Climate Change, Trade Collapse, and Cyber Warfare Among Top Investor Risks

Climate change, trade collapse, and cyber warfare are among the top risks for investors, according to Willis Towers Watson’s Thinking Ahead Institute.

The organization worries these and 27 other risks are the ones to watch, according to its Extreme Risks 2019 report, which ranks the top 15. Others, such as alien invasion, cosmic threats, or natural catastrophe, did not rank as the organization does not view them as likely to happen as others. The last time the report was published was 2013.

Thinking Ahead fears global temperature change the most as the past six years have seen the world keep emitting more greenhouse gasses “that exacerbates the risk of rising global temperature.” Warming has risen two spots since 2013, when it ranked third. Thinking Ahead’s report says climate change is “looking increasingly likely, suggesting it might need to be considered as a mainstream risk.”

Global trade collapse is another significant investor worry, which the organization says has peaked because of the rise of protectionism.. The growth of wealth inequality, leading to a decline in living standards for blue-collar workers, is also cause for concern.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

“While Trump and Xi may be in the headlines, we think that there are deep historically-rooted drivers that make large sways of populations antagonistic to the logic of free trade and the movement of jobs to countries with comparative advantage,” Tim Hodgson, the institutes head, told CIO.

As the internet becomes more widely used for everyday tasks, Thinking Ahead also notes that there are growing concerns of it being weaponized, adding to potential cyber risks.

“Cyberwarfare scares me witless,” Hodgson said, noting that while it’s “a pain” to have your identity or credit card information stolen, the branch of this threat that he fears the most is a potential nationwide cyber-attack.

Hodgson pointed to recurring annual cyber-attacks that have been occurring in the Ukraine each December for the past several years, taking out the nation’s power grid. “Each year it’s more sophisticated, and each year it takes longer to fix and the power outage hits a wider area and is longer,” he said, adding that the technology running the Ukrainian grid might also be used to run the US grid. “The extreme risk is not really your credit card details being stolen, but actually nation-state cyber warfare.”

To mitigate the risks, Thinking Ahead’s research suggests three hedging strategies: hold cash, as it has held its real value over long historical periods through both inflation and deflation; use derivatives, and hold a negatively-correlated assets.

The organization also suggests investors prioritize the risks and diversify their portfolios.

The full list of the top 15 investor risks is below.

Source: Thinking Ahead Institute

CalSTRS CIO Says Trump Tweets are a ‘Key Market Risk’ to Monitor

Millions at Risk of Falling for Pension Scams

Tags: Climate Change, Cyber Warfare, Investor Risks, Pension, risks, Thinking Ahead Institute, Willis Towers Watson

A former investment adviser and broker has been sentenced to nearly six years in prison after pleading guilty to stealing millions of dollars from his clients to pay for his personal expenses.

Gary Basralian, 72, of Springfield, New Jersey, was sentenced to 70 months in prison by a US District Court judge on one count of wire fraud and one count of investment adviser fraud. According to court documents, Basralian was a registered broker who provided investment advisory services to clients and received compensation for advising them about securities investments.

From 1989 until December 2017, he was registered with the Financial Industry Regulatory Authority (FINRA) working at a registered investment adviser and broker-dealer located in Jersey City, New Jersey. The firm, known only as “Securities Firm A” in court documents, provided a broker-dealer platform for more than 2,000 independent financial advisers across the US.

For more than 10 years, spanning from July 2007 through November 2017, Basralian defrauded his clients by telling them that he would invest their money in securities and other investments. However, he used those funds for his own personal expenses , including funneling hundreds of thousands of dollars to pay his American Express credit card bills, and thousands of dollars in BMW and mortgage payments.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

When certain clients inquired about the status of their investments, Basralian falsely assured them that their money was invested in real estate, high-interest loans, or securities.. In one instance, Basralian wired money from at least one client’s investment account to accounts that he controlled and used the proceeds for his own benefit.

When the client asked why the account’s value had declined, Basralian provided a fabricated spreadsheet showing that the money was being invested as loans to various companies. He also falsely told the client that the money would be paid back with interest. In the end, Basralian admitted stealing at least $2 million.

In addition to the prison term, Judge Arleo sentenced Basralian to three years of supervised release. In May of 2018, the New Jersey Bureau of Securities revoked Basralian’s agent and investment adviser representative registrations.

Adviser Charged with Defrauding NFL Players with Brain Injuries

Hedge Fund CEO Arrested in Alleged $105 Million Fraud

Tags: FINRA, Fraud, Gary Basralian