One Year In: Advancing Economic Security and Resiliency

Jay Horine (0:03)

Welcome to the first episode of our Security and Resiliency Initiative series.

I'm Jay Horine, Global Head of the Security and Resiliency Initiative, and I'm joined by Doug Petno, Co-President of JP Morgan Chase and CEO of the Commercial and Investment Bank. One year ago, we launched a Security and Resiliency Initiative with an ambitious goal, to help strengthen the industries, technologies and supply chains that underpin long-term economic security and resilience. Doug has been a strong advocate for this effort from the beginning, and has had a front row seat to its evolution over the past year. Thanks for joining us, Doug.

Doug Petno (0:40)

It's great to be here, Jay.

Jay Horine (0:42)

Let's start with how SRI came to be. Was there a moment or conversation that sparked how the effort came about?

Doug Petno (0:48)

It's a really interesting question. There was no single moment that caused us to launch SRI. It was really the unfolding of serious events that were happening around the world that caught our attention. We were watching each of them very, very closely. I think it started in earnest when Russia invaded Ukraine. Following that, you had the Liberation Day and the after-effect of tariffs that were washing through global trade, and some of the export bans that exposed single points of failure in our supply chain and supply chains. Then you also saw at this very same time, a very powerful emerging technologies like quantum and AI, accelerating rapidly the need for the US and its allies and major trading partners to actually be the endgame winners in that, became more pronounced. So it was really the confluence of all these things happening at the same time. In the background, we were also getting feedback from the US military, someone in response to the geopolitical events that, you know, the world needed to re-militarize, unfortunately. And not only did they need to find creative ways to do that and to finance that, they needed to build weapons and machinery and equipment that reflected the change in the character of war, which would really depend heavily on defense tech and new technologies.

And military officials had actually reached out to JPMorgan and said, we're having a hard time. We're having a hard time securing those types of technologies with the procurement process, can you help us?

So when we took stock of all of these things, we said, hey, we really need to do something. This is a profound moment for us to do what we do best as a bank, bring together the broad-based capabilities of JPMorgan Chase, best investment bank, best capital markets provider, great advisory, subject matter experts, global perspective and see if we can really make a difference and do it at a scale that only JPMorgan could provide.

Jay Horine (2:49)

Building on that, why do you think this has resonated so strongly with clients not only in the United States but around the world?

Doug Petno (2:56)

I think people very quickly realized that they had supply chain vulnerabilities and it goes all the way back to COVID.

I mean, just think about the personal challenges that all of us face during COVID, just sort of keeping your household running. There was an industrial version of that and the long, long list of single points of failure that were exposed during the pandemic. And then in the wake of Liberation Day and the aftermath of tariffs that went through global trade, we saw export controls shine an even brighter light on some very, very serious single points of failure in our supply chain. I think the one that stands out to me is when the Chinese put an export control on rare earth magnets.

We have rare earths in the United States, but we didn't have rare earth refining, and certainly didn't have rare earth magnet production in the US. And those magnets are central to our industrial base and critical to our economy. So that one single item could really bring our economy, our industrial base to its needs. And so you do a little work, you quickly realize it's not just that one item. There's a long list of critical minerals. There's critical chemicals that feed into the pharmaceutical and the health care industry. And the list goes kind of on and on and on. So these vulnerabilities were laid bare in the last several years. And we really were compelled to do something about it. It ties back to our purpose driven strategy at JP Morgan. In this particular case is we needed resilient supply chains in order to survive whatever kind of geopolitical swings and whatever kind of market dynamics were to unfold. And so it really translated in to the SRI initiative. And it's been a really profound first year for us.