National exercise tests Singapore’s cyber attack resilience

BY Fraser Tennant

Against a backdrop of increasingly frequent, sophisticated and impactful cyber attacks, the Cyber Security Agency of Singapore (CSA) has carried out a large multi-sector exercise to test the robustness of the country’s cyber incident management and emergency response plans.

Code-named Cyber Star, the exercise tested 11 critical information infrastructure sectors (CII): government, infocomm, energy, aviation, maritime, land transport, healthcare, banking and finance, water, security and emergency and media.

Comprising of a series of scenario planning sessions, workshops and table-top discussions, exercise participants were tested on their incident management and remediation plans in response to simulated cyber security incidents, such as a malware infection or a large-scale distributed denial of services (DDoS) attack.

The Cyber Star exercise followed a similar exercise in May 2016 which covered the banking and finance, government, energy and infocomm sectors.

"This is a good opportunity for us to level-up our capability and make sure that we are ready as possible," said deputy prime minister Teo Chee Hean, who observed the exercise at CSA headquarters alongside more than 200 sector leaders and owners, including the Monetary Authority of Singapore, the Energy Market Authority and Singapore Airlines.

“With greater interconnectivity and proliferation of cyber threats, the ability of our critical sectors to respond promptly to attacks is vital,” said David Koh, chief executive of the CSA.

The exercise this week also coincides with a public consultation on a proposed Cybersecurity Bill, which was launched last week by the Ministry of Communications and Information (MCI) and the CSA. The proposed Bill seeks to establish a framework for the oversight and maintenance of national cyber security in Singapore and will empower CSA to carry out its functions. The Bill also aims to minimise cyber threats and ensure that the country can better deal with cyber attacks in future.

The Bill has four main objectives: (i) to provide a framework for the regulation of CII owners; (ii) to provide the CSA with powers to manage and respond to cyber security threats and incidents; (iii) to establish a framework for the sharing of cyber security information with and by CSA officers, and the protection of such information; and (iv) to introduce a lighter-touch licensing framework for the regulation of selected cyber security service providers.

The Cybersecurity Bill consultation runs from 10 July to 3 August 2017.

News: Singapore’s 11 critical sectors tested for first time in national cyber security exercise

Activism the new normal – report

BY Richard Summerfield

Shareholder activism is increasingly widespread. No longer just a niche tactic employed by a small number of hedge funds, it is becoming more mainstream, according to a new report from J.P. Morgan Chase on the 2017 proxy season.

The report, ‘The 2017 Proxy Season – globalization and a new normal for shareholder activism’, notes that while the 2017 proxy season began slowly, it ended with a number of high-profile, mega-cap campaign announcements. Yet, surprisingly, the number of activist campaigns recorded during the proxy season was flat. According to the report, this paucity of activity is not indicative of a decline in the popularity of activism but rather demonstrates activism's metamorphosis into a more commonly accepted practice.

“Investors around the globe continue to use activist tactics to bring about change,” the report notes. “As a result, shareholder activism has become an accepted strategy across global markets, even in regions once believed to be hostile or structurally difficult for campaigns. After several years of growth, global activist campaign volume dipped by 6 percent in 2017, with nearly every region experiencing a modest decline in new campaigns, year-over-year. The US market, in particular, seemed to settle into a ‘new normal’ of campaign volume, accounting for 54 percent of global volume, as the strategy gains footing in international markets.”

Globally, there were 606 activist campaigns in the year to 30 June. The US saw the lion’s share of activity, with 327 campaigns. Of those, 68 proxy contests were launched during the 2017 season, 54 of which had been completed by 30 June.

Nineteen percent of campaigns in the US were launched by first time activists and nearly two-thirds of all 2017 US campaigns targeted companies with market caps below $500m. Smaller funds were most active during the 2017 proxy season, focusing on smaller-cap companies.

The report also claimed that institutional investors are increasingly turning to activism. As activism has matured as a strategy, traditional long-only funds have begun to embrace it. Actively managed funds displayed a willingness to publicly support activist campaigns and also partnered with activists to target one of their portfolio companies.

M&A focused activism has also become prevalent in recent years. Five hundred M&A-related campaign demands were made by activists globally during the 2016 and 2017 proxy seasons, which accounted for approximately 75 percent of total value demands for that period.

Report: The 2017 Proxy Season – globalization and a new normal for shareholder activism

More money, more problems

BY Richard Summerfield

Barely a week goes by without a major cyber attack making global headlines. Indeed, in recent weeks, the ‘WannaCry’ and ‘Petya’ ransomware attacks have caused chaos across a spectrum of organisations the world over. And, although many companies are beginning to respond to the threat, often the response is misguided, according to a new report from KPMG and BT.

The report, 'Securing the digital enterprise: The cyber security journey – from denial to opportunity', notes that too many companies are treating cyber security as a siloed issue, which can be dealt with simply by “throwing money” at the problem. While companies must ensure they have, for example, adequate and updated firewalls and antivirus protection, it is equally as important to pool shared resources and treat cyber security as a conventional operational risk issue. This requires greater ‘buy-in’ on cyber issues from the board and a better integration of cyber issues into overall business strategy.

David Ferbrache, Technical Director in KPMG’s cyber security practice, said: “The recent spate of cyber-attacks is keeping cyber risk at the top of the business agenda, and as such investments are being made. The business community needs to avoid knee-jerk reactions as cyber security is a journey – not a one size fits all issue, and getting the basics like patching and back-ups right matters. It’s important to build a security culture, raise awareness amongst staff, and remember that security needs to enable business, not prevent it.”

There must be a better acknowledgement, at board level, of the threat posed by cyber attacks. As such, organisations must have the right security provisions in place. These include, companies making sure they know where they are on their journey to cyber security, which, according to the report, involves five key stages: denial, worry, false confidence, hard lessons and true leadership.

Mark Hughes, CEO of BT Security, said: “The global scale of the recent ransomware attacks showed the astonishing speed at which even the most unsophisticated of attacks can spread around the world. Many organisations could have avoided these attacks by maintaining better standards of cyber hygiene and getting the basics right. These global incidents remind us that every business today - from the smallest sole trader through to SMEs and large multinational corporations - needs to get to grips with managing the security of their IT estate, as well as their people and processes.”

Report: Securing the digital enterprise - The cyber security journey – from denial to opportunity

Outlook for global economies more buoyant than downbeat claims new survey

BY Fraser Tennant

More buoyant than downbeat is the assessment of executives as to the outlook for both global and domestic economies over the next 12 months, according to McKinsey's latest economic conditions survey.

In its ‘Economic Conditions Snapshot, June 2017’, McKinsey notes that executives view geopolitical instability and terrorism as steadily growing threats to the global economy. Furthermore, they consider geopolitical instability to be the risk most often identified as a threat to near-term global growth in every region.

According to the McKinsey survey, the top five ‘potential risks to global economic growth over the next 10 years’ are: (i) geopolitical instability in the Middle East and North Africa; (ii) threat of terrorist attacks: (iii) slowdown in China’s economic activity; (iv) rising income inequality; and (v) volatility across global financial markets.

Additional concerns expressed by executives include transitions of political leadership and changes to trade policy, as well as social unrest (the survey found that respondents in developed Asia, India and North America were the most likely to cite this). Moreover, the number of executives in Asia that identified social unrest as a global risk has more than doubled since March 2017 (up from 14 percent to 32 today) – a figure that has tripled in other developing markets (up from 4 percent to 12 percent).

Despite these continuing threats and uncertainties, executives stated that they remain buoyant about economic conditions in their home countries, with those in Europe more likely to expect improvements. Executives in North America, in comparison, were less confident. At the same time, respondents in emerging markets and developed markets have reported new divergences in their views on trade, company profits and customer demand.

“Respondents are as bullish on the global economy as they were three months ago, with nearly half saying that global economic conditions have improved in the past six months,” states the McKinsey survey. “On the global economy’s prospects, too, respondents are more positive than negative. Nearly equal shares of executives say global conditions have improved and expect conditions will continue improving in the next six months”.

Looking ahead, 39 percent of executives say they are optimistic about the long-term prospects for the world economy, basing their belief on “pockets of growth” scenarios – characterised by high but uneven and volatile global growth. That said, the survey still makes clear that respondents are equally divided on whether or not global conditions will improve during the next few months.

Report: Economic Conditions Snapshot, June 2017: McKinsey Global Survey results

Mega deals boost H1 global M&A activity, reveals new report

BY Fraser Tennant

Mega deals across the globe boosted the value of mergers & acquisitions (M&A) activity to bumper levels in H1 2017, with Europe a particular hotspot, according to a report released by Mergermarket this week.

The report, ‘Global and regional M&A: H1 2017’, reveals that although deal volume has remained low, aggregate deal value so far this year has been the opposite – due largely to the significant number of mega deals struck.

The key data in the Mergermarket report shows that: (i) 17 mega deals have been announced since the beginning of the year (including Amazon’s recent takeover of Whole Foods), as companies look to ‘future-proof’ in the wake of rapid change to technology and politics to keep ahead of rivals; (ii) the consumer sector has seen six megadeals in H1 2017, in comparison to just one during the entirety of 2016; (iii) European M&A has surged ahead, securing 32.3 percent share of global value, while both the US and Asia Pacific have seen their share drop; and (iv) the energy, mining & utilities sector has been the most targeted industry, partially fuelled by some stabilisation of oil prices.

 “The first six months of 2017, and particularly the second quarter, has seen a clear resurgence in European M&A activity,” said Jonathan Klonowski, Europe, the Middle East and Africa (EMEA) research editor at Mergermarket. “The year started with worry over potential populist shocks but there now appears to be greater confidence in the market.

“M&A activity in the first six months of 2017 has seen firms look to adapt to changes, both in terms of politics and technology. The result has seen values increase to $1.49 trillion, an increase of 8.4 percent despite there being 1117 fewer deals in comparison to H1 2016. A key driver of this has been the increase in megadeals (with a value of $10bn) – with 17 in the first half of this year in comparison to 14 in H1 2016.”

Additional findings in the report are that the US and Asia have stagnated slightly, and despite the year starting with worry over potential populist shocks, there now appears to be greater confidence in the market following elections in France and the Netherlands.

Mr Klonowski concluded: “While volumes remain relatively low, values have continued to soar and there is no obvious reason why this should not continue for the rest of the year.”

Report: Global and regional M&A: H1 2017

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