Risk Management
IRS backup funds exhausted, core operations halted
The IRS suspended most operations on Wednesday, retaining only core employees, after exhausting unused funds. The agency had used Inflation Reduction Act appropriations to operate for another week but now has to place most staff on furlough. The acting human capital officer stated that the timing of employee pay is unpredictable. Previously, the Treasury Inspector General for Tax Administration warned that staff reductions could affect refund processing during the next filing season.
KPMG survey: Most companies affected by tariffs plan to raise prices within six months
A KPMG survey found that since the Trump administration announced large-scale import tariffs on April 2, 66% of U.S. companies have passed up to 50% of costs on to consumers, and 71% expect to raise prices by up to 15% in the next six months. 39% of companies saw declining gross margins, and 44% expect continued declines over the next year. The Yale Budget Lab calculates that tariffs will reduce economic growth by 0.5 percentage points this year, with consumers facing an effective tariff rate of 17.9% and average household annual income decreasing by $2,400.
Federal Judge Denies Former Silvergate CFO's Motion to Dismiss SEC Fraud Lawsuit
This week, a U.S. federal judge denied the motion by Antonio Martino, former CFO of the collapsed Silvergate Bank, to dismiss the SEC's securities fraud lawsuit. The SEC alleges that Martino misled investors about the bank's severe financial condition after FTX's bankruptcy, including approving false financial reports and making misleading statements during conference calls. The judge determined that the SEC's allegations were sufficient, and the case will proceed to trial.
ISM Survey: U.S. Service Sector Weakens, Hiring and Business Activity Both Under Pressure
The ISM survey shows that the U.S. service sector's business activity index fell below the breakeven line in September, marking the first contraction since May 2022, with employment remaining in contraction territory. New orders are still expanding but at a slower pace, with seven industries reporting contraction. The Fed cut interest rates by 25 basis points last month, but officials remain cautious about the pace of further cuts.
Federal government shutdown puts employees on leave, release of key business data at risk
The U.S. federal government entered a shutdown on Wednesday due to a bipartisan budget impasse, forcing hundreds of thousands of federal employees to take leave, and the Bureau of Labor Statistics suspended the release of key employment data, potentially hindering assessments of the economic situation by businesses, investors, and the Federal Reserve. Republicans and Democrats blame each other, and the economic impact depends on the duration of the shutdown.
FASB Issues Derivatives Scope Refinement Update, Clarifying Applicability Boundaries of Topics 815 and 606
FASB on Monday issued scope refinement guidance for derivatives, hedging, and contract revenue accounting, aimed at clarifying the applicability boundaries of existing Topics 815 and 606. The new guidance exempts certain ESG-related financial instruments and specific research and development and litigation financing contracts. The amendment is effective for annual and interim reporting periods after December 15, 2026. This update is the Board's seventh standards amendment of the year, following the initiation of a related project in 2023 to curb "scope creep" in derivative determinations.
Inflation and Employment Outlook Drag Consumer Confidence to Five-Month Low
Data released by The Conference Board on Tuesday showed that U.S. consumer confidence fell to a five-month low in September, affected by persistent inflation, a softening job market, and concerns about the economic outlook. The proportion of consumers who believe jobs are plentiful dropped to 26.9%, while those who believe jobs are hard to get stayed at 19.1%. Inflation has once again become the primary factor influencing consumers' economic perceptions.
Cyber insurance can significantly reduce losses through geographic and industry diversification and mitigation measures
CyberCube reported on Thursday that the cyber insurance market can reduce catastrophe risk exposure by diversifying portfolios across geography and industry and adopting mitigation strategies to lessen the impact of major attacks. The current market is highly concentrated in the United States; combining diversification across geography, industry, revenue, and technology can reduce risk by 40%. Additionally, adopting mitigation measures such as patch management, network segmentation, and robust data backups can cut losses by nearly 60%.
Enterprise AI Application Expansion Drives Significant Growth in Risk Mitigation Budgets
As enterprise AI adoption rates rise, governance and risk mitigation have become priorities. A OneTrust survey of 1,250 IT leaders shows that nearly all enterprises plan to increase governance budgets, with an average increase of 24%; IT leaders spend about 37% more time managing AI risks. Experts emphasize that improving governance frameworks and risk mitigation strategies is crucial to avoiding financial losses.
Startup aims to rescue finance teams mired in reconciliation quagmire
Maximor announced the completion of a $9 million funding round. Its AI agent platform can execute tasks such as data reconciliation across legacy systems like ERP and CRM, helping clients halve month-end closing time. The company was founded by two former Microsoft employees, and this round was led by Foundation Capital. Industry data shows broad prospects for agentic AI in finance, but trust and talent remain major obstacles.