World Trader | November and December 2017

Midwest Global Trade Association

From the President

Upcoming Events

Big Political Changes for the World's Second Largest Economy

US: Hurricanes mask underlying tepid conditions

Mexico: From inflation to NAFTA concerns

Amazon VS UPS and FedEx

Australia Post to Compete with Amazon

Whirlpool vs Samsung & LG and Protectionism under Section 201 USITC vote

Liquidity Management Strategies for Uncertain Times

CyberSecurity to Prevent Hacker Headaches

Spotlight: Gold

Spotlight: Silver

Thank You, Newsletter Sponsor: Port of Seattle

From the President


By Anna Ouattara — MGTA President

Anna Outtara

Good morning Trade family, Happy Fall season! The past few months have been devastating and challenging all around the world; from Texas, to Florida, the Caribbean, Puerto Rico, Mexico, Sierra Leone, Bangladesh due to hurricanes, floods, earthquakes, and lately fires in California. On behalf of MGTA, our thoughts and prayers go out to everyone suffering from these natural disasters. In these difficult times, we must not let our love for each other grow cold but be a support system to others in need.

Is your supply chain risk management in tact?
Unfortunately, we cannot avoid these natural disasters, but can be proactive and ensure that our supply chain disruptions are minimal. We can first make sure we understand our supply chain and review our current chain to identify strengths, weaknesses, and opportunities. Second, we can purchase trade insurance or supply chain disruption insurance if we do not currently have one as it will help minimize our costs for loss of productivity/operations.

In addition, we must also pay attention to the current state of our industry. For example, since 2010 there has been a shortage in skilled workers in U.S. manufacturing and logistics industry. According to Jane Fisher, there will be 1.4 million logistics job unfilled by 2018 (http://fortune.com/2014/05/01/wanted-1-4-million-new-supply-chain-workers-by-2018/).  Those numbers are alarming as a position unfilled ultimately impacts a company’s bottom line. Furthermore, on December 18, 2017, the new E-log mandate will go into effect. What does that mean for your supply chain operations? How will your on time delivery, transportation costs, landed cost be impacted? Are you prepared to adjust your supply chain operations to meet customers’ needs? Don’t wait until a natural disaster happens or until you cannot find a trucker to move your products to implement a strong risk management plan; Be proactive!

As always, feel free to reach out to MGTA to help support your needs and check out our upcoming events at MGTA.org. Thank you for your continuous support and time.

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Upcoming Events

Improving your Bottom Line and Maintaining Compliance with Duty Drawback and Trade Agreements

  • Date: Wednesday, November 16, 2017
  • Time: 10:30 a.m to 1:00 p.m.
  • Location: Navegate Logistics 1300 Mendota Heights Road, Mendota, MN 551120
  • Registration

Agenda

8:00 am    Registration
8:30 am    Program
12:00 pm  Adjourn

Program

Improving your Bottom Line with Duty Drawback and Trade Agreements

Duty Drawback

Did you know that duty drawback allows companies to recover import duties paid to the government?  Only a small percentage of duty paid by businesses is actually recouped, with the majority being left unclaimed. Many companies simply don’t know that they can receive duty refunds or how to go about it. Companies that import and export may be leaving money on the table that can go straight to their bottom line.

This presentation provides an overview of the different types of duty drawback, the requirements for filing duty drawback, and how to identify drawback opportunities within your company.  It will also provide a brief overview of the upcoming drawback changes in 2018 and ACE drawback filing.

Trade Agreements

Are you fully utilizing free trade agreements (FTAs) and special trade programs (STPs)? What compliance requirements should you be prepared to address? FTA and STPs have the potential to reduce or eliminate your duty and fee payments, but importers must be certain they meet compliance and reasonable care obligations.

This presentation will provide guidance on how to assess the applicability of FTAs / STPs to your company’s import profile. It will also cover compliance topics, including rules of origin, recordkeeping, and verification activities to help validate merchandise qualifies for FTA / STP treatment. Finally, it will cover some burgeoning issues in the FTA / STP space, including the renegotiation of NAFTA and the posture of the Trump administration with regard to trade agreements (is KORUS next?)

Please join us on November 16th

Audience/Who Should Attend?

Import compliance personnel with responsibility for or interest in utilizing duty drawback and/or free trade agreements.

Learning Objectives

  1. Assess duty drawback and trade agreement savings opportunities
  2. Be prepared to manage compliance, including verification audits
  3. Understand forthcoming changes, and potential changes to both drawback and trade agreements

Presenters

Cheryl Dolinski — Senior Consultant, Livingston International

Cheryl Dolinski has been a licensed Customs Broker since 1999 and has 21 years of experience in US Duty Drawback recovery. This experience includes knowledge for filing refunds on a variety of industries, including automotive, chemical, goods sold at retail and wearing apparel. Before joining the Trade Management Consulting team at Livingston International, Cheryl worked for a large drawback service provider. She was responsible for developing, maintaining and maximizing drawback programs. Other responsibilities included the timely filing of drawback claims, including NAFTA drawback Lesser of Two Duties (LOTD), privilege applications and manufacturing rulings with US Customs. She has successfully filed and won privilege application denial appeals and protests at both the drawback port and HQ level.

Ms. Dolinski contributed to filing $30 million in annual refunds for over 150 clients. She handled the management of several multi-million dollar drawback programs. As such, her role provided the opportunity to perform consulting services to review current drawback programs for additional drawback revenue. She possesses a comprehensive understanding of drawback operations and how to document processes. She has conducted duty drawback webinars and seminars for new and prospective clients as well as part of the preparation for the US Customs Broker exam.

Additionally, Cheryl has the knowledge and skillset to assist in the onboarding of clients who are new to filing duty drawback. She is proficient in guiding clients through the process of filing drawback retroactively and on a go-forward basis. Her understanding of the drawback regulations provides for the know-how to educate clients about key drawback concepts.

Ms. Dolinski holds a B.A. from the University of Michigan. She has been a Certified Customs Specialist since 2007. Currently, she is located in the Southfield, Michigan office.

Leah Ellis — Corporate Compliance Specialist, JAS Forwarding Inc.

Leah Ellis began her carrier in the forwarding industry in 1990. She has worked for various forwarders and Maersk Line and passed the brokers exam in 2008. Leah joined JAS Forwarding USA Inc. in 2008 as the Import Manager. In 2009 she started working part time with the JAS Corporate Compliance team and full time 2011. She also holds the NCBFFA CCS and CES certifications. Leah is the President of the Houston Customhouse Brokers and Freight Forwarders Association since 2014 and she is the Political Action Committee Chairman for NCBFAA.

Registration Fees

Member: $50
Non-Member: $60
Student: $10

Parking

Park on the south side of the UEL Building.


November Lunch Event

  • Date: Tuesday, November 14, 2017
  • Time: 11:30 a.m to 1:00 p.m.
  • Location: Cooper Pub 1607 Park Blvd. St. Louis Park, MN 55416
  • Registration

There is 'no cost' for attending this event but reservations are requested to ensure there is space available.

Lunch is available at this event at your expense.

Guests are welcome to attend!

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Big Political Changes for the World's Second Largest Economy


By Todd R. Vollmers — Global Access Capital

China’s 19th National Congress, a gathering of 2,300 of the Chinese Communist Party’s (CCP) most important delegates, closed on October 24, 2017.

President Xi Jinping Consolidates Power

With his personal philosophy now included in China’s constitution as “Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era”, President Xi joined Mao Zedong and Deng Xiaoping as one of modern China’s most powerful leaders.  Since 1949 (when Mao founded the People’s Republic of China) except for Mao no other leader has been given the honor of being named in the constitution during that leader’s lifetime (the inclusion of “Deng Xiaoping Theory”, named for the architect of China’s economic revival leading to its current status in the world economy, was even given posthumously).

The elevation in the status of Xi and his philosophy comes at a time when China is seeking a larger role and extending its influence on a global scale.  Although in the past Chinese leaders have tended to smilingly characterize their nation as “developing” or “poor”, in his speech this past week Xi repeatedly called China a “great” or “strong” power, and said that his “new era” will be a time “that sees China moving closer to center stage”.

Policy Indications Going Forward?

Aside from a heightened role for China on the world stage, and after Xi locks in the anti-corruption campaign that he has been pursuing, the question remains as to what the prospects will be for significant economic reform.  In the run up to the 19th National Congress this month, the clear priority for 2017 was to avoid any economic instability that could undermine Xi’s efforts to consolidate power.  As part of ensuring stability, reforms were rolled back and control by the central government was increased, along with an overall de-emphasis on market principles and economic liberalization.  One significant example of this included the intense scrutiny of overseas investment at almost every level, from big businesses to individuals, which was intended to slow capital outflows and stop the further depletion of China’s foreign exchange reserves. It should be noted that this effort resulted in China regaining US$70 billion in reserves on a year-to-date basis, after losing US$320 billion in 2016.

However, among other things, the change in philosophy articulated by Xi and recently adopted at the 19th National Congress recognizes “the people’s ever-growing needs for a better life”.  With, for example, many Chinese looking overseas to purchase real estate, a prestigious education for their children, and even a family vacation, there seems to be some acknowledgement that the demand by Chinese citizens for a better life overseas is due to a shortage in the ability to meet those demands at home.  And along with this acknowledgement, the reality that substantial steps need to be taken to meet those demands in China. Given that those demands will only increase over time, and considering the increased consolidation of power by Xi, the hope for those doing business in China is that the vision and political capital exist for significant economic reform as the best and only viable path forward.                  

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US: Hurricanes mask underlying tepid conditions


By Gary Daggett — Euler Hermes

The effects of Hurricanes Harvey and Irma have distorted recent economic data. Consumer inflation rose a sharp +0.5% m/m in September, driven by a +6.1% m/m spike in energy prices, and as a result, the y/y rate rose to +2.2% from +1.9%. Yet the core rate rose only +0.1%, leaving the y/y rate unchanged at +1.7% where it has been for five straight months. Producer prices also rose sharply, gaining +0.4% m/m again driven by a +3.4% m/m spike in energy prices. On a y/y basis headline (+2.5%) and core rates (+2.2%) are the highest in over five years.

Hurricanes affected retail sales with big gains in gasoline of +5.8% m/m, autos of +3.6%, and building and garden equipment supplies +2.1%. But the core group which excludes those items rose only +0.4% to +3.2% y/y, well below the long-term average of +4.1%. Manufacturing industrial production (IP) rose only +0.1% m/m in September, after falling the last two months, to a weak +1.0% y/y.

The IP report contrasts with regional Fed reports and anecdotal evidence which indicate a much stronger manufacturing environment.

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Mexico: From inflation to NAFTA concerns


By Gary Daggett — Euler Hermes

After inflation culminated in August at +6.7% y/y, latest figures could be pointing to a trend reversal. In September (+6.3% y/y) the 15-month long acceleration in inflation finally halted.
The Mexican central bank stated it is confident that after 4 hikes this year to 7% the policy rate is high enough to achieve disinflation. Yet, further hikes would be needed if risks stemming from a more aggressive US Fed and uncertainty surrounding NAFTA negotiations materialize. The past two weeks have already seen the peso depreciate to its lowest level in 5 months (MXN/1USD=19.1). The end of the fourth round of negotiations saw both Mexico and Canada reject US proposals.

In the short term, the risk of NAFTA falling apart is reduced as negotiations are extended until March 2018. In the medium-term, this results in greater uncertainty around the ratification process. It could indeed take place after Mexican presidential elections (July 2018) and US midterm elections (November 2018).

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Amazon VS UPS and FedEx


By Jakub Kowalczyk — LiteSentry Corp

In early October Amazon announced it is experimenting with a new delivery service aimed at making more items available for its free two day prime and relieve overcrowding at its warehouses. This will push Amazon into functions that are currently handled by their supply chain partners, UPS and FedEx. Why is Amazon making this move and how will it impact the company, it’s customers and supply chain partners such as UPS and FedEx.

Amazon and its customers

Amazon’s new “Seller Flex” service will focus on the pickup of packages from warehouses of third-party Amazon merchants and final mile delivery.  The service began two years ago in India, and is on a trial basis this year on the west coast and a possible broader rollout in 2018. By handling these deliveries from third party merchants it will provide Amazon greater flexibly, visibility and control over last mile delivery, reduce the cost of delivery (Amazon’s largest expense) and help reduce its crowed warehouse, bypassing them all-together. 

Currently the average cost of delivery for for Amazon is $7.80. According to Citigroup analyst bypassing UPS and FedEx could potentially save Amazon over $1 billion annually. Reducing the cost of  by $3 or more per average delivery.  The financial incentive is there for Amazon.

In 2013 a rush of last minute orders holiday orders forced Amazon to issue refunds for shoppers who didn’t get gifts on time. Since then Amazon has had ambitions to expand its logistics operations and and and reduce the dependence of UPS and FedEx. Amazon is consistently looking for ways to shorten delivery times and reduce cost. It has built a network of sortation centers around the US, experiment with drone delivery, and introduced “Amazon Flex” which uses independent contractors driving their own vehicles to deliver packages using a smartphone app.  All this to maintain part of its business pledge, quick reliable delivery.

Impact on UPS and FedEx

Amazon accounts for 5 to 10 percent of UPS revenue and less than 3 percent of FedEx. Shares of FedEx and UPS both fell after news of Amazon considering its own delivery service was released, though later rebounded.  But what is the real impact on UPS and FedEx. Analysts at Credit Suisse believe the impact of Amazon's delivery service on both FedEx and UPS is 'negligible.' While FedEx did not comment specifically about Amazons plans it did mention the “scale, infrastructure and complexity" involved in running a global transportation network. 

Conclusion

After the news of “Seller Flex” was released Amazon clarified that "We are using the same carrier partners to offer this program that we've used for years, including UPS, USPS and FedEx," Amazon said in a statement.

According to Kevin Sterling, a Seaport Global Holdings analyst, “Shares are going to be under pressure" for UPS and FedEx "because it's Amazon and no one wants to go head to head with them,"  Kevin also added that "if you look at the world of e-commerce and double-digit growth year after year, FedEx and UPS are still going to get their share of growth. If Amazon does take a few customers, the whole ecommerce pie is growing so fast that FedEx and UPS won't miss a beat."

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Australia Post to Compete with Amazon


From Daily Mail Australia

As Amazon’s impending arrival down under has local retailers on edge, Australia Post has announced it will be offering free Christmas delivery – for a fee. 

Online shoppers at 40 of Australia’s biggest retailers, including the likes of Myer, Target, Toys ‘R’ Us, and Cotton On, will be entitled to free shipping when signing up to Shipster, a new membership program powered by Australia Post.  Signing up to Shipster costs just $9.95, but once you’re part of the system you’ll be entitled to free shipping on any order over $25, plus a free Deliveroo order a month.

Retail expert Jo Munro told News.com.au this was a good move.  “This is great news for shopaholics like me,” she said. “If you’re a regular online shopper buying most of the usual things people buy online such as clothes and toys, then this is a good deal.  All of these initiatives in Australia are gearing up for one thing — the arrival of Amazon. And it’s forcing retailers to think outside the box.  They are learning to be more aggressive and I think that is fantastic for shoppers. It’s forcing those who were lazy to be more competitive.”

Following the introductory period, Shipster membership sets you back $6.95 per month, and will continue to offer free delivery when shipping costs are less than $20.

But it still provides a big opportunity for shoppers looking to organize their pre-Christmas spend, with Australia Post’s acting managing director and group chief executive Christine Corbett saying it’s a big win in the lead up to the silly season.

“We know our customers love to shop online and this Christmas, we expect more gifts to be bought online than ever before,” she said.  “Shipster lets you shop with confidence knowing that there will be no surprises at the checkout.  When you shop with Shipster, all you need to do is spend $25 and over to unlock free shipping from more than 40 of Australia’s biggest and most-loved retailers.  We’re predicting the busiest year for online shopping we’ve ever seen at Australia Post.”

 

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Whirlpool vs Samsung & LG and Protectionism under Section 201 USITC vote


By Adam Redlin

LG and Samsung are mostly known for their smartphones and consumer devices, but over the past few years they’ve managed to carve out a significant percentage of the washer market.  With slick touchscreens and “internet of things” technology, these washers feel much more advanced and connected by comparison with the products from their competitors.  Erstwhile market leader Whirlpool hasn’t kept pace with these new developments, and is losing their footing in the market they’ve largely controlled for years.  The most recent battleground in their war over market dominance is the USITC, to which Whirlpool has filed a complaint under section 201 of the Trade Act of 1974.

Under Section 201, domestic industries can petition the USITC for import relief if they feel threatened or seriously injured by increased imports.  If the International Trade Commission finds that injury would occur without intervention, they must recommend a remedy to the President, who then will determine what relief, if any, to impose, including tariff increases or quotas.  What is unique to Section 201 complaints is that it does not require any finding of an unfair trade practice, such as dumping.  By contrast, common antidumping and countervailing duty laws require evidence of injury, or threat of injury, incurred as a result of such unfair trade practices.

Whirlpool’s choice to pursue a Section 201 safeguard complaint is the latest episode of their cat-and-mouse history of trade disputes with LG and Samsung.  In 2012, Whirlpool was successful in persuading the department of Commerce to impose anti-dumping duties on South Korean washer imports.  However, this victory quickly faded and LG and Samsung moved production to China to side-step the punitive duties.  In response, Whirlpool again petitioned the USITC three years later to stem the flow of washers from China.  This time, LG and Samsung didn’t wait for punitive measures, promptly shifting manufacturing, this time to Vietnam and Thailand.
Since then, Whirlpool’s fortunes have been continually under threat as LG and Samsung have grown market share by releasing innovative new designs and pursuing competitive pricing strategies.  Whirlpool, unfortunately, is rapidly losing edge on both fronts. While Whirlpool has built a traditional appliance business, LG and Samsung have established and fortified their position in the market with a wide range of consumer products.  LG and Samsung arguably have a more comprehensive understanding of the fickle nature of consumers, proven by their success in the notoriously fickle markets of smartphones and consumer electronics.

In face with these challenges, the question remains whether Whirlpool’s victory in a legal battle will ultimately benefit the consumers or the domestic industry in the long term.  A success in a Section 201 complaint may not only restrict imports from LG and Samsung, but all foreign manufacturers.  The domestic washer and dryer industry consists largely of 2 key players, GE and Whirlpool.  If the President acts in favor of the domestic industry by issuing punitive duties, Whirlpool and GE would be granted a de-facto duopoly.  Not only would this harm consumers by reducing choice, but could actually harm domestic manufacturers if trading partners respond in kind.  

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Liquidity Management Strategies for Uncertain Times


With so many factors affecting multinational businesses today, it’s more important than ever for leaders to determine the liquidity management strategy that best fits their corporations.

Adrian Perez, Executive Director and Senior Liquidity Advisor, Commercial Banking
June 7, 2017

Market volatility has introduced a number of challenges to multinational businesses, particularly in managing day-to-day and long-term liquidity. That said, these challenges can create an incentive and opportunity to optimize liquidity structures and prepare for future uncertainty.

There are several factors that could impact business considerations for liquidity management. Interest rates in the US, which had been held at historic lows for almost a decade, are now starting to rise as the Federal Reserve withdraws accommodative policies it put in place during the recession. So far, the Fed has raised short-term interest rates three times since December 2015 by a quarter of a percentage point each time, leaving its benchmark overnight lending rate target in a range of 0.75 percent to 1 percent. Furthermore, weighing US unemployment rates and inflation targets, the Fed forecasts that it will continue to raise interest rates in 2017 and 2018. Expected policies from the Trump administration—including tax reform, the repatriation of corporate capital and deficit spending—could stimulate growth but also accelerate inflation, which, in turn, may prompt policymakers to raise US interest rates more rapidly.

In contrast, the European Central Bank, Bank of Japan and Swiss National Bank continue to hold their policy rates down and buy assets. That adds further pressure on multinational companies to manage their cash balances effectively in order to not only enhance returns but also to mitigate costs for negative yielding currencies.

Given the growing disparity between global interest rates and the uncertain impact and timing of US policy changes, the current environment creates an opportunity for US multinational businesses to optimize their liquidity management and to position themselves to realize the maximum benefit from higher US dollar interest rates and/or a tax holiday for repatriation of foreign earnings.

Organizational Structures

The fundamental requirements for any “best-in-class” liquidity structure are visibility of cash flows and currency positions, control over those balances and yield optimization. However, a multinational company’s organizational structure often influences which strategy best aligns with its corporate culture and is therefore best suited to achieving its liquidity objectives.
Decentralized companies often contend with local autonomy, in-country profit and loss objectives, challenges with matrix reporting—both locally and to headquarters—and disparate enterprise resource planning (ERP) platforms.

Regionalized companies maintain staff in hubs typically responsible for treasury operations for a specific region while also reporting into headquarters. This structure may allow companies to leverage Regional Treasury Centers (RTC), Shared Service Centers (SSC) for investments, borrowing, foreign exchange (FX) management and accounts payable/accounts receivable.
Lastly, in centralized structures, headquarters typically manage FX, investments and borrowing, and employ a single ERP platform across the organization. Often, they also endeavor to fully leverage process centralization and automation through RTCs, SSCs, payment factories, an in-house bank and other resources.

As the adage goes, “If you don’t know where you’re going, any road will get you there.” Multinational companies should first determine and prioritize their key liquidity objectives relative to their organizational structure before deciding which liquidity management strategy to employ. These objectives can include:

  • Gaining visibility and control of global cash holdings
  • Centralizing balances into one account or location
  • Reducing interest expense or improving investment returns
  • Maintaining operating business with local banking partners
  • Enhancing efficiency with automated processes
  • Managing FX or counterparty risk
  • Mitigating intercompany loans

Types of Strategies

There are three common types of liquidity management strategies, each raising potential benefits and considerations.

  1. Physical concentration: This is the most straight-forward strategy for consolidating balances. It yields a central account containing surplus cash for the entire structure. Physical concentration is transparent, easily controlled and provides the opportunity to use excess cash for debt pay-down, investments, dividends and more. It can also leverage automated bank systems to track intercompany loan positions. However, physically consolidating balances into one account or location may not be appropriate for decentralized companies; moreover, the structure will bring administrative costs, and foreign currencies can’t be directly combined into a single account without incurring FX conversion costs. Other considerations or restrictions may apply for countries with currency controls.
  2. Notional pooling: In this approach, balances are maintained in their respective accounts and currencies, but for the purposes of calculating interest, the bank combines the balances into a single net currency and balance. This strategy eliminates intercompany loans, and in cases of a multicurrency pool, the organization is able to operate with multiple currencies without incurring FX conversion costs. Considerations include subsidiary joint liability for incurred debts, which could be challenging for jointly owned organizations. Additionally, not all countries permit notional pooling participation and these structures are often heavily scrutinized by auditors and tax authorities.
  3. Overlay structures: This strategy allows companies to employ or maintain local banking relationships to manage day-to-day banking activities while leveraging the benefits of a cash concentration or even a notional pool structure by automating the concentration of balances with an overlay bank—typically through an end-of-day sweep process. However, applicable cut-off times for the remitting and receiving banks can impact structural efficiency and often results in the duplication of accounts and costs.
Deciding which liquidity management strategy offers the most advantages is a complex process. Finding the right solution based on unique objectives and local market requirements takes expert support and guidance to help navigate these uncertain times.

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CyberSecurity to Prevent Hacker Headaches


By Karen R Palm CPA, CMA, CFP

As the owner of a small firm, I worry about how can I protect myself from being hacked. So, I went through a practical security audit. A good way to think about cyber security is to imagine your information is held in the middle of a castle. You can put in a moat, build high walls, use security guards, and build thick doors between the outside and your information. You set up your firewalls, set up your security codes, add more security codes and try to make it difficult to get in. But how do you know if it is working? The practical cyber security audit of my firm by AaesIT Solutions consisted of:
  -- Questionnaire: we went over physical protection, password protection, security policy, back up procedures, follow system from the outside in — routers, firewalls, server, workstations.
  -- Three-day SCAN: Their computer was  hooked up to my system; it tests for 380,000 ways (identified by cyber security organizations including US Cert under US Department of  Homeland Security) that attackers can compromise your cyber security.  It tests the server and also tests the firewall from the outside and the inside system. My results produced 800 pages of data.

They interpret the data and give summary rating and written report.

Common issues to look for:
Administrative Privileges: It allows full access to everything on the machine and allows someone to load programs, delete programs, change passwords to programs — a hacker’s dream. The fix is simple: no administrator privileges on any computers for daily use. When you want to load software, there is a special request asking for password. Just one extra door — one more layer of security — big benefit!

Remote Entry: A good system will block all publicly available connections and ports. It will be  configured for remote users to use VPN connection and the RDP into workstations.  By having  a Virtual Private Network, you create an extra tunnel entry before remote entry into your system. You need VPN, plus the normal password to the computer, plus the password to the program.

Old Server Software: Microsoft and other software vendors are not fixing a number of vulnerabilities found by the scan as the software gets further and further outdated.

I am running Microsoft 2008; while my server (thank goodness) is still capable, it’s time to upgrade to Microsoft 2016. This will incur the cost of software plus hardware upgrades plus installation.

JAVA and Flash: These are common vectors for attack, and removing them will increase security. They were designed to share info and will happily share your info with hackers. Unless they are absolutely required by critical business software, remove anything using JAVA and Flash. If you must use it, minimize the number of machines that have it. Ideally, dedicate specific machines only to run JAVA and Flash. The results of the scan showed one workstation had JAVA on it, even though we thought we had removed all JAVA and Flash prior to the scan.
Firewall: I had gotten a new firewall before the test. The scan still found 1 port was open to outside threat. Keeping this up to date is very important.

Segregated Versioned Backups: Like most of you, I have backup of the server and the data is backed-up to the cloud. If disaster struck, it could take up to 3 days or longer to get the system up and running. With new ransomware, able to hold your data hostage, there is no way to recover without an effective backup system. I purchased a new backup device which performs backup hourly from 8am to 9 pm — snapshots of my server, including the programs on the server — and retains it for one year. When the hourly data hits 30 days it converts to daily retention. This is good for disaster recovery as well as malware recovery. In the event of fire, flood, or electrical outage, we could download the server snapshot from the cloud, load tax programs on new computers and be up and running in less than a day. Backups should be tested at least twice a year. Backups prior to a malware event can recreate the system so your data cannot be held for ransom.

Passwords: Changing passwords anytime someone leaves the firm is a must; the person may have kept their password at home or on their personal device. Using a system for passwords (like  nameplusanumber or nameplusbirthday) is not good. If it is easy for you to figure out, a hacker will figure it out. Try to think of a phrase you will remember plus number and symbol. Use a minimum of 8 characters and  optimally 12 characters for sensitive data.

Personal Device Usage Agreement: The agreement should be signed by all employees who connect to office systems. The policy should require the employee to follow security practices for current antivirus, hard drive encryption, secure individual login (no family members should know) and other good security practices.

Network Diagram: A current listing of all devices connected or able to connect to network can be used as an Executive IT Reference, so you are not held hostage by your IT service. A listing (to be kept under lock and key and maybe additional copy offsite) of all critical systems and their administrative details is a must for your system.

Security Policy: Our professional standards require a written policy.

Antivirus: Make sure you have it on every computer and server, and that it is actively updating and running. They have found clients who order the antivirus from an IT provider and even though it is paid for, it is actually missing or disabled on their computers.

Patches and Updates: Windows and installed software are constantly being updated to add features, fix bugs and address discovered vulnerabilities. It is very important that workstations and servers are updated on a regular schedule, at least monthly.

Now I have one less thing to worry about.

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Spotlight: - Gold


KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have more than 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

When it comes to delivering an audit, quality is KPMG’s top priority. Our audit professionals’ foremost responsibility is to serve investors, the capital markets, audit committees and management with reasonable assurance. KPMG is committed to continuously identifying and implementing innovative approaches and tools to help deliver and enhance a quality audit. KPMG is making a significant investment in innovations that enhance audit quality, bring greater relevance to audit findings and ultimately enrich the client experience.

When tax performance is put under a microscope, you need precise knowledge and the latest facts.  Our knowledge and experience rank us among the world’s top tax firms. But what really sets us apart can’t be captured on a resume.  Passionate, collaborative, and committed to your business success, we work with you to learn all we can about your organization, understand your goals at the deepest level, and uncover unexpected opportunities.  When you have an issue at hand, we tap into our vast network of functional, industry, legislative, jurisdictional, and technical specialists, including the nearly 200 professionals in our Washington National Tax practice, to assemble the right people, tools, and knowledge to tackle your toughest tax issues.

Our Advisory professionals are trusted advisors of the world’s leading organizations focused on creating and sustaining value for our clients. Our professionals work with senior leadership across functional areas, applying our expertise and deep industry knowledge to develop innovative, technology-driven solutions to solve our clients’ business challenges and help them grow and achieve financial results.

We'd love to hear from you. Get in touch with one of our professionals, specialist groups or KPMG offices

 

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Spotlight: - Silver


KPMG

HMM is an integrated logistics company, operating around 130 state-of-the-art vessels. HMM worldwide global service networks, Diverse logistics facilities, leading IT shipping related systems, a professional highly trained staff, and continual effort to provide premier transportation services.

Beginning with three VLCCs in 1976, HMM has strengthened its competiveness to advance new services such as bulk carrier, tramper, container carrier, LNG carrier and special product carrier. As a result, HMM has a stable business structure that can withstand sector fluctuations by operating diversified businesses.

HMM has formed a global business network with four international head-quarters, 27 subsidiaries, 76 branches, five overseas offices and 10 liaison offices. It is highly regarded as one of the world’s top integrated-logistics companies with its targeted market prospects, efficient organization, top personnel, and advanced internet systems.

HMM invests to continuously expand vessel fleet, acquires container terminals in the worldwide primary location and inland logistics facilities, and develops premiere customer oriented IT system. As a result of these endeavors, HMM will become a world top integrated logistics company giving “Hope to shareholders, satisfaction to customers and pride to employees”.

 

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HMM

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Global Training Center


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Cassidy Levy Kent

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