Bruce Mehlman @bpmehlman December 8, 2021 (Re-ordered …

1 Living in LimboAnticipating the Top 2022 Risks in Politics & PolicyBruce Mehlman @bpmehlman December 8, 2021 (Re-ordered 12/9)LIVING IN TOP 2022 RISKS Uncertainty, volatility & disruption are the new normal. 2022 will neither be the best of times nor worst of times: COVID won t magically go away nor kill us all. The economy won t return 1970 s stagflation nor the 1990 s boom . tension neither ends in WWIII nor in Reality will prove more nuanced & complicated. Leaders need to reassess approaches to risk analysis & preparation: Understand macro trends driving technology, geopolitics & culture.

2 Adapt strategies to survive / benefit from accelerating change. Engage stakeholders proactively to maximize intelligence & 2022 Risks in Politics & PolicyCONTENTSEXISTENTIAL Expectations Obscure Common : The Fourth : Cyber : Extreme Weather : Wars, Refugees, Economic NationalismECONOMIC (short-term): : (long-term): Supply Chain Headwinds : Irrational : Space, the Fragile : Perceived Softness : Wave Election GOP: Primary GOP: An Off-Year, Off-Year : One Zillion Election Ads : Swing Seats : Restless ElectorateBUSINESS : Bureaucracy : : Political.

3 Employee Activism** Recommendations for Leaders3 EXISTENTIAL RISKS4 COVIDThe Andromeda StrainMagically Goes AwayECONOMY1970 s Stagflation1990 s BoomUS-CHINAW orld War Rules After Every ElectionDurable Majorities Bringing CertaintyBRANDSC onsumed by Culture WarsEveryone Always SatisfiedMARKETS19291999#1 RISK: EXTREME EXPECTATIONS OBSCURE COMMON GROUNDWe Can t Solve Real Problems If We Can t Agree on What s Hyper-partisans see what they wantto be true vs what AREHERE5 Maximum ChaosReturn to Normalcy#2. COVID: THE FOURTH WAVEToo Few Vaccinated 61% fully-vaxed(not boosters) Globally 45% fully-vaxedVirus Keeps Evolving WHO monitored >27 variants in 2021 More coming in 2022 (& 23, )Unprepared for Endemic Risks over-hyped Preventions under-embraced Zero COVID won t work forever Independence Day never comingWe Remain on Pandemic Footing vs an Endemic DiseaseSource: Johns Hopkins, CSSE, WHO data per Financial Times6#3.

4 INFRASTRUCTURE: CYBER INSECURITY721252137322825423436344131283 7820102030405060708090200620072008200920 1020112012201320142015201620172018201920 202021 Zero Day Vulnerabilities DiscoveredAccelerating Pace of Cyber Attacks Breaching Increasingly Sensitive SystemsSource: Zero Day Tracking Project#4. INSURERS: EXTREME WEATHER DISASTERSS ource: NOAAD isasters Increasing Costs, Challenging Supply Chains & Driving Policy8#5. MULTILATERALISM: WARS, REFUGEES, NATIONALISM9 RISK OF WARREFUGEE / HUMAN RIGHTS CRISESECONOMIC NATIONALISMData, Cyber, Privacy LawsTechnology SovereigntyWill COVID, Energy & Supply Chain Crises Embolden Bullies?

5 ECONOMICRISKS10 SEMICONDUCTORSWORKERSENERGYS ickness & ShutdownsPandemic PartisanshipWorkers under-concerned or over-reactingSupply & demand shocksNew Cold War vs ChinaDecoupling & domestic manufacturing prioritizedCold (shutdown) & Hot (recovery)COVIDPOLITICSRESULTP olitics Prolonging Supply Chain ShortagesDecarbonizationLow fossil fuel inventories & investment#6. MANUFACTURERS (SHORT TERM): ONGOING SHORTAGESR eformatted 12/16#7. CONSUMERS: INFLATION Persistent Inflation Raising Multiple Public Policy BattlesTighter monetary policy or prioritize jobs?

6 Tighter fiscal policy or prioritize domestic spending / defense?Investigate big players or encourage productivity?Subsidize fossil fuels and/or renewables?Leverage global supply chains or deny tech to adversaries?Encourage union strikes or expand labor force?12#8. MANUFACTURERS (LONGER-TERM): SUPPLY CHAIN HEADWINDS RISING1989-2019: Tailwinds PrevailedTech-Enabled (Cross-border data flows)US-China EngagementRising GlobalizationShareholder-DrivenPrioritiz ing EfficiencyDisinflationary EnvironmentUS-China DecouplingRising NationalismStakeholder-ResistedPrioritiz ing ResilienceCosts Rising (Wages, Energy, Logistics)2020-: Headwinds RisingTech Regulations-Hindered13 What Happens When the Fed Starts Tightening?

7 #9. MARKETS: IRRATIONAL EXUBERANCE 75% of companies going public in 2021 were unprofitable (up from 25% of IPOs in 1980) Total cryptocurrency markets up >300% over 1 year (12/4/20-12/3/21) Total household wealth up ($ (Q2 20) $ (Q2 21) home prices up >20% (in 2021 vs. ~ long-term )Sources: BofAper Bloomberg; IPOs; Home prices; Crypto (CoinMarket); Wealth (Gavekal) 142021 investments into equities exceed combined inflow of previous 19 yearsS&P500 more concentrated in the 5 largest stocks now than everCollisions could create waterfall cascade, accelerating in near-earth orbit objectSource: UN Office for Outer Space Affairs.)

8 >7,500 ACTIVE SATELLITES IN LEOOver 65,000 additional satellitesplanned by SpaceX, Amazon, OneWeb& StarNet/GW (China) over next 5 years>8,800 TONS OFORBITAL DEBRISOver 128,000,000 pieces of debris in LEOC ollisions likely to beget more collisions in a cascade waterfall threatening GPS, communications & weather systems, among othersANTI-SATELLITE WEAPONSTo-date 4 countries displayed A-SAT capabilities: US, Russia, China, IndiaRussia s Nov. 2021 A-SAT test created 1,500 pieces of debris, threatening the International Space StationOdds of Incidents or Accidents Grow as Traffic Explodes (sometimes literally)#10.

9 NETWORKS: SPACE, THE FRAGILE FRONTIER15 Sources: LEO; Debris; A-SATPOLITICAL RISKS16#11. BIDEN: PERCEIVED SOFTNESS Soft on the BorderSoft on Foreign PolicySource: Pew, Nov. 2021 Source: FBI data via CNNchartSoft on CrimeHomicides in the on InflationHouse Dems(-5 seats flips control)Senate Dems(-1 seat flips control)GOP WAVEH ouse Retirements(28D, 13R per270towin)POTUSNet Approval (-14% per RCP)EnthusiasmGap (R+14 per NBC)Wrong Direction(65%per RCP)SENATEper CPRTo s s-Up / Lean seats:4 Dem, 5 GOPHOUSEper CPRTo s s-Up / Lean seats:21 Dem, 9 GOPP olls as of 1/24/22#12.

10 DEMOCRATS: GOP WAVE ELECTION LOOKING LIKELY2022: Secure the Senate or Stop the Steal ?#13. SENATE GOP: AVOIDING PRIMARY FAILURESWeak Candidates Lose Winnable Races, Even in Red States2018 Alabama2010 Delaware2010 Nevada2012 MissouriWill Top-Tier Candidates or will Fealty > Electability?191998#14. HOUSE GOP: AVOIDING AN OFF-YEAR, OFF-YEAR 2018 Because Other Guys Worse2002To Support a Wartime LeaderTo Rally vs External ThreatsIt s a Referendum on TrumpTo Protect Health CareOct. 1842%Approve51%DisapproveOct. 2138%Approve50%Disapprove20To Maintain a Roaring Economy1998 US GDP+ Lessons from Potentially-Parallel Prior Years2022 Will Be the Most Expensive Midterms in History,Historic Volume of TV, Print & Digital Ads#15.