Introduction to Global Tariffs and Risk Management

The recent introduction of US-imposed tariffs has shaken global trade. While economists and financial analysts debate whether this on-again/off-again trade war fits into their model for geopolitical, economic, or supply chain risks, the result is the same: uncertainty and chaos sure to shake up business strategy for the foreseeable future. This new era of volatility will impact all companies regardless of industry or geography, forcing business leaders and technology leaders to think like risk leaders. Everyone must focus on what they can control and adapt swiftly and dynamically. This is the moment for which enterprise risk management was made.

Let Context And Control Dictate Your Risk Management Response

Even in times of relative calm but perhaps especially in times of chaos, the purpose of risk management is not to remove all risks but to determine which risks are worth taking — and at what cost — in pursuit of strategic goals and business objectives. Two mantras should dictate your approach: context and control.

Context is key to risk response. For example, for the pharmaceutical, airline, and automotive industries, where safety is paramount, pivoting to new suppliers to avoid tariff impact may not be a viable short-term strategy, as new suppliers must be certified for safety and quality.

Control is critical for risk prioritization. Trying to predict and plan for what the US administration will do next on tariffs is not a suitable basis for a stable risk management strategy. To respond dynamically but in a collected manner:

• Continue to align risk strategy with the business. Volatility will inevitably require companies to rethink their business strategy. That could mean deliberately shrinking certain product lines that may no longer be profitable, pivoting away from certain global markets with high complexity, or diversifying your offering to take advantage of current circumstances and new preferences. For risk leaders, now is the time to embrace a continuous risk management approach to ensure that the business is taking on the right risks, at the right costs, in pursuit of value.
• Focus on factors you can control. There’s never enough time, budget, or resources to tackle risk in the way we’d like. And when the risk changes with every new headline or social media post, risk pros must prioritize efforts based on level of control. To regain control over business risk arising from tariff trauma, apply a framework to identify risks to the enterprise that you can control directly, risks to the ecosystem for which you only have partial control, and external risk factors (systemic risks) that are outside your control when determining risk mitigation options. Risk pros must identify those levers, whether that involves sourcing alternative suppliers, cost management measures, or reimagining pricing.
• Bolster your risk intelligence to enable dynamic risk management. To empower executives to make the right decisions, risk professionals need to borrow a leaf from first responders and emergency services and bolster their organization’s strategic risk intelligence capabilities. Risk pros can use them to quickly spot emerging risks and threats to the business, providing actionable strategic counsel to executives when moments such as the recent tariffs occur. This requires not only good data sources but professionals who are able to quickly synthesize and write actionable and practical recommendations that executives can use to make decisions, even in the face of limited information.
• Scrutinize changes through a data risk lens. Data risks come in different flavors: risks to data, risks from data, and risks in the data. Assess whether this change — such as to the supplier, location, process, etc. — introduces data risks that are unacceptable or require additional risk mitigation efforts. Changing your supplier for IT equipment may introduce risks to data if it is preloaded with spyware during the manufacturing process or if it’s in locations where threat actors have a higher likelihood of intercepting shipments to tamper with the devices. Hastily restructuring to move operations out of a geography may introduce risks from data based on how you use or process the data, as well as how the data needs to flow for business purposes; this can potentially put your organization out of compliance with regulatory or contractual obligations.
• Adapt safety and quality control processes to cost pressures, carefully. New tariffs can negatively impact safety and quality assurance by increasing overhead costs, which pressures companies to cut corners and brings a decline in quality control practices. Yet every industry has unique requirements for safety and quality outcomes that are nonnegotiable. Pharmaceutical companies must ensure that medications are safe, even if it means incurring higher costs for quality control, and construction projects must follow quality design and safety standards for new buildings or public infrastructure. Cost pressure cannot override safety and quality outcomes. Risk leaders must communicate the value of meeting these outcomes to business leaders, even if it means higher costs in the near term. There is only so much a company can do to optimize its safety/quality management systems, so risk leaders must be involved in any new sourcing or supply chain discussions to ensure that required outcomes are upheld.

US Tariffs Don’t Apply To Services Yet, But Services Will Still Be Impacted

US tariffs focus on goods, with a range of tariffs applied based on a highly specific focus on the balance of trade with specific countries and the United States. The US administration has not been shy about its desire to bring more manufacturing back to the US, but the US tariffs do not apply to services that make up the majority of the US’s trade balance with the rest of the world. Don’t forget to include services in your overall context and control lens and:

• Include services in risk intelligence feeds. US tariffs did not initially include any tariffs on services, but by levying significant goods tariffs, other countries are now fighting back. Service sectors including financial services, healthcare, and technology services are squarely in the firing line. China has started by targeting services exports from the US in response to the 145% tariffs levied on it, in addition to its 125% goods levies in response. Risk managers should expect other countries to follow suit if tariffs continue after the current 90-day pause. Risk managers must include services in risk intelligence feeds and develop scenarios for how services can be impacted by tariffs.
• Model drops in services-related revenue. US tariffs on goods impact associated services like logistics, maintenance, and consulting for these goods. US organizations such as Apple make significant profits from services associated with their hardware ecosystem. Global manufacturers (for example, European automobile providers) rely on revenue from servicing and maintenance offerings for their cars. Risk managers must not only factor in the impact of direct tariffs on goods and supply chains but must also model drops in services revenue.

Conclusion

The introduction of US-imposed tariffs has brought a new era of volatility to global trade, impacting businesses across all industries and geographies. To navigate this uncertainty, business leaders and risk professionals must focus on what they can control and adapt swiftly and dynamically. By embracing a continuous risk management approach, prioritizing efforts based on level of control, and bolstering risk intelligence capabilities, organizations can turn chaos into opportunity and emerge stronger in the face of uncertainty.

FAQs

Q: What is the main impact of US-imposed tariffs on global trade?
A: The main impact is uncertainty and chaos, shaking up business strategy for the foreseeable future.
Q: What is the purpose of risk management in times of chaos?
A: The purpose is not to remove all risks but to determine which risks are worth taking — and at what cost — in pursuit of strategic goals and business objectives.
Q: What are the two mantras that should dictate risk management response?
A: Context and control.
Q: How can organizations adapt to the impact of tariffs on services?
A: By including services in risk intelligence feeds, modeling drops in services-related revenue, and developing scenarios for how services can be impacted by tariffs.
Q: What is the importance of safety and quality control processes in the face of cost pressures?
A: Safety and quality outcomes are nonnegotiable, and cost pressure cannot override them. Risk leaders must communicate the value of meeting these outcomes to business leaders, even if it means higher costs in the near term.

Introduction to LawZero

Computer scientist Yoshua Bengio, often referred to as the “godfather” of AI, has launched a nonprofit aimed at creating AI systems that prioritize safety over business interests. The organization, called LawZero, “was founded in response to evidence that today’s frontier AI models are developing dangerous capabilities and behaviors, including deception, self-preservation and goal misalignment,” reads a statement posted to its website. “LawZero’s work will help to unlock the immense potential of AI in ways that reduce the likelihood of a range of known dangers associated with today’s systems, including algorithmic bias, intentional misuse and loss of human control.”

Background on Yoshua Bengio

Bengio is a worldwide leader in AI and a co-recipient of the 2018 Turing Award, the Association for Computing Machinery’s prestigious annual prize that’s sometimes called the Nobel Prize of Computing. He won the award alongside two other deep-learning pioneers — Geoffrey Hinton, another “godfather of AI” who worked at Google, and Yann LeCun — for conceptual and engineering breakthroughs, made over decades, that have positioned deep neural networks as a critical component of computing. Bengio also serves as scientific director at Mila (Montreal Institute for Learning Algorithms), an AI research institute. Now, he’ll add LawZero president and scientific director to his resume.

What Are The Main AI Safety Concerns?

While artificial intelligence has sparked considerable excitement across industries — and Bengio recognizes its potential as a driver of significant innovation — it’s also led to mounting concerns about possible pitfalls. Generative AI tools are capable of producing text, images and video that spread almost instantly over social media and can be difficult to distinguish from the real thing. Bengio has called for slowing the development of AI systems to better understand and regulate them. “There is no guarantee that someone in the foreseeable future won’t develop dangerous autonomous AI systems with behaviors that deviate from human goals and values,” the University of Montreal professor wrote in a blog post announcing why he’d signed a 2023 open letter calling for a slowdown in the development of some AI tools.

Structure and Funding of LawZero

LawZero is structured as a nonprofit “to ensure it is insulated from market and government pressures, which risk compromising AI safety,” the statement says. LawZero started with $30 million in funding and says it’s assembling a team of world-class AI researchers. Together, the scientists are working on a system called Scientist AI, which LawZero calls a safer, more secure alternative to many of the commercial AI systems being developed and released today.

What Could A Safer AI System Look Like?

Scientist AI is non-agentic, meaning it doesn’t have agency or work autonomously, but instead behaves in response to human input and goals. “Such AI systems could be used to provide oversight for agentic AI systems, accelerate scientific discovery and advance the understanding of AI risks and how to avoid them,” LawZero says. “LawZero believes that AI should be cultivated as a global public good—developed and used safely towards human flourishing.”

Conclusion

The launch of LawZero marks an important step towards prioritizing safety in AI development. With its focus on creating non-agentic AI systems and its commitment to transparency and accountability, LawZero has the potential to make a significant impact in the field of AI research. As the use of AI continues to grow and expand into new areas, it is essential that we prioritize safety and responsibility in its development.

FAQs

• What is LawZero?: LawZero is a nonprofit organization aimed at creating AI systems that prioritize safety over business interests.
• Who founded LawZero?: LawZero was founded by Yoshua Bengio, a computer scientist and co-recipient of the 2018 Turing Award.
• What is Scientist AI?: Scientist AI is a non-agentic AI system being developed by LawZero, which behaves in response to human input and goals.
• Why is AI safety important?: AI safety is important because AI systems have the potential to develop dangerous capabilities and behaviors, including deception, self-preservation, and goal misalignment.
• How is LawZero funded?: LawZero started with $30 million in funding and is assembling a team of world-class AI researchers.

With the rise of software and platforms for DEIA (Diversity, Equity, Inclusion, and Accessibility), companies are now more equipped than ever to foster inclusive environments. In this article, we’ll explore the evolution of inclusive practices in the workplace, from DEIA to BEAM (Belonging, Equity, Access, and Membership). Let’s dive in and discover how companies can create a more inclusive and diverse work environment.

Understanding DEIA

DEIA is a framework used to promote diversity, equity, inclusion, and accessibility in the workplace. It’s essential to understand each component of DEIA to create a comprehensive strategy for inclusivity. Diversity refers to the presence of different groups or individuals with unique characteristics, while equity ensures that everyone has equal opportunities and resources. Inclusion creates a sense of belonging among employees, and accessibility removes barriers for people with disabilities.

Benefits of DEIA

Implementing DEIA practices in the workplace has numerous benefits, including improved employee satisfaction, increased innovation, and enhanced reputation. When employees feel included and valued, they’re more likely to be engaged and productive, leading to better business outcomes. Additionally, companies that prioritize DEIA are more attractive to top talent and customers who value diversity and inclusion.

Challenges of DEIA

Despite the benefits, implementing DEIA practices can be challenging. One of the primary obstacles is resistance to change, as some employees may feel uncomfortable with new initiatives or policies. Moreover, DEIA efforts can be time-consuming and require significant resources, making it difficult for small or medium-sized businesses to prioritize.

Introducing BEAM

BEAM is an evolution of the DEIA framework, focusing on belonging, equity, access, and membership. This new approach recognizes that inclusion is not a one-time achievement, but rather an ongoing process that requires continuous effort and commitment. BEAM emphasizes the importance of creating a sense of belonging among employees, ensuring that everyone has equal access to opportunities and resources, and fostering a culture of membership and community.

Key Components of BEAM

The BEAM framework consists of four key components: belonging, equity, access, and membership. Belonging refers to the feeling of being part of a community or group, while equity ensures that everyone has equal opportunities and resources. Access removes barriers and provides equal opportunities for all employees, and membership creates a sense of responsibility and ownership among employees.

Benefits of BEAM

The BEAM framework offers several benefits, including improved employee engagement, increased retention, and enhanced innovation. When employees feel a sense of belonging and membership, they’re more likely to be invested in the company’s success and contribute to its growth. Additionally, BEAM helps companies to identify and address systemic barriers, creating a more equitable and inclusive work environment.

Implementing BEAM in the Workplace

Implementing BEAM in the workplace requires a comprehensive approach that involves all employees and stakeholders. Companies can start by conducting a thorough assessment of their current DEIA practices and identifying areas for improvement. This can involve surveys, focus groups, and one-on-one interviews to gather feedback and insights from employees.

Strategies for Implementing BEAM

Several strategies can help companies implement BEAM in the workplace, including training and development programs, mentorship initiatives, and employee resource groups. These strategies can help to create a sense of belonging and membership among employees, while also ensuring that everyone has equal access to opportunities and resources.

Overcoming Challenges

Implementing BEAM can be challenging, especially for companies with limited resources or resistance to change. To overcome these challenges, companies can start small, focusing on one or two initiatives at a time. They can also engage with external partners and experts to provide guidance and support, and communicate regularly with employees to ensure that everyone is informed and invested in the process.

Case Studies and Examples

Several companies have successfully implemented BEAM in the workplace, achieving significant benefits and improvements. For example, a leading tech company implemented a mentorship program that paired employees from underrepresented groups with senior leaders, resulting in improved retention and career advancement. Another company created an employee resource group for employees with disabilities, providing a platform for feedback and advocacy.

Lessons Learned

These case studies and examples offer valuable lessons for companies looking to implement BEAM in the workplace. One key takeaway is the importance of continuous communication and feedback, ensuring that employees are informed and invested in the process. Another lesson is the need for ongoing assessment and evaluation, identifying areas for improvement and making adjustments as needed.

Conclusion

In conclusion, the evolution of inclusive practices in the workplace from DEIA to BEAM offers a new approach to creating a more diverse, equitable, and inclusive work environment. By understanding the key components of BEAM and implementing strategies to promote belonging, equity, access, and membership, companies can improve employee engagement, retention, and innovation. While challenges may arise, companies can overcome them by starting small, engaging with external partners, and communicating regularly with employees.

Frequently Asked Questions

What is DEIA, and how does it differ from BEAM?

DEIA is a framework used to promote diversity, equity, inclusion, and accessibility in the workplace, while BEAM is an evolution of this framework, focusing on belonging, equity, access, and membership.

How can companies implement BEAM in the workplace?

Companies can implement BEAM by conducting a thorough assessment of their current DEIA practices, identifying areas for improvement, and implementing strategies such as training and development programs, mentorship initiatives, and employee resource groups.

What are the benefits of implementing BEAM in the workplace?

The benefits of implementing BEAM include improved employee engagement, increased retention, and enhanced innovation, as well as a more equitable and inclusive work environment.

How can companies overcome challenges when implementing BEAM?

Companies can overcome challenges by starting small, engaging with external partners, and communicating regularly with employees, as well as continuously assessing and evaluating their BEAM initiatives to identify areas for improvement.

What role do employees play in implementing BEAM in the workplace?

Employees play a critical role in implementing BEAM, providing feedback and insights to inform the process, and participating in initiatives and programs to promote belonging, equity, access, and membership.