Stephen Lantz's Profile

I’m really impressed by the DoD’s pro-activeness on this issue. Its clear that its been very thoughtful about assessing the risks to both assets and existing systems that the DoD relies on, and how those may be impacted by climate change.

To me, the clearest imperative is removing the political log-jam that this issue finds itself in among political circles. Any discussion of the facts is immediately disregarded with charges of partisanship and the DoD has a unique authority in this area that should be able to transcend political party – I hope they use this power responsibly.

That said, there is significant risk here, especially in the current administration, that the DoD raising this issue is seen as a political maneuver, which not only erodes the credibility of another important institution, but wastes the opportunity and decreases the prospect of effective national defense and readiness. This is by far the most important issue for DoD to focus on, in my view, and messaging in a way that conveys the importance of the problem, but in a credible and accessible way for political actors, is the tightrope that they will find themselves walking. I hope they are up to the task!

Really interesting read about a very important and impactful topic, great job! Regarding VW regaining trust, I think its clear they are on their way, especially as regards other market players, but I wonder how they can do about the general public perception (short of just letting time work its magic).

As regards electric cars, I wonder how their past actions will affect them going forward. Obviously they need supplier trust in order to re-make the electric car supply chain, and the development of electric cars aren’t without emissions and environmental risks themselves (higher production costs / battery production etc.). There is a risk here that VW is being seen as too shady of a company to be trust to follow into this new market, and they have permanently impacted their brand value and ability to capitalize on this entirely new phase of the automobile market.

This is really interesting and useful technology! While I applaud Barilla for being the pilot on this, it seems like this kind of technology could be best used outside the non-perishable food items (Pasta and Sauce have super long shelf lives, so are naturally resistant to things like the E.Coli problem that chipotle faced). I would love to see this same application in things that are perishable (where waste during transportation is an even bigger problem).

That said though, I wonder whether the added investment to deploy this for perishables is worth it. Packaging for perishables tends to be less robust, and with razor thing margins already, is the added benefit worth it to cover the entire supply chain and distribution channel? Especially since the majority of perishables go to food services companies / restaurants, which by definition have to break bulk before selling, I wonder if there is sufficient benefit to cover the entire process vs. just individualized bar-codes through a certain point in the channel?

A very interesting and thorough read! I’m particularly interested in the HIPAA (patient privacy) implications of this. As you pointed out, whenever there is any digitized data available, its extremely likely that the data will eventually leak outside the company. Healthcare companies are required by law to follow certain procedures that are well defined in the US, but Pharma companies may not be as well versed in handling this kind of data correctly. The worry here would be that data that effectively tracks drug shipments down to the person can be used in things like lending decisions (would you charge a different rate to someone on painkillers?), or insurance (would you charge more to insure someone on anti-depressants?).

I think HIPAA alone makes the blockchain idea really challenging. My understanding is less than complete, but I think the blockchain relies on essentially crowd sourcing the data storage, and unless some very creative encryption is used, you are opening yourself up to exploitation by hackers, even if the data storage itself is highly secure (in the sense that it can’t be deleted or counterfeited). Would love to learn more about how far this push into digitization goes (its a concern across all of life, not just in pharma!).

A very interesting read! While it makes perfect sense to me that the vast majority of water use in the Beer supply chain is in the growth of barley, I wonder whether this is really the best use of AB InBev’s focus. Climate change has the potential to increase costs across the entire supply chain, and I would think that water, at least at current prices, isn’t that large of a cost of the actual beer production process. Its laudible that the company is trying to manage down its water usage, I’m not sure it really makes that much of a difference in overall water usage, and isn’t the most sensitive part of the supply chain to climate change. The energy use to manage a global distribution channel, let along the energy for the production process (and the direct CO2 emissions of production itself) seems like it might be much more impactful than water conservation, and I wonder whether AB InBev might better spend its time there?

I disagree that Munich Re is very exposed to this risk. Fundamentally, the reinsurance business works because it diversifies risks that are otherwise too large for local carriers to diversify. As the frequency of natural disasters (e.g. Hurricane Sandy, Katrina, etc.) increases, yes the cost of reinsurance will increase, but so too will the benefits of diversifying that now more likely and costly risk. Yes, the pricing model will need to be re-calibrated, but assuming its still done correctly, there is a net benefit to everyone, and Munich Re’s customers will be more and more eager to protect themselves from more frequent and more costly risks.

Fundamentally, what this really comes down to is the responsiveness of insurers to the new “true-distribution” of risks. Those who respond too quickly and aggressively (i.e. raise prices too high), will lose business. Those who don’t respond sufficiently will be forced out of business by high claim costs. This flows down the chain and ultimately impacts the costs of insurance to the end consumer, who will then be incentivized to avoid exposure to the risks. The downside here is that these costs either increase the cost of living, or displace large populations who can no longer afford them, and can’t live with uncovered risks. The human costs here are massive, but as with other effects of climate change, the benefits are clear and immediate (cheap energy), while the costs are hidden and spread (higher insurance premiums for Manhattan).

The one additional thing to remember is that catastrophe insurance is highly uncorrelated to other financial assets, and with increased costs and therefore increased premiums, you would actually expect the overall industry to grow (attracting capital with low cost), creating an almost perverse value for companies and capital providers in this area who can benefit and provide this business profitably.