KSG Exec Brief: Taiwan Crisis Scenario Planning
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KSG Exec Brief: Taiwan Crisis Scenario Planning
Can you reach the levers you might need to pull?
Insight
Table top exercises for crisis scenarios allow executives to both learn about a potential crisis and to identify the levers they will want to pull during that crisis. For companies operating in the PRC and East Asia, going through the exercise of a Taiwan crisis can help decision-makers identify the capabilities to start building now while hoping they never have to use them.
The Financial Times recently published an analysis of financial losses of firms that chose to leave Russia after its invasion of Ukraine. Businesses able to cut and run quickly lost the least amount of money, with those staying behind losing the most and have their assets expropriated by the government. While many firms may have elected to remain in Russia due to the complexity of leaving (e.g., disposing of significant in-country CapEx), it's clear that slow exits reflected a lack of preparation.
Another source of lessons from the Russian withdrawal was the establishment of legal impediments preventing citizens from supporting the exit of their foreign employer. Routine divestiture actions, such as network separation, became a crime; putting foreign employers in an ethical and legal quandary. Taking action to help separate networks became a crime, and employers could not ethically ask their employees to take actions that put them in legal jeopardy. Business executives scrambled to partition networks and decommission accounts quickly. Most found that a quick exit was impossible for their enterprise network, much less physical assets in Russia.
Table Top Exercises
It’s not a vote for war to run a table top exercise. As KSG published last week, there’s little consensus that the PRC will invade Taiwan. Yet running an exercise and developing the tools to safely and quickly relocate operations in East Asia can influence already on-going enterprise architecture work prompted by recent data security laws in China. Compliance with PRC laws and regulations can be the motivating factor to implement changes developed from any table top exercise, providing political cover for executives.
For more information or assistance on these issues, please reach out to intel@ks.group.
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Global Scan
Geopolitics
China Becoming More Trouble than it’s Worth for US Investment Banks: After splitting a revenue pool of over $1 billion in 2021, major firms saw this number fall by 87% in 2022. Thus far in 2023, Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America, and Citi are seeing less than $100 million in shared revenue between them—as compliance burdens mount.
African Railroad Key to Cutting China’s Dependence on Australia for Iron Ore: Mining giant Rio Tinto and several Chinese state-owned enterprises inked a deal with Guinea to build a across the nation's inland to the coast. The project will tap into the world's largest known undeveloped supply of high-grade, low-impurity iron ore.
Drought Blamed for Panama Canal Shipping Delays: The passage—via which 40% of all US container traffic travels each year—is beset by weeks-long wait times and a backlog of over 150 vessels. The Panama Canal authority says it expects revenue to drop by about $170 million in the next fiscal year.
Cybersecurity
Threat Actors are Interested in Generative AI, but Use is Limited: Mandiant researchers assess that information operations are increasingly using synthetic text and video. Cyber threat actors, however, while experimenting, have yet to operationalize AI tools effectively.
Western Providers Shutting Off Service to Russian, Belarusian Customers: Australian firm Atlassian sent notifications that accounts from the two countries will be disabled beginning in September, following Microsoft’s earlier warning that Office 365 licenses would also not be renewed for Russian companies.
Vulnerabilities Continue to Mount for Ivanti Mobile Device Management: Researchers flagged a critical vulnerability, the latest since discovery of flaws last April, in the widely used commercial solution. The company and researchers urged rapid patching with a new update.
Strategic and Emerging Technology
Intel Bid to Acquire Tower Semiconductor Scuttled by Beijing: The US-based chipmaker dropped its $5.4 billion bid after China’s State Administration for Market Regulation refused approval. Beijing was reportedly skeptical of Tower’s onward ability to partner with Chinese firms if the deal went through, due to US export restrictions.
Britain Doubles Down on Life-Sciences Industry: Authorities have cut red tape while a growing chorus calls for subsidies to make the UK tech and bio sector the centerpiece of its economic recovery.
Google Pitches New Keys to Protect against Future Quantum Attacks: While quantum-based attacks are still hypothetical, the company released code for a security key that uses advanced cryptography to withstand attempts from both traditional computers and quantum processors.
Policy/Regulation
SEC Subpoenas Fund Managers over ESG Disclosures: The move comes amidst a push to scrutinize the ESG space, which has become increasingly popular in recent years, in particular to ensure that entities marketing themselves as green are not misleading investors.
US Not Going Far Enough on Cyber Regulations, Experts Say: Of the Washington Post’s network of cyber experts, half wanted to see more stringent rules, preferably from Congress. They argue market forces alone are insufficient to spur security by design.
New SEC Rule Poses Insurance Risks to Corporate Officers: New breach disclosure requirements mean public companies may soon find themselves in the “worst of both worlds,” where neither cyber nor director-and-officer policies pay for legal bills over SEC investigations and investor lawsuits.