Hundreds Dead after Turkey and Syria Earthquake, plus Executive Liability in the US.
Daily SITREP for Monday, February 6, 2023
A sad morning.
The death toll in Turkey and Syria following Monday’s terrible earthquake is rising and the latest death toll at the time of writing was over 1,000 but this number has been rising steadily all morning. The full toll will be many times higher while thousands more are injured or without shelter and power. The recovery and aid operations will be complex and likely hampered by political and security considerations.
Closer to home, a judge’s ruling in Delaware means that company executives may be held personally responsible for regulatory and governance failures.
Earthquake in Turkey and Syria
A 7.8 magnitude earthquake hit southern Turkey early on Monday morning, causing widespread damage across the border region and into North Syria. This is one of the most powerful earthquakes ever to hit Turkey. Initial reports were of over 500 hundred dead and thousands injured but these numbers are rising rapidly and the latest report is of over 1,000 dead: it will be days before the true extent is known.
Map via the BBC
International agencies are offering support to local responders but getting large amounts of aid and support into Syria will be a complicated operation for western organizations. President Erdogan’s handling of the response will also come under great scrutiny in the next few days once the initial shock has worn off.
Personal Liability in the C-Suite
A shareholder lawsuit against a former McDonalds’ executive signals a significant change in how company executives can be held personally liable for company failures. A Delaware judge approved the lawsuit which accuses the former Chief Human Resources officer, David Fairhurst, of neglecting his fiduciary duties to the fast-food chain by poorly handling reports of systemic sexual harassment at the firm. Fairhurst has been accused of sexual harassment in the past, but the Delaware lawsuit separately contends that his poor handling of the claims amounted to neglect and mishandling of a critical risk to the firm, something he should have addressed as an executive at the company.
It will be some time before we know if this case is successful or not, but the judge’s ruling is a change in the application of so-called ‘Caremark’ claims. These cases have previously been directed at companies’ boards, contending that boards of directors set up the compliance systems that are supposed to manage corporate risks. The Fairhurst ruling means that Caremark claims of oversight failures can now be brought against company executives more easily. This may lead to frivolous claims but should also ensure that executives take their governance and oversight responsibilities seriously.
Cyprus’ Presidential Elections Head to a Run-Off
Sunday’s election in Cyprus returned no clear winner and heads to a runoff on February 12th. Former foreign minister Nikos Christodoulides, came first, with former diplomat Andreas Mavroyiannis a close second, despite polls having written Mavroyiannis off in the run-up to the vote. Read more in Reuters.
On to the numbers
Relative Values (90-Days)
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Commentary and Evaluation
Potentially impacting: Fuel prices | Gound shipping costs. | Plastic prices | Changes to fuel subsidies (potentially leading to unrest) | Cost of living (especially transport and heating) | Changes to traffic volume/transportation choices | Demand for automotive products | Theft and smuggling.
Brent Crude is very low for this 90-day interval. Prices decreased moderately over the last 21 days after slight fluctuation.
Iron and Steel
Potentially impacting: Cost of construction projects | Construction project timelines | Cost/availability of raw materials | Infrastructure project timelines/costs | Cost and availability of finished metal goods | Value of scrap | Value of 2nd hand equipment/vehicles.
(No change) Iron and Steel remain very high for this 90-day interval. Prices increased moderately over the last 21 days after slight fluctuation but continue to creep up.
Market Volatility (VIX-US)
Potentially impacting: Availability of capital for investment | Interest rates| Share prices | Consumer confidence | House prices/rent | Financial certainty/uncertainty | Financial models | Stock-based compensation values.
Market Volatility (VIX) is very low for this 90-day interval. The index ended relatively flat over the last 21 days after moderate fluctuation.
Potentially impacting: Bread, pasta, couscous & noodle prices | Changes to food subsidies (potentially leading to unrest) | Cost of living | Movement from low-income to food insecure to undernourished | Increased theft or graft in loosely governed areas | Demand on charities.
(No change) Wheat is very high for this 90-day interval. Prices ended relatively flat over the last 21 days with little fluctuation.
Ocean Freight (FBX)
Potentially impacting: Supply chain costs (direct and indirect) | Supply chain delays | Port capacity/throughput speed | Customs clearance | Availability of goods and materials | Consumer demand/hoarding.
Shipping (FBX) remains very low for this 90-day interval. Prices decreased moderately over the last 21 days after significant fluctuation but the downward trend continues.
February 12: Cyprus, Presidential run-off
February 25: Nigeria, President, House of Representatives and Senate
I'm glad to see this apprentice electrician hard at work. #lifelonglearning.
I'm also experimenting with some new ways to illustrate the metrics.
⬆️ This one's a little too hectic for me, but I like how this shows the movements ⬇️
Let me know what you think (these are a bit clunky but I'm sure you get the idea).