Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. John F. Savarese and Sarah K. Eddy are Partners in the Litigation Department at Wachtell, Lipton, Rosen & Katz. This post is based on their Wachtell Lipton memorandum.
This post is based on a Wachtell article by Martin Lipton, John Savarese, Sarah K. Eddy, Ryan McLeod, Elina Tetelbaum, David Adlerstein, and Carmen Lu.
I. INTRODUCTION
Overview
Public companies and their boards of directors face an increasingly complex array of risks that test the resilience of corporate values, strategies, operations, and enterprise risk management frameworks. Tightening monetary policies, deepening geopolitical tensions, widening domestic political polarization, labor shortages, severe weather events, growing challenges tied to biodiversity loss, and the uncertainties surrounding generative AI are among the varied risks that companies have had to contend with over the past year.
Looking to the year ahead, these risks are likely to persist and even intensify—against the backdrop of an election year in the United States, ongoing war in Ukraine, and China’s sluggish post-pandemic recovery. Severe wildfires, heatwaves and flooding across the globe, rising insurance costs, and the exodus of insurers from certain regions underscore the burgeoning financial challenges of climate risks. Cybersecurity risk is bound to increase while the geopolitical rivalry between China and the United States continues to grow. And with presidential primary campaigns already in full swing, candidates are capitalizing on political divisions by publicly targeting corporations across a range of social issues. According to the World Economic Forum’s Global Risks Report 2023, more than four in five business leaders polled anticipate increased volatility over the next two years.
