is under strain. Revelations of major data breaches across a range of social media, and the use of that data for propaganda, are likely to see social media companies facing tighter regulation in the coming years. Meanwhile, cyber-attacks continue apace. In March 2018 the US blamed Russia for a cyber-attack on its energy grid. At a similar time there was a sustained attack on German government networks. Although these attacks have been relatively contained so far, there is a risk that their frequency and severity will increase to the extent that corporate and government networks could be brought down or manipulated for an extended period."

8. There is a major military confrontation on the Korean peninsula (Very low risk; Very high impact; Risk intensity = 5)

"There was a pick-up in diplomatic activity on the Korean peninsula in 2018, peaking with a historic summit in June between Mr Trump and the North Korean leader, Kim Jong-un, in Singapore. Decades of carefully planned approaches between the US and North Korea have failed, but there is a glimmer of hope that a more improvised and personal approach by two unorthodox leaders could make progress, with a second meeting between the two scheduled for late February. However, we maintain the view that there are irreconcilable differences between the US and North Korea on both the pace and the breadth of denuclearization."

9. Political gridlock leads to a disorderly no-deal Brexit (Low risk; Low impact; Risk intensity = 4)

"Although a withdrawal agreement between the EU and the UK was finalized at an EU summit on November 25th, it was initially rejected by UK members of parliament in a vote in mid-January, and only received parliamentary backing in a later vote on condition that the Irish border backstop be renegotiated. (The backstop stipulates that the UK would remain in a customs union with the EU indefinitely should a trade agreement preserving an open Irish border not be found.) However, the EU has so far rejected any reopening of withdrawal agreement negotiations. With so little room for maneuver before the March 29th deadline, we think that the UK prime minister, Theresa May, will be forced to delay Brexit by requesting an extension of the Article 50 window."

10. Political and financial instability lead to an Italian banking crisis (Low risk; Low impact; Risk intensity = 4)

"After positive growth in the preceding 14 quarters, the Italian economy contracted in both of the final quarters of 2018, constrained by a mixture of domestic political and economic uncertainty, tightening liquidity conditions and the worsening global trade outlook. In the light of this, we expect real GDP growth to slow from 0.8% in 2018 to just 0.2% in 2019. There is, however, a risk of a much deeper recession should investor confidence lead to another spike in bond yields."

Source: The Economist Intelligence Unit

Which risks provide the greatest concern to you or your business?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Global Health Business Case Competition Focuses on Ending Malaria

In the middle of a three week trip to Uganda in 2004, a driver I hired to escort me from my hotel to various meetings said his young son had just died from malaria, an infectious disease transmitted by the bites of infected mosquitoes. While malaria has been eradicated in the developed countries, the U.S. Centers for Disease Control and Prevention says an estimated 445,000 people died of the infectious disease—most were young children in sub-Saharan Africa.

Having spent a large amount of my career working to strengthen the private sector in developing countries, I have come to appreciate the collaborative role entrepreneurship plays in combating infectious diseases such as malaria. Therefore, it was with great pleasure to participate as a volunteer judge at the fourth annual Global Health Business Case Competition on Jan. 26, 2019. The event was hosted by the Global Business Center (GBC) at the University of Washington Foster School of Business, in partnership with the Jackson School's Center for Global Studies and the UW Department of Global Health. As explained in a blog post, "This competition provides a unique opportunity for students to experience hands-on, cross-disciplinary teamwork while tackling a global health challenge."

Thirty-two teams (26 undergraduate and six graduate) were given The Mosquito Network: Collaborative Entrepreneurship in the Fight to Eliminate Malaria Deaths, a 2016 case written by Gaylen Williams Moore, and published by the Harvard Kennedy School. The case was supplemented with a 2018 article, "Countries must steer new response to turn the malaria tide," which highlighted how malaria reduction efforts had recently stalled in the last two years, especially in high burden countries.

The GBC blog post further explains:

The students were asked to take on the role of an Africa-based team of consultants hired by the RBM Partnership to End Malaria. The teams were tasked with recommending how to spend an extra $6 billion on malaria reduction in the context of a new "high burden to high impact" malaria program, an approach that supports countries most affected by malaria. Specifically, students addressed how much would be allocated to the ten high burden countries in Africa and explored why malaria control efforts have not been effective in curbing malaria in these countries. Next, they had to identify the right mix of malaria interventions and best practices for a country where previous efforts proved ineffective.

Students had just 48 hours to do their research and create the slide deck to accompany their presentation. On Saturday morning, January 26th, interdisciplinary UW teams presented their solutions and judges scored teams on their analysis, style, rational, and ability to handle the question and answer session.

I was grouped with three other volunteer judges who heard presentations from four teams of talented undergraduate students. Focusing initially in the Democratic Republic of Congo with future expansion to Nigeria, Niger, and Mozambique, a team presented "The Domino Country" whose mission calls for using individualized action as an adaptable model to stimulate awareness and the economy to create a domino effect throughout Africa's high burden countries. Its benchmarks were trifurcated by educate (provide knowledge of diseases and prevention, and train community leaders and civilians in diagnostics), enact (create incentives towards malaria fighting organizations and initiate national malaria programs), and evaluate (high rates of net usage of bed nets and malaria awareness and economic stability towards malaria initiatives).

The vision of team "IMPACT Consulting" is to transform health intelligence and save lives in the fight against malaria through improved data analytics and partnering with local officials. They identified Cameroon as their initial test country with a phase two expansion to Burkina Faso, Ghana, Mali, and Uganda.

"Uniting to Combat Malaria in an Era of Industrialization and Globalization" aimed to achieve four goals: (1) Develop a strategy that will appeal both to politicians and large donors while at also promoting community-based solutions in order to endure a long-term solution, (2) delegate funds to high risk countries and international organizations so that the marginal product per dollar spent is equal among productive capital to maximize total utility, (3) demonstrate a comprehensive analysis of past policies both good and bad to ensure progress for the future, and (4) establish an exhaustive Global Guidance Policy which will ensure there is cohesion in communication between global and local settings and to keep the various efforts on track for success. This team chose Nigeria as its country of focus.

Also focusing on combating malaria in Nigeria, team "Tumaini" made a presentation outlining two goals: developing an effective malaria vaccine or treatment by funding an established research program and immediately reduce malaria impact and mortality by fighting malaria through specialized clinics.

Undergraduate Track 1st Place

While neither of the teams we heard presentations from made the top three among the 26 undergraduate teams, we were quite impressed with the way each team employed essential critical thinking tools to understand the problem they were charged with solving and their creativity to formulate a possible solution.

With a rising middle class among its 1.24 billion inhabitants, government officials representing African nations often approach me about expanding my investment and business holdings on the continent. While I am keen to do so, having a workforce in good health or not otherwise impacted by sick young family members by a preventable disease such as malaria is essential to achieving long-term success. Programs like the Global Health Business Case Competition are an important piece to the process of creating sustainable solutions.

What solutions would propose if you had the opportunity to participate in this year's Global Health Business Case Competition?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Mobile App Designed to Document Sick Chickens in Rural Thailand

Having dined in restaurants from Afghanistan to Uruguay, Brazil to Vietnam, and many points in between, the most common item found on the menu is Gallus gallus domesticus. In its Jan. 17, 2019 issue, The Economist published an article on how chicken became the world's most popular meat. "The chicken industry is a dirty business, but it is also a profitable one. In the OECD, a club of mostly rich countries, pork and beef consumption has remained unchanged since 1990. Chicken consumption has grown by 70% (see chart)."

The article further notes that "[h]umans gobble so many chickens that the birds now count for 23bn of the 30bn land animals living on farms." Importantly, "Chicken is cheap... . A pound of poultry in America now costs $1.92, a fall of $1.71 since 1960 (after adjusting for inflation). Meanwhile the price of beef has fallen by $1.17 a pound to $5.80."

A hen and her chicks I saw in
Jinja, Uganda

Moreover, "It is not just fussy Western eaters who increasingly favor chicken. Rising incomes mean that demand for the meat is growing even faster in poorer countries. As a result, chickens are now the world's most widely traded meat. In economic terms they are, in effect, the opposite of cars. They are produced whole. But their value is maximized once they are broken up.

"Though westerners prefer lean, white meat; many in Asia and Africa prefer dark meat, which includes legs and thighs. These preferences are reflected in local prices: in America breasts are 88% more expensive than legs; in Indonesia they are 12% cheaper. Differences in the price of chicken feet are even starker. The thought of eating talons is abhorrent to many Westerners, but they often feature in Cantonese recipes. China now imports 300,000 tonnes of 'phoenix claws' every year."

Poor food security in industrial and developing countries alike, however, have been well documented over the past several years. Fred de Sam Lazaro, director of the Under-Told Stories Project at the University of St. Thomas in Minnesota, and a special correspondent for the PBS NewsHour, produced a report explaining that "viruses like Avian flu, Ebola and Marburg often fester in animals before moving into human populations. Animals in regions that are geographically remote present particular challenges for disease containment. But in Thailand, local residents are using technology, including digital scanning, to track animals and stop outbreaks before they start."

As Mr. de Sam Lazaro notes: "There are more chickens than people in remote Thai villages like Huay Ton Chok, and people do worry when their chickens stop crossing the road. That's because, five years ago, this village suffered an outbreak of flu-like disease that killed hundreds of birds. So when farmer Udom Putipatharakal thought one of his chickens wasn't doing well and another looked really ill, he reported it."

"For four years," according to Mr. de Sam Lazaro, "Pariwat Roomak has been dispatched from the local health department, responding to calls about sick animals in the area."

Mr. de Sam Lazaro further explains:

Pariwat enters all of this information into an app on his smartphone and transmits it directly to the local government health office, the veterinary department and to a major university to be analyzed. It's part of a participatory One Health disease detection program, more simply called PODD. And it has become a model for programs like this all over the world. It's villages like this one that scientists fear could be the cradle of the next superbug, one that can jump from animal to human, and then mutate so it can leap from human to human. So the objective of this exercise is to track every diseased animal, particularly chickens, so as to contain an outbreak before it becomes a pandemic.

According to Jarwan Chaicom, who heads the local health department for this region in Thailand, "Before we adopted the system, the villagers didn't have a way to connect with each other or with us. The local government is quite far away from them. Language is another barrier, because we have seven ethnic groups and seven languages in this area."

A smartphone app developed for the program translates those languages, so all the responders can track where the diseases are occurring. Patipat Susumpow leads the firm that designed the app. It had to be simple. "The penetration rate of smartphone is not really high in those communities," says Mr. Susumpow. "So most of our volunteers either never used a phone before or used like a very simple phone."

In the case of documenting the ill chicken in Huay Ton Chok, Mr. de Sam Lazaro reports the next stop for the diseased bird was a two-hour bus ride to Chiang Mai University where "scientists determine the type of disease, the likely cause, and, accordingly, recommend action to prevent its spread, whether it's administering antibiotics to animals or disinfectant spraying."

By utilizing mobile technology, Mr. Susumpow adds: "We hope the app can be the placeholder for democratizing the power of response and disease management back to the community."

Click here to watch the video or read the transcript of the PBS NewsHour segment.

What mobile applications are you seeing that are helping to document occurrences of infectious diseases?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Blockchain, Robotics, and Healthtech: Observations from CES 2019

Me and my mom attending
the final day of CES 2019

This post is the third and final one reflecting on my experience of attending CES®2019. The first post focused on a report published by AIG, an American insurer, that presents key questions Chief Information Security Officers and risk managers should be asking regarding IoT and cybersecurity and the second post explores a report produced by GfK, a market research firm, on how "Smart Lifers" are increasingly using connected devices and services, but worry about privacy and security. This post looks at some of the companies and products that I saw during the annual consumer electronics show in Las Vegas, Nev.

I appreciate how CES attracts industry attendees, exhibitor personnel, and media from around the world (over 63,000 individuals from outside the United States attended CES in 2018, according to the Consumer Technology Association, an Arlington, Va.-based trade organization that owns and produces CES). During this year's exhibition, I spent time visiting with startups from Qatar, an oil-rich Middle East country with a population of 2.6 million people.

Among the several Qatari companies exhibiting their products or services, I enjoyed talking with Hesham Elfeshawy and learning about At Home Doc, a digital health platform supporting on-demand home doctor and other healthcare services. The application also provides virtual consultation and telemedicine enabled by voice transcription.

The Eureka Park™ marketplace at CES provides startups with a unique opportunity to showcase their ingenuity. Walking around the startup exhibits, I met Tammy Dorsey, the founder and chief executive of Prenatal Hope, a Kansas-based company that created the VivO2, a utero testing device that instantly and effectively reads fetus oxygen levels. Ms. Dorsey said that by measuring a baby's pH level, VivO2 provides attending doctors the crucial data necessary to make confident decisions and accurately detect fetal distress. She added that her company "exists to provide hope for families through reducing infant mortality with our biomedical innovations." (Wichita State University, where Ms. Dorsey received her undergraduate degree and is currently pursuing a graduate degree in  published an article on Nov. 6, 2018 that provides a good overview of the goals Ms. Dorsey is trying to achieve through her company.)

Ellie Smart Pill Box

Regina Vatterott serves as the co-founder of EllieGrid. Her company in Texas created the Ellie Smart Pill Box, a Bluetooth-enabled pillbox for families and individuals with healthy lifestyles that organizes pills by type instead of time. As a result, you can refill Ellie in seconds by simply pouring your pills straight from the bottle into one of the seven appropriate compartments.

In the demo provided by Ms. Vatterott, I was intrigued to hear an alarm and lights simultaneously flash when it is time to take the pills. After opening the device, specific lights were illuminated indicating which pills to take and how many. For those who need to take some pills more than once a day, the user can set multiple alarms through the EllieGrid app.

As an avid walker (and I certainly walked several miles throughout my time at CES), I can appreciate any product that will bring comfort to my feet. The French company Digisole designed the PODOSmart, which is a connected insole that provides gait analysis, facilitates walking balance, 3D motion analysis, and monitors stride pattern, and evolution tracking. For walking in cold climates, Digisole's Warm Series are designed to keep your feet warm.

QTrobot designed for children
with autism spectrum disorder 

Since a close friend and her husband have a daughter with autism spectrum disorder (ASD), I am mindful of products or services tailored to helping people that encounter challenges with social skills, repetitive behaviors, speech and nonverbal communication. Designed by LuxAI in Luxembourg, the QTrobot, an expressive humanoid social robot that is a friend, tutor and teacher for children with ASD. According to a marketing brochure, "With QTrobot, children can learn emotional and social skills in a simplified and engaging manner."

Moreover, "QTrobot comes with multiple educational programs for autism. Each of these programs focuses on one set of skills which is necessary for children to learn in order to be more independent and socially more interactive." It is also worth noting that the LuxAI booth was distributing copies of the findings of a study, More Attention and Less Repetitive and Stereotyped Behaviors Using a Robot with Children with Autism, which is aimed "to access the usefulness of QTrobot, a socially assistive robot, in interventions with children with autism spectrum disorder (ASD) by assessing children's attention, limitation, and presence of repetitive and stereotyped behaviors."

While I still hold some skepticism about the long-term global adoption of cryptocurrency, I do support the underlying blockchain technology as a distributed ledger, or database, shared across a public or private computing network. As such, I found my visit to Pundi X's booth to see their blockchain-based solution for digitalizing any store quite interesting. Zac Cheah, co-founder and chief executive of the Singapore-based company, said customers can conduct cryptocurrency transactions using traditional fiat currency, bank cards, mobile wallets or the Pundi X PASS Card.

SecuX Technology, Inc. is a blockchain security company devoted to developing comprehensive solutions to secure people's valuable digital assets in blockchain. The Taiwanese company lists the following security features for its SecuX Crypto Hardware Wallet: A CC EAL 5 certified SE to secure private key and device PIN from attacks; tamper proof firmware pre-load and upgrade mechanism; a personalized PIN code or one-time-password to control the access to device or wallet applications; randomized digital keypad to avoid following keystrokes; physical confirmation for each transaction to avoid man-in-the-middle attacks; and anti-tamper packaging. Howard Liao, Managing Director of SecuX's European office in Germany, said the SecuX wallets support cryptocurrencies such as BTC, BCH, ETH, LTC, XRP and ERC-20 for the time being.

I had a wonderful conversation with Alex Mashinsky, the founder and chief executive of Celsius Network, a blockchain-based borrowing and lending platform, founded in the U.K., whose goal is to bring the next 100 million people into cryptocurrency. Mr. Mashinsky said his company is providing "a new way to earn, borrow, and pay on the blockchain."

Based in France, Billal Chouli, founder and chief technology officer of NeuroChain, said his company "is the next-generation of blockchain technology that improves the security, reliability, and scalability of current blockchain protocols." Dr. Chouli added that NeuroChain "is the first genuinely decentralized, energy-efficient blockchain, powered by machine learning and artificial applications."

Mark Mueller-Eberstein and Phil Klein
talking with attendees from their book talk

One more item to mention is my attendance of a book talk featuring Mark Mueller-Eberstein and Phil Klein, co-authors of The Trust Technology: How Blockchain is changing your world. You can watch the discussion in its entirety through this link or the video embedded below. (I will publish a review of the book in a future post on this blog.)

If you attended CES 2019, what did you see that captured your attention or imagination?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Smart Lifers Increasingly Use Connected Devices and Services, but Worry About Privacy and Security

The previous post on this blog focused a conference session, "Getting Hacked: IoT and Beyond," I attended at CES®2019 in Las Vegas, Nev. where AIG, an American insurer, released a report that presents key questions Chief Information Security Officers (CISOs) and risk managers should be asking regarding the relationship between IoT and cybersecurity. In addition to this session, I attended one entitled "Living the Smart Life: The Evolution of Today's Consumer" where representatives of GfK, a multinational market research firm based in German, shared their latest research on consumers and the "smart life."

During the conference session, which an archived video may be viewed through this link, Karen Ramspacher and Kathy Sheehan, GfK's Senior Vice President of Innovation & Insights and Executive Vice President of Consumer Life, respectively, co-presented "The Promise of the Smart Life: Opportunities and barriers that will impact adoption."

A point made early in the presentation is how the global smartphone market has reached saturation. Voice technologies, however, is growing by 21 percent of the worldwide population have used the emerging technology. Interestingly, the median age of adults using voice assistants 42.7 with 58 percent using them for streaming music, 48 percent for weather updates, and 37 percent to set a timer or alarm. What is more, as reflected in the slide to the right, the global use of voice technologies is high in Argentina, Brazil, India, Russia, Spain, and the United States.

Whether it is voice assistants or the smart home, the presentation crucially says the "demand for simplicity" where "if a new technology product is not simple to use, I lose interest in it." The presentation notes the smart home is hitting a tipping point in leading markets with 49 percent of Americans owns at least one smart home product or device. And there is still room for growth with 58 percent of Americans, an increase of seven percentage points since 2015, "feel smart home technology will impact their life over the next few years."

Where will the growth continue? Americans interested in having the following types of smart home features: Optimize energy usage, remote home monitoring, appliances communicate with each other, self-diagnose problems, remote via mobile devices, real-time energy tracking, further automate household chores, and share health data with healthcare providers.

And more sophisticated applications are emerging with communication between appliances becoming the fastest growing emerging technology and smart home benefit. Furthermore, new apps and interfaces are making it easier for consumers to monitor their homes for safety, which include receiving alerts when something unusual happens at home (e.g., smoke/gas, security alarm, door/window opening or water leak), monitor your home with a video camera, control lights inside or outside your home, and grant access to home when you cannot be there with a scheduled code to let housekeeper/guest in.

With respect to detection opportunities, the presenters explained 57 percent of Americans, up from 49 percent in 2012, are interested in smart home products that reduce allergens in the home. Globally, 41 percent of people want a car that protects from health threats (allergens, pollution, and other environmental hazards), and 58 percent worry about getting sick from contaminated food or drink.

On the topic of mobility (auto), 55 percent of Americans said their vehicle selection has been influenced by in-vehicle technology and 58 percent of Americans attest that they definitely or probably will consider a vehicle with personal assistant capabilities.

When it comes to using mobile applications for health and wellness, 69 percent of U.S. consumers, up four percentage points from 2009, focus on preventative healthcare measures as opposed to treating current issues. In providing reasons for tracking or monitoring their health or fitness, 52 percent say they do so to motivate themselves to exercise, 52 percent do so to maintain or improve their physical condition, 51 percent do so to lose weight, 45 percent do so to motivate themselves to eat or drink healthy, and 30 percent do so to improve sleep.

Regarding mobile payments, online banking and shopping are two areas consumers overwhelmingly see the benefits far outweighing any negatives. While mobile wallets have lower acceptance rates in the U.S., growth globally suggests further opportunity in the American market.

The presenters then discussed the demographics of the Smart Lifer. Six percent or 16 million Americans are considered a Smart Lifer with 59 percent being female, 51 percent having children, and 60 percent being married. Importantly, Smart Lifers say privacy concern is the primary barrier for adoption of digital home assistants in the U.S.

More Smart Lifers are saying no to always-on connectivity with 37 percent of global consumers responding they regularly take a break from technology or unplug/disconnect to maintain health (an increase of 14 points since 2014). Among Americans aged 18-24, 25 percent say they feel disconnected without the internet (down seven points since 2013), 25 percent say it is important to always be reachable wherever they are (down six points since 2013), and 22 percent like to be connected, either by phone or the internet, at all times (down six points since 2013).

The presenters also noted that 2018 was the year when the danger of social media becomes apparent with 82 percent saying they were concerned about their social media footprint. And 17 percent citing personal information falling into the wrong hands as a top concern.

Lastly, on the topic of brand trust, 44 percent of global consumers strongly agree with "I only buy products or services from a trusted brand."

As more global consumers purchase internet-connected devices and services, cybersecurity will have a direct correlation in establishing brand trust. And as noted in the previous blog post, creating strong cybersecurity standards to protect consumer data will involved the collaboration of CISOs and risk managers. The GfK presentation demonstrates the large global market opportunity for connected hardware manufacturers and service companies. However, companies should understand that incorporating strong data protection processes will serve an important value proposition in selling products and services to Smart Lifers.

Which findings from the presentation will your company incorporate in its operational or product development strategy?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

IoT and Cybersecurity: Key Questions CISOs and Risk Managers Should Be Asking

In what has become a regular experience over the past two decades, I had the privilege of attending CES®2019 in Las Vegas, Nev. As presented in a press release by the Consumer Technology Association, an Arlington, Va.-based trade organization that owns and produces CES, this year's event covered a wide-array of topics including 5G, artificial intelligence, digital health (MedCity News provides four takeaways from the 2019 Digital Health Summit), and autonomous vehicles. Cybersecurity was also a dominant theme during this year's event.

The "Getting Hacked: IoT and Beyond" was one of several conference sessions at this year's CES, which focused on cybersecurity. The description for this particular session notes that "smarter homes, cars, buildings and networks powered by the Internet of Things change the risk landscape for companies and consumers." While I recommend watching an archived video through this link of representatives from American International Group, Inc. (AIG), an American insurer, and other risk experts exploring how devices meant to improve lives and business operations make us vulnerable to attacks, this blog post focuses on a report that is aimed to provide Chief Information Security Officers (CISOs), "Risk Managers and other decision-makers with questions they can ask each other to help establish and strengthen relationships and ultimately lead to stronger protections for their organizations."

The report importantly notes: "There's no question that cyber risk represents one of the top threats facing enterprises today, and addressing the challenge will require a coordinated effort among leaders at all levels of the organization."

Furthermore, "As enterprises seek to address rapidly evolving cyber risks, they may discover a common challenge: a yawning gap between the person responsible for ensuring the organization is protected from cyber attacks -- usually a Chief Information Security Officer or similar position -- and the person responsible for ensuring the organization is protected from the risk of financial loss that inevitably results from those attacks -- typically a Risk Manager, Treasurer or General Counsel. Boards of Directors are increasingly responsible for oversight of both."

The report also crucially explains that "cyber threats are rarely contained within a clearly defined box. They combine characteristics of multiple kinds of threats, and can create a wide range of impacts depending on the attacker’s motives and the unintended consequences inherent to a viral attack."

What is more, "Attackers will take the path of least resistance. IoT devices usually ship with insecure configurations. Without vast improvement in consumer adoption of security best practices, they will create substantial risk for the foreseeable future. Even individuals and enterprises who practice good security basics aren't guaranteed to be safe without massive support from vendors to keep IoT updated with the latest security patches.

"The fluidity and complexity of cyber threats highlight the critical need to align prevention and remediation efforts. The individuals working to prevent cyber attacks from occurring ultimately share the same goal as the individuals working to protect the organization from the fallout of a breach, and they will be most effective in meeting their shared goal when they work together."

Having followed the interconnected relationship between IoT and cybersecurity by reading various reports and attending multiple conferences on the topic, I concur that "Risk Managers can and should communicate closely with CISOs to better understand not only where cyber vulnerabilities exist for their enterprise, but also what is being done to prevent them, as well as the likelihood and potential impact of a cyber event, should those prevention efforts be circumvented. Similarly, CISOs can and should communicate closely with Risk Managers to better understand how cyber risk transfer can complement the CISO’s efforts to prevent cyber attacks."

The report presents the following three questions for Risk Managers to ask:

1. What are our unique vulnerabilities?
2. How do we already protect ourselves?
3. What could those vulnerabilities cost us?

Questions for CISOs to ask include:

1. Why should we consider cyber insurance?
2. What does cyber insurance cover?
3. How is the legal landscape going to change the IoT?

AIG's report concludes that "connectivity enabled by the Internet of Things is creating new risks for enterprises. It is critical for those enterprises to close the gap between the person responsible for ensuring the organization is protected from cyber attacks and the person responsible for ensuring the organization is protected from the risk of financial loss stemming from attacks that do occur.

"The collaboration between Risk Managers and CISOs, and among them and other business leaders from across the company, should mirror the complexity and interconnectedness of attacks themselves. Only when leaders work together will businesses be well positioned to prevent attacks that can be prevented, respond as quickly as possible to attacks that do occur, and achieve restoration in a timely manner that minimizes long-term fallout.

"It all starts with a conversation."

What conversations are you having with your colleagues about IoT and cybersecurity?



Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Report Says the Rising Incidence of Cardiovascular Diseases Poses a Substantial Challenge to Asia-Pacific Markets

"Cardiovascular diseases (CVDs), disorders of the heart and blood vessels, are the leading global cause of death annually," says a published by The Economist Intelligence Unit (The EIU) and EIU Healthcare, its healthcare subsidiary. Commissioned by Amgen, an American biopharmaceutical company, Protecting the heart: Preventing cardiovascular disease in Asia further explains CVDs "levy a substantial financial toll on individuals, their households and the public finances. These include the costs of hospital treatment, long-term disease management and recurring incidence of heart attacks and stroke. They also include the costs of functional impairment and knock-on costs as families may lose breadwinners or have to withdraw other family members from the workforce to care for a CVD patient. Governments also lose tax revenue due to early retirement and mortality, and can be forced to reallocate public finances from other budgets to maintain an accessible healthcare system in the face of rising costs."

The report provides a study of the economic impact of CVD risk factors on the following Asian markets: Australia, China, Hong Kong, Japan, Singapore, South Korea, Taiwan and Thailand. Below are its key takeaways:

"The rising incidence of CVD poses a substantial challenge to Asia-Pacific markets. The rising incidence and expected treatment costs of CVDs challenge the sustainability of many healthcare financing models in the region. Early retirement and functional disability from rising CVD incidence also erode the tax base and put pressure on social service budgets. This can lead to fiscal constraints that have a regressive impact on citizens. Reducing risk factor incidence, which could reduce and even prevent CVDs, is a more preferable strategy.

"The four main modifiable cardiovascular risk factors pose a communications challenge for governments and health agencies. Because the effects of the four risk factors on cardiovascular health—smoking, hypertension, obesity and high cholesterol— can accumulate over many years, individuals have little to no knowledge that they have increased their risk for CVD until symptoms occur. This makes preventing these risk factors all the more challenging.

"Hypertension is the risk factor that contributes the highest cost. Hypertension is exerting the greatest population attributable cost across the eight markets with an estimated total of US$18bn annually, according to Economist Intelligence Unit estimates. Across the other estimated annual risk factor costs, high cholesterol contributes US$15bn, smoking US$11bn, and obesity $8bn.

"The costs of CVDs are not fixed. Greater awareness and policymaker attention can substantially reduce CVD costs as many obstacles and corresponding solutions have been identified as effective. For example, the World Heart Federation provides a number of roadmaps to manage CVD risks brought on by hypertension, high cholesterol and smoking. For the two “silent” risk factors, the pathways are similar: improve patient and physician awareness of key risk factors, increase access to diagnostic testing, empower patients with knowledge, and provide professional support and affordable drug access to manage their risks.

"Policy options for primary prevention include choice 'nudges.' Policy options for primary prevention of all risk factors include 'nudges' to positively influence dietary choices, such as improved food labeling or partnerships with companies to encourage food reformulation to remove unhealthy ingredients. Investment in green spaces in urban areas and subsidized access to health facilities can also encourage physical activity.

"Effective secondary prevention can also significantly affect costs and outcomes. The recurrence rates for people suffering from a CVD event are high. For instance, in Australia, the risk of a subsequent stroke is 43% in the ten years following the first event, and the mortality rates for known sufferers of CVDs are substantially higher than those not at high risk. Across the span of a first CVD event and one’s death, the cost for disease management and the treatment of secondary events can be significant. Prioritizing at-risk groups can also drive positive impacts on CVD cost management."

Based on my experience, I agree that "[t]he Asia-Pacifc's CVD burden sits within the broader context of a rise in NCDs (noncommunicable diseases), due partly to ageing populations and partly to economic transition. It is a threat to the health and financial security of citizens and a burden on the public finances. Efforts to increase access to healthcare over recent decades will be undermined if cost-cutting measures are required to balance the books."

The report encouragingly concludes that "many risk factors for CVDs are modifiable through primary and secondary preventions, across behavior, lifestyle and medical domains. Looking forward, a powerful CVD action plan is one that targets multiple points along the 'continuum' from primary prevention to cost-effective treatment methods and secondary prevention. Innovation in service delivery and greater leveraging of data, digital technology and wearable devices can also help optimize CVD detection and management in cost-effective ways."

What solutions are you seeing that are reducing the incidence of CVDs?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Further Growth Ahead in 2019, but Worrying Risks Loom

According to The Economist Intelligence Unit (The EIU), the research arm of The Economist, "The world's major industries are all set for further growth in 2019, but there are some worrying risks." The EIU's Industries in 2019 report discusses changes that US President Donald Trump's "policies—and other global trends—have already brought to six industry sectors: automotive, consumer goods and retailing, energy, financial services, healthcare, and telecoms. And we look ahead to the challenges facing these businesses in 2019."

The report highlights five major risks that could affect The EIU's industry forecasts for the year ahead.

• The US-China trade war: The EIU cut its 2019 growth forecasts for the automotive and consumer-goods sectors in particular compared with six months ago.
• A global slowdown: even those countries not directly affected by growing trade barriers could be vulnerable to a change in business confidence in 2019, with the most likely impact being on emerging markets.
• Brexit: the UK's exit from the EU in March 2019 will be a drag on sectors including financial services, automotive and healthcare, regardless of any deal that is struck.
• Sanctions on Iran: the US's decision to backtrack from the international Joint Comprehensive Plan of Action could push up global oil prices in 2019.
• Cybersecurity and technology risks: a tussle for technological dominance is at the core of the US-China trade dispute, while regulators are also struggling to ensure safe connectivity.

The report importantly notes that "most of these risks are, to some degree, certainties. The UK will officially leave the EU on March 30th 2019, while US sanctions on Iran have already been imposed. It is not yet clear, however, what the full effects of these will be. Brexit's impact in 2019 depends on whether the transition deal that was negotiated in mid-November of this year is finalized, easing the UK's trade problems as it exits. In the case of Iran, much hinges on how successful the US—unsupported by the EU—is in blocking Iran's exports. If global oil supplies tighten sharply, then oil prices could yet soar. As for cybersecurity and technology risks, they are always present but are likely to increase in 2019 as connectivity spreads."

Moreover, "The power struggle between the US and China has already come to a head in 2018. In a three-stage process, the US has imposed additional tariffs of between 10% and 25% on Chinese imports worth about US$200bn a year. China has retaliated with its own trade barriers against the US, while liberalizing terms with some of its other trading partners. However, a further round of retaliation now looks likely in either December 2018 or early 2019, and could cover all of the remaining trade between the two countries."

I concur with The EIU that "how businesses react to rising tariffs will be as important as the tariffs themselves. Faced with increases in their trading costs, they can swallow the extra expense, pass it on to end buyers, or seek out new suppliers and new markets. They may also respond by reducing investment, laying off staff and reducing costs. Should that happen, we would expect global trade to shrink, inflation to rise, consumers' purchasing power to fall and global economic growth to slow."

The EIU expects all six of the industries covered in its "report growth in 2019, and in most cases it will be strong growth."

• New-car sales in the 60 markets covered by this report will rise by 2.7%, with commercial-vehicle sales rising at the same rate.
• World retail sales will increase by 2.8%, led by 6.1% growth in China.
• Global energy consumption will rise by 1.8%, with particularly strong growth for renewables, while oil prices will firm.
• Total deposits with the global financial industry will increase by 5.8%, while lending will rise by 6%.
• Healthcare spending will climb by 5.1% worldwide, including 5.7% higher spending on pharmaceuticals.
• Global mobile subscriptions will increase by 3%, fixed lines by nearly 2% and broadband subscriptions by 6%.

"This overall growth will give companies some breathing space as they maneuver to avoid the risks. Even so, the least adaptable will undoubtedly struggle during the sometimes difficult year ahead."

The Economist presents a list of ten items that will be the biggest stories of the year ahead.

What are your predictions for 2019?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

The Mobile Economy Will Generate $200 Billion of Economic Value in the MENA Region by 2022

A report published by PwC says the Middle East and North Africa (MENA) region is young, with over 40% of people under 25. Furthermore, PwC asserts that youth unemployment in the region is among the highest in the world at 28%.

While it does not generate the headlines on the nightly news in the United States, many governments in the MENA region understand it must cut public expenditures by reducing the number of people on the public payroll. Some government officials in the region also recognize the important role a thriving private sector will play in helping young people find jobs. Not only will a growing private sector ease governmental budgetary pressure, but it will produce additional tax revenue.

Therefore, as my colleagues and I seek business and investment opportunities in the MENA region's information and communications technology sector, we read with great interest The Mobile Economy: Middle East and North Africa 2018. Produced by GSMA Intelligence, the research arm of London, England-based GSMA, the report presents four key points.

Subscriber growth slowing, but growth potential remains

"By mid-2018, there were 381 million unique subscribers across the Middle East and North Africa (MENA) region, accounting for 64% of the population. Despite annual subscriber growth of 4% on average over the last four years, MENA remains the second least penetrated region in the world. There is, however, significant variation among countries in the region, from the advanced Gulf Cooperation Council (GCC) Arab States where 77% of the population on average are mobile subscribers, to Other Arab States such as Comoros, Djibouti and Somalia where subscriber penetration is around 30%."

The report importantly points out that "between 2017 and 2025, the MENA region will see the fastest subscriber growth rate of any region except Sub-Saharan Africa, growing above the global average at a CAGR of 2.5% to reach 459 million. By this time, 69% of the population will be mobile subscribers, only slightly behind the global average of 71%."

Mobile contributing to jobs and economic growth

It is the report's second point that I found most valuable with respect to the future potential of the region's ICT sector. According to the GSMA, "In 2017, mobile technologies and services generated 4% of GDP in the MENA region, a contribution that amounted to just under $165 billion of economic value added. By 2022, the mobile economy in the region will generate around $200 billion of economic value added as countries continue to benefit from the improvements in productivity and efficiency brought about by increased take-up of mobile services."

The report crucially explains that "the mobile ecosystem supported more than 1 million jobs in 2017. This includes workers directly employed in the ecosystem and jobs indirectly supported by the economic activity generated by the sector.

"In addition to the impact on the economy and labor market, the mobile sector also makes a substantial contribution to the funding of the public sector, with more than $17 billion raised in 2017 in the form of general taxation."

Advanced MENA markets at the forefront of innovation

With respect to 5G technology, the report notes: "Some mobile operators, particularly those in some of the GCC Arab States, are seeking to be global leaders in 5G deployments, and are pushing ahead with tests and trial launches ahead of commercialization as early as 2019. These markets will exhibit relatively rapid 5G rollout, with adoption reaching 16% of total connections by 2025, slightly above the global average."

"Enhanced mobile broadband will be the key use case in early 5G deployments in the region, while applications and services for enterprises are tested and then introduced. There also exists a significant addressable market for 5G-based fixed wireless services, particularly in those countries with limited fiber penetration. In the enterprise space, there is broad agreement from MENA operators on the key industry verticals where 5G can deliver the greatest long-term value, including smart cities, utilities, mining and tourism."

What is more, "While the potential is clear, long-term monetization may require greater maturity of the 5G ecosystem – particularly for the more innovative and mission-critical services, such as autonomous vehicles and certain smart city applications. Key to this will be industry-wide collaboration and innovation centers, where companies from different sectors can experiment with the 5G ecosystem to develop new products and services."

On the topic of Internet of Things (IoT), the report says "the number of IoT connections across the MENA region will triple between 2017 and 2025, reaching 1.1 billion. Currently, the consumer and industrial IoT segments have equal shares of total IoT connections, but industrial IoT is where most of the growth will take place due to an increase in smart utilities, smart retail and smart city deployments."

Moreover, IoT revenue in the MENA region will increase at an average annual rate of 19% to 2025 to reach $55 billion. Applications, platforms and services account for the largest share of IoT revenue and will grow further as mobile operators continue to deploy different strategies and business models to move beyond offering connectivity only."

The report also discusses the topic of digital identity in that "the MENA region has exhibited rapid uptake of digital trade, driven by growth in mass connectivity and mobile device penetration, and more recently by advances in the provision of digital identity. Consumers are increasingly demanding to access services securely, shielded by robust privacy safeguards and strong data protection delivered by digital identity capabilities. To this end, Mobile Connect is a secure universal log-in solution which, by matching the user to their mobile phone, allows them to log-in to websites and applications quickly without the need to remember passwords and usernames, and with no personal information shared without permission. Turkey is a key market for Mobile Connect: Turkcell, for example, uses the solution for its Fast Login authentication application, and is hoping to develop additional services that will form the basis of new revenue streams."

Realizing the potential of a digital society

I concur with the report's authors that "public policy and regulation are key factors in the spread of mobile-enabled services across the MENA region. By setting the right regulatory context, governments can create incentives for mobile operators to continually upgrade and expand mobile services in the region. The GSMA encourages governments across MENA to review and recalibrate telecoms policy to advance the digital transformation and to reflect new market dynamics. Three key areas require close attention:

• Fostering a transparent and stable licensing framework that promotes a high quality of service and encourages investment; and
• Aligning mobile sector taxation with national ICT objectives so as not to create obstacles to investment or consumer adoption; and
• Creating a spectrum roadmap to meet future demand for mobile services.

What role does the MENA region play in your business or investment strategy?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Is the US-China Trade War Creating Opportunities in Other Asian Countries?

Achieving business success often involves a certain amount of luck in trying to predict the future, which is challenging enough during periods of normal business activity. However, at the time of writing this post, there is nothing 'normal' in the world of international business. Whether I agree or not with U.S. President Donald Trump's allegations that China plays unfairly in the game of international trade, his policies are forcing my colleagues and I to reexamine our business dealings and investment exposure as they relate to the Middle Kingdom. When evaluating our short- and long-term strategy is: Should we shift our focus to business opportunities in other countries, which may benefit from the US-China trade war?

A new report, Creative disruption: Asia's winners in the US-China trade war, by The Economist Intelligence Unit (The EIU) boldly claims "the US and China are rapidly discovering how wrong Donald Trump was when he said that trade wars are good and easy to win. The two countries have so far imposed tariffs covering roughly US$360bn of merchandise trade between them. A breakdown in negotiations suggests that neither side is yet seriously looking for an 'off ramp' in the dispute. The Economist Intelligence Unit expects that by early 2019 tariffs will have been introduced on the vast majority of US-China merchandise trade."

The report examines which countries in Asia will benefit most from the US-China trade war. It focuses on the comparative advantages in the economies of North-east, South-east and South Asia, examining the broader region overall, and discussing the opportunities and disruptions caused by the ongoing trade war. The report also focuses on the impact the US-China trade war may have on three important sectors: information and communications technology (ICT) products; automotives and automotive parts; and apparel and readymade garments (RMGs). This post focuses on the report's discussion on the ICT sector.

The EIU explains that "the ICT industry has been a particular focus for the US government as it has moved to increase tariffs on imports from China. This is partly because it is by far the biggest category of US imports from China, with electronics and related component imports alone amounting to some US$150bn of the total US imports from China of US$526bn in 2017. It is also because one of the aims of the US tariff strategy is to hamper the Chinese government's Made in China 2025 development agenda—an initiative focused on cultivating the country's key high-technology sectors."

The report importantly notes that "Vietnam and Malaysia will benefit the most from the US-China trade war, particularly in low-end manufacturing of ICT products, such as intermediate components and manufacturing of consumer goods like mobile phones and laptops. Major electronics companies have existing operations in these countries. Dell (US), Sony and Panasonic (both Japan) have plants in Malaysia, for example, while Samsung (South Korea) and Intel (US) have a presence in Vietnam. This means that they would be able to re-deploy investment and production relatively smoothly. In addition, both countries have strong road, rail and port infrastructure, which has in turn helped to develop strong local logistics and shipping networks to support merchandise trade."

As reflected in the picture above, "India, Indonesia and Thailand should also be able to secure some benefits from the relocation of export-oriented ICT manufacturing, according to the report. However, this type of export production is more limited in these markets than it is in Vietnam and Malaysia at present, meaning that international trade links in these markets may be underdeveloped."

With respect to the Philippines, the archipelagic country "will see mild disruption stemming from the trade war, owing to the importance of the Chinese market for shipments of ICT intermediate components from that economy." The EIU, however, does "not expect the Philippines to benefit massively from any shift in ICT export supply chains, owing to its weak regulatory and business environment. The country's underdeveloped digital ecosystem will also be a further hindrance to investment, with internet speeds the slowest in Asia."

For those companies engaged in the ICT sector in Japan, Singapore, South Korea and Taiwan, the report alarmingly says these countries "are set to experience even greater disruption from the trade war, particularly in the short term, owing to the importance of the Chinese market to exporters in those economies. China is a major destination for intermediate and final ICT goods from all four economies, meaning that companies in that sector will be heavily exposed to the impact of tariffs on demand for these products."

What is more, "High taxes, limited land and expensive labor will prevent significant reshoring of ICT manufacturing operations from China back to these four markets. However, the impact of the trade war on exports from South Korea, Japan, Taiwan and Singapore will be limited by the fact that all four tend to produce high-end ICT components that are not easily replaceable through import substitution. Thus, although the Chinese operations of companies from these economies may be disrupted, their domestic exports will be less vulnerable."

Having done business in China for several years, I agree with The EIU that "even before the start of the US-China trade war, multinational companies were becoming increasingly wary about the risk of becoming over-dependent on China as a manufacturing base. Such fears have been aggravated by a combination of rising labor and land costs in China. Meanwhile, markets in South and South-east Asia have looked increasingly attractive in their own right, as their consumer markets have developed."

Are you finding new opportunities in the ICT sector in Asian countries outside of China as a result of the US-China trade war?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.