Understanding Business Risks

Today, a VP of Product reached out asking if I’d be willing to have a “quick backchannel conversation” about a candidate he’s considering hiring. His reasoning? “You only get the best side of someone during the interview process.” That request stopped me cold. I said yes—but only so I could tell him directly that backchanneling is not a practice I agree with or participate in. I only proceeded because I happened to have positive firsthand experience with the candidate, and I wanted to advocate for them. But I left that conversation unsettled. Let me be clear: - Backchanneling is unprofessional. - It’s slanderous when done to discredit someone. - And if you’re still employed at the same company as the candidate, it can be illegal. No one should ever speak off-the-record in a way that could jeopardize someone else’s opportunity for employment. If a candidate wants you to serve as a reference, they'll ask you directly. And if you're hiring, respect the process: interview thoroughly, ask for thoughtful references, and make an informed decision based on facts—not whispers. Backchanneling is lazy hiring dressed up as due diligence. It violates trust. It fuels bias. And it has no place in a professional, equitable hiring process. Let’s do better. ___________________________________________________________________ 🔄 UPDATE: I want to add a few clarifications based on the thoughtful discussion happening in the comments: The VP of Product who reached out to me was a leader at another company—someone I didn’t know personally. “Backchanneling” refers to the common (and problematic) practice of contacting former managers or colleagues of a candidate for an unofficial reference—without the candidate’s knowledge or consent. I’m grateful for the positive and constructive dialogue this post has sparked. Thank you all for engaging with honesty and care. 🙏

Sustainability in Supply Chains A guide for private markets investors 🌍 Private markets investors face increasing pressure to integrate sustainability into supply chain management. This guide by PRI explains why supply chain due diligence is essential and how investors can embed it across the investment cycle to safeguard assets, reduce risks, and capture value. Supply chain risks, ranging from human rights abuses to environmental violations, have become financially material issues with direct implications for investor performance, regulatory compliance, and reputation. Human rights concerns are significant. Forced labour affects an estimated 28 million people worldwide, with rising risks in major sourcing countries such as India, Vietnam, China, Mexico and the United States. Migrant workers are particularly vulnerable, while child labour remains prevalent in high-risk industries and regions. Working conditions also present serious challenges. Excessive hours, unsafe workplaces and poor wages undermine the stability of global supply chains. These issues are concentrated in industries such as apparel, electronics, food and agriculture, construction materials and mining where oversight is often limited. Environmental risks add complexity. Nearly half of global sourcing markets face high or extreme risk of violations related to waste management, emissions and hazardous materials. Biodiversity loss and deforestation linked to commodities such as palm oil, soy and timber increase exposure to both regulatory and operational disruptions. Regulatory requirements are tightening worldwide. The EU Corporate Sustainability Due Diligence Directive, the US Uyghur Forced Labor Prevention Act and the EU Deforestation Regulation compel companies and investors to identify, mitigate and report risks throughout their supply chains. Failure to comply carries financial consequences. Volkswagen shipments were detained at US ports, Shein faced delays in listing plans due to sourcing concerns and companies in Germany were investigated and fined for breaches of the Supply Chain Act. These examples show how supply chain management is now a strategic necessity. Proactive due diligence creates opportunities. Companies with strong supply chain transparency and risk management can secure contracts, improve resilience, reduce costs and strengthen their brand. Investors can leverage these practices to enhance portfolio performance and protect value at exit. The guide explains that due diligence should be present at every stage of the investment cycle. This includes governance and policies, early screening, detailed risk assessments, legal agreements, active engagement, monitoring and exit planning. Clear roles, data systems and training are critical. Integrating sustainability into supply chain due diligence strengthens both risk management and value creation. #sustainability #business #sustainable #esg

I hear from a lot of social media teams that they “ask for forgiveness, not permission” to use songs that they don’t have the rights to on TikTok and Instagram. Turns out forgiveness is expensive. Last week, UMG sued Quince for copyright infringement for including unlicensed music in Instagram and TikTok posts. While I’ve talked about brands being sued by music labels before, this one is interesting because it also holds the brand responsible for sponsored influencer posts that use unlicensed music. UMG has identified a whopping 130 works infringed by Quince. The exposure in statutory damages alone is over $20M. I asked marketing lawyer Rob Freund what brands should take away from this lawsuit: “The Quince case is the latest in a string of cases against brands using unlicensed popular songs on social media, both on brand-owned pages and via influencers. The takeaway is that brands cannot use the general popular music libraries that the platforms provide for any commercial content (which includes any posting on brand-owned pages) and cannot treat influencer content as a copyright safe harbor. The platform licenses do not extend to commercial use, unless you use the designated commercial sound libraries. Any brand running a creator program needs a music licensing strategy and clear contractual guardrails for its influencers.”

We just finished mapping water risk for all 9,500 data centers on Earth. The results should worry anyone planning AI infrastructure. Over the past months, our team has been building the first global, facility-level assessment of data center exposure to water stress — combining hydrological modeling with the location of every currently identified data center worldwide. Paper is in progress, but the early findings are striking enough to share now. What we're finding: → 1 in 4 data centers today already sit in locations where water demand exceeds local supply for at least part of the year → That rises to 1 in 3 under future hydrological conditions — this isn't a distant risk, it's a planning horizon problem → The US hosts nearly 4 in 10 of the world's data centers, and 1 in 5 of those are already in water-stressed regions → 4 in 10 data centers globally sit in areas where they're drawing from the same water as cities' municipal supply — meaning growth here is a direct governance and permitting issue, not just an engineering one Why this matters for business decisions: Water risk is hyper-local in a way energy risk isn't — you can import power, you can't import a river. That makes site selection, water rights, and community relationships a bigger part of AI infrastructure strategy than most capacity-planning models currently account for. The companies that get ahead of this — through siting choices, alternative cooling, or transparent water accounting — will face far fewer stranded-asset and permitting risks than those that don't. Curious to hear how operators and investors in this space are already thinking about water exposure. #AI #DataCenters #WaterRisk #Infrastructure #Sustainability

So… hackers broke into the control system of a dam in Norway, and forced open a valve that released 132 gallons of water per second for four hours before operators detected it and shut it down. More than two million gallons were lost. No one was hurt but the message is clear: when core systems are hacked, the impact is physical. Power grids, transport, hospitals, finance, even the AI systems being added into all of them and once control is lost, the damage is real. Every layer of modern infrastructure is now a potential pressure point. These systems were built with safety and reliability, but bad actors adapt. They escalate, they chain methods, and they keep testing until they find a weakness. And once they do, the consequences don’t stay online. They are physical, immediate, and often international. A breach can ripple into outages, contamination, blackouts, or economic disruption. The uncomfortable truth is that we will see more of these incidents. Adversaries often work harder and faster than defenders. That’s why we have to evolve at the same pace by breaking our own systems before someone else does, finding the loopholes first, and building guardrails in real time. Because the cost of waiting is measured in more than data. It’s measured in the stability of entire societies.

I moved across the country to join an online bookstore with no job description. A 3,000-mile relocation, a strange city, and ultimately, an Amazon VP role. But at the beginning I was scared I had joined the IT department of a bookstore. Taking the risks you need to take will never be totally rational or logical. To stand out you *must* sometimes take illogical risks that feel scary. Columbus sailing for the new world was not a safe bet, and Jeff Bezos leaving a successful hedge fund role to start Amazon was a huge gamble. Almost all the big successes of our time looked scary and uncertain at the start. The important fundamental here is that the risks you need to take for an outstanding career are not safe, logical, or rational. They never will be. A good friend and fellow executive, Michael Frazzini, recently commented on a post of mine that I write excellent logical frameworks for most situations. He then asked if there are things that I do not cover because they don’t lend themselves to clear, linear steps. The answer is yes. That question led to this post. Big risks and leaps cannot be made easy and comfortable with neat frameworks. Big leaps are big leaps. I can give you a formula to recognize them and reduce the risk, but you still have to take the plunge. Here’s what you can do: 1. Recognize potential opportunity- Invent things and/or spot trends 2. Create a *realistic* worst case. Read Tim Ferriss’ “Fear Setting” essay for this. The takeaway is that the consequences of most risks are reversible and recoverable, and that the price of inaction is higher than the risk. I have had many failures in my career and was laid off twice, but I still became a VP and retired at 50. When things went wrong, I was able to recover. 3. Take the leap. If I have a regret, it is that I did not take more risks. 4. If you succeed, celebrate, learn, and remind yourself that it worked despite your fears. 5. If you fail, implement your plan from step 2, recover, and try again. "The only true failure is when you stop trying." How to lower your fear: 1. Time box your analysis: Dig for rational indicators that you should take the risk, but do not expect to get to a perfect business case before jumping in. 2. Buffer. If you have some savings, a good network, or other recovery tools, you face less true risk in the face of a setback. 3. Remember the risks that DO work out. When you can reflect on the gambles that paid off, it makes you more open to gambling again. Readers: how do you get over the fear and take the plunge? Follow me here for more career success tips.

In 1997, we made a big mistake—and I'll never forget it. We set the organic farm conversion subsidy too high. Production went up, prices went down. Our existing organic farmers were pissed. So were our new organic farmers. The lesson was not that organic subsidies are bad. It was that this “push” for more production needs and equally strong “pull” from the market. It was a “push” and “pull” mismatch. This was the birth of our “push & pull” strategy for organic growth that made Denmark a leader in organics. With organic market shares of 30-50% for many basic foods. “Push & Pull” is now used widely. Most recently in our work with: ➡️EU’s Organic Action Plan ➡️The Canadian movement’s new Organic Action Plan ➡️National Agroecology Strategies in Tanzania, Kenya and across Africa. And yet, new national policies, philanthropic initiatives & movement strategies still often lack focus on markets. Here are four mistakes I see right now: 1. Treating organic as only a farming issue Most countries design their organic strategy inside agriculture ministries. But organic growth happens in markets, where people actually buy their food.  And organic growth happens in public procurement, where organic meals in hospitals, child care and military barracks create a market for organics.  School meals, linked to local organic & agroecological farmers, are a new driver from Brazil & Kenya to South Korea, Japan and the EU! 2. Lack of investment in market capacity building When Germany & The Netherlands run government campaigns for organics, this is positive. But had organic organizations been “lead” on these campaigns, they would have built new capacity & market relationships that could continue to drive growth. In Organic Denmark, we built a market team that worked directly with retailers. We hired people who spoke the language of retail, understood the motivation factors, and could help retailers to develop strategy, expand organic assortments and communicate “the why” of organic much better. 3. Forgetting Organics in sustainability strategies Organic is by far the most successful market-driven sustainable farming strategy. And yet this powerful tool is often forgotten in national strategies for sustainable or ill-defined “climate smart” or “regenerative” agriculture. Including  market-smart organic farming, the market “pull” helps drive transition in farming.  4. Only thinking of Certified Organic In the global north, third-party certified organic is a success. Also for smallholder organic farmers in the global south, who have gained access to these markets.  But policy makers & organisations, north & south, should be paying attention to the rapid growth of low-cost Participatory Guarantee Systems (PGS) for local organic and agroecological products. ~ I've worked with organic stakeholders & policy makers across Europe, North America, and Africa, and while context is king, push & pull is needed everywhere. Share your lessons!

Aditya Puri began reducing his HDFC Bank shareholding even before retiring. Not because he had lost faith in the business, and not because the future looked uncertain, but because when income, reputation, and wealth are all tied to one company, conviction can start to look like concentration. A great company can still be a risky portfolio. For most senior professionals, this does not begin as a bet. It begins as a career. You work at a strong employer, your salary comes from the same place, and your bonuses, RSUs, or ESOPs come in the same stock. The business performs, the stock rises, and one good company gradually becomes a large part of your net worth, without you ever deciding it should. Warren Buffett once told Bill Gates to diversify out of Microsoft over time, and Gates did. Microsoft continued to do well even after he sold portions. On paper, it may look like “lost upside,” but that was never the point. The point was to ensure one company did not control both income and wealth. Most people do not get hurt because they picked a bad stock. They get hurt because one good stock became too large. This is not a “the stock fell, so diversify” lesson. Concentration is a risk even when everything looks fine, and Yes Bank employees learned that the hard way. The social layer makes it worse. Colleagues are holding too, so it feels normal. But everyone has different quantities, vesting schedules, goals, and risk tolerance, and what is manageable for them can be dangerous for you. Then emotion, too, makes it difficult to sustain. You know the business, you see the progress, new grants keep coming, and you tell yourself, “I will sell at 300.” It goes to 250 and you wait. It goes to 200 and you wait. It comes back to 230 and you wait again. This is how concentration turns into a trap. The disciplined move is usually boring. Set a cap on employer stock, and as units vest, reduce toward that cap in a rule-based way, not a mood-based one. Redeploy across diversified assets, not to chase returns, but to protect your financial life.

We live in a world of deep interdependencies, but often the consequences are not what we initially expected. 🌍🔗 Montesquieu believed that trade and mutual dependencies would naturally lead to peace. ☮️ As he argued in “The Spirit of Laws”, the logic was simple: when nations rely on each other economically, the cost of conflict becomes too high. 📈 Yet, recent history has shown that interdependence does not automatically prevent confrontation. In 2022, Russia, after years of cultivating Europe’s dependence on its gas, launched a large-scale invasion of Ukraine, seemingly betting that this dependency would deter strong EU sanctions. It did not. ⏭️ Fast forward to 2026: some analysts note that Israel and the United States likely would not have engaged in a major strike against Iran if they were not largely self-sufficient in oil and gas. In the U.S., this autonomy is a direct consequence of the shale energy boom that began less than two decades ago. As a consequence, other countries are suffering from the closing of the #StraitofHormuz, enduring higher energy prices or even physical scarcity. Time will tell whether the ceasefire announced last night will lead to lasting peace in the Middle East. But for economic actors, including banks, the lessons are striking. Reducing geopolitical dependencies isn’t only a matter of national policy; it’s critical for supply chain resilience, credit risk assessments, and long-term stability. The conclusion is clear: 📍sovereignty; 📍diversification. In a world defined by unexpected shocks, true strength lies in reducing critical dependencies before they turn into constraints, for both nations and corporations.

One salesperson had brought in 20 of the company’s 23 customers. That wasn’t only a success story. It was a warning. The person was clearly talented. They had strong relationships. They understood the market. They knew how to create trust and move conversations forward. But the number exposed something else. The company had not built a sales capability. It had built a dependency. There is nothing wrong with having exceptional performers. Every company wants them. The risk begins when customer trust, account knowledge, sales judgment, and revenue creation remain concentrated in one or two people. That creates vulnerabilities many CEOs do not see until something changes. The top seller leaves. They burn out. They reach their capacity. A key contact moves to another company. Their existing network stops producing at the same rate. Then leadership realizes the rest of the team was never truly developed. A strong sales organization is not defined only by how much its best person can produce. It is also defined by how well the company transfers what works. Can managers develop sound judgment in other sellers? Can multiple people build executive relationships? Can customer knowledge survive a transition? Can the team create pipeline without relying on one person’s reputation? Can the company continue growing when the hero is no longer available to carry it? Your top performers should be an advantage. They should not be the infrastructure. How much of your revenue confidence still lives with the same one or two people?