So in this second lecture, I will try and give you an introduction to the international legal framework for nuclear security. Nuclear security, as you can see from this definition, which is a bit old, and I think the IEA now uses a broader definition as a working definition for nuclear safety. But I still have on this slide an old definition that was adopted in 2002 by an advisory group on nuclear security, which is a group of experts which advises the IEA secretariat, the DG, and the IEA secretariat on issues of nuclear security. And from this definition, although it's not the more recent one that the IEA uses for working purposes, you can see what I already told you in the previous lecture that basically the difference between nuclear safety and nuclear security is that, whereas nuclear safety is about protecting the outside world from the negative consequences that can potentially derive from the peaceful uses of nuclear energy. Nuclear security is really about trying to avoid outside interference by unauthorized people or maybe terrorists or other non-state actors with nuclear material and facilities, which could then result, of course, in a nuclear safety event. Because if there is outside interference with a nuclear facility or with nuclear material, this could then result in a nuclear safety issue if there is a release of radiation. But nuclear security is really about trying to avoid these outside interferences in order to protect nuclear material and associated facilities from the unauthorized activities of non-state actors, individuals. So the focus is really on non-state actors. And that is why nuclear security is also different from safeguards, which is, you will hear about it this afternoon, is about the verification of non-proliferation obligations which are placed upon states. So safeguards is really dealing with whether or not states abide by their legal obligations in the area of non-proliferation of nuclear weapons or as nuclear security is about trying to avoid interference with nuclear material and associated facilities from non-state actors. This is an area, by the way, which for a long time was not exactly dealt with within the IEA. Because as I mentioned in my previous lecture, for many years there weren't any treaties in the era of nuclear law, except for nuclear liability, which we will deal with in the next lecture. But there were the IEA safety standards. There were the IEA safety standards that the IEA could adopt under its statute. And then at some point states decided that it was time to adopt binding obligations in the era of nuclear safety. And they started to adopt these various treaties which deal with different aspects of nuclear safety. In the era of nuclear security there were no standards because the statute of the IEA does not specifically empower the IEA to adopt security standards. It only refers to safety standards. So it is an area where gradually the member states of the IEA became aware that there was a need for the IEA to deal with nuclear security as well. And the Board of Governors started to adopt decisions whereby the IEA secretariat was decided, was authorized to do a number of things in the era of nuclear safety. These were the so-called nuclear security plans which were adopted by the Board of Governors, which is one of the governing bodies of the IEA. But even before these nuclear security plans started, at least one treaty was adopted under the O-species of the IEA. This was the Convention on the Physical Protection of Nuclear Material, which was the first binding instrument which was adopted not by the IEA, but under the O-species of the IEA, by the IEA member states. This is an important difference because the IEA can't do anything unless the member states tell us that we can do something. So the states decided to adopt binding obligations in the area of the physical protection of nuclear material. This convention was then amended in 2005 by the amendment to the physical protection convention, which ended into force in May 2016. Then there are, of course, also non-binding instruments. I don't want to go back to issues that I have already mentioned in my previous lecture concerning nuclear safety. But in nuclear security, we have the same pattern that we see in nuclear safety. On the one hand, we have the treaties which are binding upon states that have freely consented to become parties to these treaties. And these are the Convention on Nuclear Safety and its 2005 amendment. But we also have non-binding instruments that have been adopted under the O-species of the IEA. One of them we have already mentioned is the Code of Conduct on the Safety and Security of Radiative Sources, which is important precisely because it deals with both safety and security. And that's why it's relevant also when we describe the legal framework for nuclear security. But in the area of nuclear security, another, an important factor which distinguishes it, if we want, from the area of nuclear safety, from the legal point of view, is the fact that apart from those instruments binding or non-binding that have been adopted under the O-species of the IAEA, there are a number of other instruments, treaties in particular, but also resolutions of the Security Council of the United Nations that have been adopted outside the framework of the IEA. So the IAEA is not the only entity under the O-species of which instruments have been adopted which deal with nuclear security. And for example, we have here, and I will come back to this later, the most important of these treaties that have been adopted outside the framework of the IAEA, which is the number of United Nations conventions that were adopted under the O-species of the United Nations organization, the most important of which is the International Convention on the Suppression of Acts of Nuclear Terrorism. This convention was adopted, I think it should have been adopted under the O-species of the IAEA, but for some reason, for political reasons, I think it was the Russian Federation at the time who took the initiative to start drafting this convention. And they decided that it was better to negotiate this convention within the United Nations and then have it adopted within the framework of the United Nations organization. So there are a number of UN conventions, the most important of which is the International Convention on the Suppression of Acts of Terrorism. But there are also other specialized treaties which deal with specific areas where nuclear security is relevant, which have been adopted under specialized agencies of the United Nations. You're probably familiar with the fact that the United Nations family is made not only by the United Nations organization, but by a number of other intergovernmental organizations which are legally separate from the UN are part of the United Nations family because the UN exercises a supervisory function over these organizations through the Economic and Social Council, mainly, which is an organ of the UN. These organizations are called specialized agencies, and one of them is the International Maritime Organization under the O-species of which two important instruments have been adopted, which are relevant for nuclear security. And yet another one is ICAO, which I already mentioned before, which is the International Civil Aviation Organization. In this case, it makes more sense that these instruments, these treaties, were adopted outside the framework of the IEA, although one may question even that. But at least these relate to specific aspects of nuclear security, which deal with maritime issues, and that's why they were adopted under the auspices of the International Maritime Organization, which has its headquarters in London, or they deal with civil aviation aspects of nuclear security, and that is why they were adopted under the auspices of the ICAO, which has its headquarters in Montreal in Canada. And then finally, we have at least two important security council resolutions. These are not treaties, but they are also legally binding, like treaties, because, as some of you I'm sure know, the United Nations Organization treaty provides that the charter of the United Nations, which is the constitutive treaty of the UN, provides that the Security Council, which is an organ of the United Nations, under Chapter 7 of the United Nations Charter, when there is a threat to the peace, which is a very generic concept, which can encompass everything and its opposite. So it's up to the Security Council mainly to decide when there is an issue which constitutes a threat to international peace, or whether there is a natural breach of the peace, which is a more grave a situation, or whether there is an act of aggression, which is the most important of these situations. But normally, when there is a threat to the peace, the Security Council is empowered under Chapter 7 of the United Nations Charter to adopt binding decisions, which are binding on all UN member states. They are binding because the UN Charter, which is a treaty which has been ratified by the members of the United Nations Organization, the Security Council has this power. And under Chapter 7, the Security Council has adopted at least two important major resolutions, which are binding, which are relevant for nuclear security. So the picture from the legal point of view of nuclear security is a little bit more complicated than the picture we've seen in the area of nuclear safety. There we have legally binding and non-legally binding instruments, but they have been all adopted under the auspices of the IAEA. Here we have also the same pattern. We have legally binding and non-legally binding instruments. But at least when it comes to the legally binding instruments, some of them have been adopted outside the framework of the IAEA under the auspices of either the United Nations Organization or some of its specialized agencies, such as IMO or RECAL. And then we even have decisions by the UN Security Council which are not treaties but are binding on all UN member states. So as you probably know, maybe I didn't say this strongly enough in my first lecture, there is a major difference between a UN Security Council resolution based on Chapter 7 and a treaty. Because treaties are legally binding, of course, but they're legally binding only on those states that have freely decided to become parties to these treaties. It's not that once a treaty enters into force, it binds everyone. It only binds those states that have freely consented, normally through an act of ratification, to become parties to the treaty. So it's a voluntary process. Each state is free to decide whether or not it wants to become a party to a treaty. Once it has made that decision, it ratifies the treaty, the treaty becomes binding upon that state. When it counts the UN Security Council resolutions, it's more like being within a federal state, in a way, in the sense that the UN Security Council resolution has the power, unlike the IEA, to adopt binding decisions on all UN member states. That means that it's no longer a question of free will, in particular because, as you probably know, the UN Security Council is not made of all UN member states. It's made of 15 UN member states. So 15 UN member states can decide to adopt measures that become binding on all UN member states on the basis of Chapter 7 of the UN Charter, when there is a threat to international peace or a breach of the peace or an act of aggression. So this is a major development in international law that was made after the Second World War, when the United Nations Charter was adopted. So this is the major difference from the legal point of view between safety and security. Here we have a number of legally binding instruments that have been adopted outside the framework of the IEA. And we even have at least two decisions of the UN Security Council, which are binding on all UN member states, and not only on those states that are freely consented to be bound, as is the case for multilateral treaties. There is also another aspect that I would like to point out from the general point of view, that leaving aside the UN Security Council resolutions, which have a more comprehensive scope of application, in particular one of them, if you look at these treaties that have been adopted outside the framework of the IEA, like, for example, the International Convention on the Suppression of Acts of Nuclear Terrorism, all the specific treaties dealing with maritime nuclear terrorism that have been adopted under the auspices of the IMO or of civil aviation, nuclear terrorism that have been adopted under the auspices of IKAO, all of these treaties only deal with one aspect of nuclear security, which is the criminal law aspect. Those of you who are lawyers probably know what criminal law means at the national level, at least. It means that there are a number of offenses which each state decides are criminal offenses in the sense that an individual who is suspected of having committed one of these offenses can be arrested and he can also be prosecuted. And if found guilty, he can then be sanctioned, sanctioned and put in prison, for example. That is typical of criminal law at the national level. Most states have a criminal code, others do not have a criminal code, but they have common law offenses, they have statutory offenses, and so on. At the international level, there have been a number of treaties that have been adopted in the area of criminal law that put upon the state's parties an obligation, an international obligation, to consider certain acts committed by individuals as criminal offenses in their national criminal law. And these treaties then usually also deal with international cooperation in criminal matters in order to facilitate the arrest and prosecution of individuals who have committed these criminal acts in the sense that they provide that if an individual is found in the territory of one state and that state does not have a direct interest to arrest and prosecute that individual, that state still has to arrest that individual and if it doesn't want to prosecute that individual, they will extradite that individual, I mean is they will transfer that individual to another state that has a more direct interest in prosecuting that individual. For example, because the criminal act was committed on the territory of that state or because that criminal act was committed against a person which is a national of that state. If these are cases where there is a more direct interest for a state to exercise its criminal jurisdiction vis-a-vis an individual and thereby prosecute that individual than for example within another state where the individual may be present at some point but the offense was not committed there, it wasn't committed against any national of that state and therefore that state does not have such a direct interest in prosecuting that individual. But because the treaties have, these international criminal law treaties have the aim of facilitating the prosecution of this individual so that there can be no safe haven for people who have committed these offenses that are of an international character, then there is an obligation for the state to extradite that individual so that it can be tried in another state that has a more direct interest in prosecuting. So this is the international criminal law aspect and these treaties that have been adopted under the auspices of organizations other than the IEA mostly or exclusively deal with this aspect of nuclear security. There are certain acts which are relevant for nuclear security which have to be considered as criminal offenses and in respect of which states have an obligation to either prosecute or extradite the individual who is suspected of having committed one of these offenses. When we look at other aspects of nuclear security like the actual measures that the state has to take in order to protect nuclear facilities or nuclear material from the interference of these individuals. So the preventive aspects if you want of nuclear security we don't want these offenses to be committed and therefore we take a number of measures in order to protect, physically protect nuclear facilities or nuclear material from outside interference. Then if we don't succeed then we will prosecute the individual who has committed that act. But even before that we need to take measures to avoid that and physically protect and do other things that may be important in order to prevent these criminal offenses to be committed. So this aspect of nuclear security is not dealt with by these treaties that have been adopted outside the framework of the IEA. It's only the IEA that has adopted either binding, oh actually, it's only within the framework of the IEA that states have adopted binding treaties in this area and the IEA has also adopted a number of non-binding instruments which we will see are called nuclear security recommendations that deal with this which is probably the most important aspect of nuclear security because nuclear security is much more than simply the criminalization of certain acts committed by certain individuals. We'll see this for example in the convention on the physical protection of nuclear material which is the first convention that was adopted in this area and it was adopted under the auspices of the IEA. This convention has at the moment 155 states parties. The scope of the convention is threefold in the sense that it deals with the physical protection of nuclear material and then it deals with the criminal law aspect, so the criminalization of offenses and then it deals with the third aspect with international cooperation and information exchange. So there is one aspect of the CPPNM which is the criminalization of offenses but there's only one aspect of the convention. Perhaps not even the most important aspect of the convention. The most important aspect is the first one, the physical protection aspect. Here again we see the usual pattern that we've seen in nuclear safety. When states decide to sit down and adopt a treaty they discuss its scope of application and there will be some who want the scope of application to be very broad, there will be others who want the scope of application to be very narrow and then there will be inevitably a compromise and this is what happened when this convention was adopted. Although it has a very general title like the CNS Convention on Nuclear Safety has a very general title but then if we look at the contents of the convention we see that it only applies to the safety of nuclear power plants that has a very narrow scope of application compared with the concept of nuclear safety as a general concept. Here the convention is called Convention on the Physical Protection of Nuclear Material but actually the articles are in the convention that obliged states to adopt measures to physically protect nuclear material only apply to nuclear material which is being transported from one state to another to nuclear material which is in international transport. That was a compromise at the time. States didn't want to adopt binding rules relating to the physical protection of nuclear material in general. They said oh we only want to deal with the transboundary issues. When it's a purely national issue because there is nuclear material which is in domestic use storage or transport we don't want to be bound by any international treaties. This is a matter for national sovereignty. Each state has to decide freely by itself how, if and how it wants to protect nuclear material at the national level. So that was the compromise when the convention was adopted. So actually the scope of application of the convention when it comes to physical protection is rather narrow. Fortunately when it comes to the criminalization aspect the scope is not so narrow because there are a number of acts which are criminalized by the convention which means that the state's parties has to consider these acts as criminal offenses in their national criminal law which relate to out let's say in general unauthorized interference with nuclear material by private individuals and these are quite general application. It doesn't matter anymore whether this unauthorized interference is with nuclear material which is being transported from one state to another. They just apply to any outside interference with nuclear material whether it's in domestic or international transport. So they have a broader scope of application. The article relating to criminalization of offenses and then of course there are a number of other articles that deal with jurisdiction, extradition, cooperation in criminal matters and so on. And there are also in the convention a number of provisions relating to international cooperation and information exchange among the state's parties but I don't want to go into details because we don't have too much time. However, this was a compromise when the convention was adopted. At some point it was realized that the scope of the convention was too narrow. In particular as regards physical protection it was realized that it's not true that any state should be free to decide by itself whether or not and how to protect nuclear material in domestic use, storage and transport and that there was a need for international binding obligations even for nuclear material in domestic use, storage and transport and for nuclear facilities that are by definition within a state's territory. And that is why at some point negotiations started that the outcome of which was the adoption of the amendment to the CPPNM which was adopted in 2005. This amendment took many years to enter into force. It only entered into force as I mentioned last year because the convention on the physical protection on nuclear material has a provision relating to its amendment which puts a very high threshold on the entry into force of any amendment to the convention that may be adopted. So this amendment was adopted in 2005 but the convention provides that any amendment to the convention only enters into force once it has been ratified by two-thirds of the contracting parties to the convention. This is a very high threshold. If we look at some of the other treaties that have been adopted in the area of nuclear security outside the framework of the IEA which ended into force much sooner than the amendment to the CPPNM we'll see that the reason was that the threshold for entering into force was much lower. Of course, if you put a low threshold and you say the amendable ended into force once it's been ratified by five states you will have an amendment that will enter into force very soon, it's not very difficult to find states who will ratify an amendment. But then of course it will end up with an amendment that is only in force for five states and the others may join at a later stage and God knows when. So the decision was taken when the Convention on the Physical Protection was adopted that because this is a sensitive area any amendment to the convention should enter into force when there was broad consensus and broad consensus meant for those states at the time at least two-thirds of the state's parties must have consented to be banned. And this threshold was reached only last year and that's why the amendment ended into force so long after its original adoption in 2005. So, but now it's in force. It's in force for those states that have ratified it and the IAEA of course is working on getting all the other states parties to the CPPNM which have not yet ratified the amendment to also ratified so that everyone will be party to the amended convention. The amended convention has an extended scope of application in all three areas but I think the most important one is the first one physical protection because as I mentioned the CPPNM despite its very general title had a very, very narrow scope. It only applied to the physical protection of nuclear material while in international nuclear transport. Here at last states realized that this was not acceptable there was a need for obligations in the broader area of the physical protection of nuclear material and nuclear facilities and therefore the amendment now covers the physical protection of nuclear material in not only in international transport but also in domestic storage use and transport and it also applies to the protection of nuclear facilities. And the important thing about this aspect is that the convention and like the original the amendment sorry unlike the original convention has a number of obligations that a state has to abide to regarding the national legal framework relating to the protection of nuclear material and nuclear facilities. There are a number of general principles that have to be abided by the states parties that relate to the independence of the regulatory authority and other aspects which are familiar to those who deal with nuclear safety but in the air nuclear security have been for the first time put into binding rules by the amendment to the physical protection of nuclear material. There is also an extended scope of the criminalization provisions because new offenses have been added which relate to the nuclear smuggling, illicit trafficking and sabotage of nuclear facilities and nuclear material. The original convention mainly related to the unauthorized possession, use, transfer, disposal of nuclear material that could cause that caused or could cause injury to third parties. It applied to robbery or theft of nuclear material. And now we have these additional offenses which relate to nuclear smuggling and illicit trafficking and sabotage of nuclear material and nuclear facilities. And then we have an expanded scope of the provisions on international cooperation among states. Now within the IEA, apart from the physical protection convention on its amendment, we then have a number of non binding instruments that have been adopted under the auspices of the IEA or by the IEA directly. Like in the era of nuclear safety, I think the most important one as we've already mentioned is the Code of Conduct which is important because the CPPLM and its amendment do not cover radioactive sources. They only cover nuclear material which is defined in such a way to exclude radioactive sources. So again, this is a pattern that we've seen in nuclear safety as well. States are not prepared to adopt binding obligations for activities which they consider rightly or wrongly to be less risky. So for sources which are risky but are not as risky as nuclear material, there is only a Code of Conduct. Also for the security aspect, there is no international convention. There are those who would like to transform the Code of Conduct into a binding treaty. But so far, this tendency has not reached the stage where states are prepared to consider whether or not to turn this Code of Conduct into a binding treaty. We have then what might be called the equivalent of the IEA safety standards. So I've said that the statute of the IEA only provides for the IEA to adopt safety standards but the practice has developed whereby the IEA also adopts nuclear security recommendations. And the number of such recommendations have been adopted which are published in the IEA nuclear security series. The most important of these is also known as INSIRC 225-RF5 because it's also published as an information circular. INSIRC's are information circulars that the IEA produces for the information of its member states. And one of these relates to recommendations providing guidance for the physical protection of nuclear material and nuclear facilities. This is very important because it goes into details like the safety standards go into technical details. The nuclear security recommendations go into technical details which are not in the conventions. The conventions have more general provisions but so the recommendations will actually facilitate states in abiding by their obligations under the CPPNM and its amendment because they will provide more technical rules and guidance that states will incorporate if not at the level of legislation at the level of secondary legislation or regulations that will be adopted by a government or by a regulatory authority within a state to provide the details. But there are nuclear security recommendations. This is the most important ones but we also have nuclear security recommendations relating to radioactive material which are not covered by the CPPNM. So the IEA recommendations go beyond the scope of what is obligatory for states under the CPPNM and its amendment. And we also have recommendations for nuclear material and radioactive material out of regulatory control which is nuclear materials as experts on nuclear security will be able to explain better to you these are nuclear or radioactive materials which are no longer under the control of a regulatory authority but may also be interfered with by non-state actors and therefore pose a nuclear security threat. And there are nuclear security recommendations for those as well. Now if you go outside the IEA we will find as we've seen before a number of treaties that have been adopted in order to cover specific aspects of nuclear security. Under the auspices of the IEA we have at least three important treaties that are relevant for nuclear security. But I would like to emphasize once more that unlike the CPPNM and its amendment these treaties are really exclusively or almost exclusively about the criminalization aspect of nuclear security. They don't deal with physical protection. They only deal with those acts that a state has to consider as criminal acts under its criminal law and they deal with the contained provisions on how to facilitate at the international level the arrest, prosecution, extradition of individuals who are suspected of having committed one of these acts. You see the conventions listed there. The most important of these conventions is the United Nations Convention for the Suppression of Nuclear Terrorism. This is important because it covers criminal acts and authorized criminal acts which are related not only to nuclear material like or facilities like the CPPNM and its amendment but also radiological. So it has a broader scope of application than the CPPNM and its amendment because it deals with radiological material other than nuclear material as well. But on the other hand it doesn't deal with physical protection. It has some provisions but these provisions basically mostly refer to the IEA measures relating to physical protection. So these conventions like the other UN conventions is basically a criminal law convention. Doesn't deal with other aspects of nuclear security except through referring to the IEA. Then we have the other conventions that have been adopted by specialized agencies of the United Nations. I am Mohony Kaur which deal with specific acts relating to maritime terrorism or aviation terrorism and specifically relate to offenses which have to do with nuclear or radioactive material. So they are also relevant for the purposes of nuclear security but again they only deal with the criminal law aspect of nuclear security. The fact that there are so many conventions about the deal with the criminal law aspect of nuclear security may give the impression that it's actually very difficult for a state to abide at the national level with all of these conventions. There are so many of them. We have the CPP and Amnesty Amendment. We have the three United Nations conventions. We have the IMO conventions. We have the IKAO conventions. But actually a good criminal lawyer, I'm not rating myself as a good criminal lawyer because I'm not a criminal lawyer at all but I think a good criminal lawyer can adopt or can advise a state to adopt criminal law provisions that can comply with all of these conventions without having to have too many separate articles. One on the CPP and Amnesty Amendment. One on the UN conventions. One on the IKAO conventions. One on the IMO. You can have relatively simple criminal law provisions that cover all of these offenses which at the international level are covered by different treaties. It's not so difficult for a good criminal lawyer to devise a way whereby through the adoption of a relatively low number of criminal law and procedure provisions a state can abide by all of these treaties together. And finally we have the United Nations Security Council resolutions. There are two of them that I think need to be recalled. One of them was adopted almost immediately after the events of 9-11 in the United States of America and the aftermath of these deadly terrorist acts. There was a United Nations Security Council 1373 adopted under chapter seven of the United Nations Charter and therefore legally binding at least on UN member states which is about the prevention and suppression of terrorist financing but not only of terrorist financing so the financing of terrorism. This is a relatively new aspect which was then also translated into a convention on the suppression of terrorist financing by the UN which you've seen in that list of United Nations Convention which are relevant for nuclear security. It's also about the prevention and criminalization of terrorist acts. So most of what this convention of what this resolution provides you can already find in international treaties but of course there is a big difference from the legal point of view because as I mentioned before international treaties are only binding of those that have ratified these treaties freely decided to ratify them whereas this resolution is binding on all UN member states. So they're mainly important in a transitory period before everyone has ratified the treaties. There also are provisions that go beyond the treaties but I think mostly they are important because they make it binding for everyone to abide by rules that under treaty law are only binding on those states that are freely decided to ratify each of the treaties that we have mentioned before. We also have another UN Security Council resolution 1540 that was adopted in 2004. Again under chapter seven of the United Nations Charter which deals with it's about the nonproliferation of weapons of mass destruction but not so much from the point of view of the IA safeguards because it deals with non-state actors. So it's a nonproliferation. What the convention, what this resolution wants to prevent is non-state actors becoming involved with activities that may lead to the building of weapons of mass destruction including nuclear weapons. So it does contain a number of provisions which are very directly relevant for nuclear security. Some of them again you will also find that are similar or corresponding to legal obligations under existing treaties and in this case the main importance of this resolution is the fact that it makes it binding for all UN member states whereas the treaties only oblige those that have freely ratified them. But the resolution also goes beyond and regulates a number of other aspects which are not necessarily covered by international treaties. Both these resolutions, so 1373 and 1540 established Security Council committees which are composed of members of the Security Council which have the competence to monitor the observance of the resolutions by the UN member states. Again, there is a reporting system, states have to report to these committees on how they abide by their obligations and the Security Council committee is there to verify or monitor how states comply with these resolutions. What happens if they don't comply? In theory, because this has not happened yet, United Nations Security Council is in a better position than the IEA to adopt sanctions because under chapter seven of the United Nations Charter if a state does not comply with any of these resolutions, the Security Council could decide that that state's behavior is a threat to the peace and adopt sanctions against that state. Economic sanctions or other kinds of sanctions which again will have to be adopted by UN member states but they're much more effective than what the IEA can do. But of course this can only happen if there is a consensus within the Security Council because as you know, the Security Council is composed of 15 states, five of which are permanent members and these five permanent members have a veto power. So no Security Council resolution can be adopted under chapter seven unless the five permanent members are in agreement. If one of them is not in agreement, there will be no sanctions against a state that the Security Council Committee may have found to be not in compliance with the Security Council resolution. So finally, these are conclusions. One of the mantras that you will hear if you participate in activities within the IEA is the concept that responsibility for nuclear security rests entirely with each state. Legally speaking, this is a mantra because this is true for every activity. It's an aspect of national sovereignty that states are free to decide on what to do within their borders and it could be relevant for nuclear safety just as well as for nuclear security. But in the era of nuclear security because of the sensitivity of nuclear security, states like to repeat this whenever they have an occasion to. Nuclear security is the exclusive responsibility of each state. At the same time, the recognition that there is a need for international cooperation has increasingly been recognized within the international community and that has been translated in the adoption of these treaties, the treaties that we have seen were adopted under the auspices of the IEA and those that were adopted outside the framework of the IEA or non-binding instruments. So the need for international cooperation is recognized as extremely important. There is a publication which the IEA has issued which goes into more details about what I've been introducing to you today. So if you're interested, this is also available online. It can be freely downloaded through the website of the IEA. Thank you. Thank you very much, Andrea. You, for this comprehensive presentation, you've managed to keep it as it was not simple within the allocated time and therefore I would suggest to you that before we move to the last item this morning, liability, we could accommodate a couple of questions, if any. And are we going now to one? Madam.


From around the globe, it's theCUBE with digital coverage of Pegaworld Inspire. Brought to you by Pegasystems. Hi everybody, this is Dave Vellante and welcome to theCUBE's coverage of Pegaworld Inspire 2020. And now that the dust has settled on the event, we wanted to have a little post-mortem power panel. And I'm really excited to have three great guests here today. Adriensko is a customer service and experience advisor, the best-selling author of a couple of books, Hot Wow and Punk CX. Adriensko, great to see you, thanks for coming on. Hey Dave, how are you? And Shelly Kramer is a principal analyst and a founding partner at Futurum Research, CUBE alum. Shelly, good to see you. Hi, great to see you too. And really Don Sherman, who is the CTO of Pegasystems and one of the people that was really highlighting the keynotes. Thanks for your time, appreciate you coming on. Great to be here. Guys, let's start with some of the takeaways from the event. And if you don't mind, I'm going to set it up. I had many, many notes, but I'll take a cue from Alan's keynote, where he talked about three things. Rethinking the customer engagement, that whole experience. The as-is service, I mean it's certainly the second part of last decade came to the front and center and we think is going to continue in space. And then, new tech. We heard about that Don, we're going to ask you to chime in on that. Modern software, microservices, we've got machine intelligence now. And then I thought there were some really good customer examples. We heard from Siemens, we heard from the CIO and head of digital at Aflac, the Bank of Australia. So some really good customer examples. But Shelly, let me start with you. What were your big takeaways of Pegaworld Inspire 2020, the virtual edition? You know, what I love is a focus and we have talked a lot about that here at Future and Research. But what I love is the thinking that what really is important now is to think about rethinking and kind of tearing things apart. Especially when we're in a time, we're in difficult economic times. And so instead of focusing on rebuilding and relaunching as quickly as possible, I think that now is the time to really focus on kind of reexamining, you know, what is it that our customers want? How is it that we can best serve them? And really sort of start from ground zero and examine our thinking. And I think that's really at the heart of digital transformation. And I think that both in this virtual event and in some interviews, I was lucky enough to do in advance with some of the PEGA senior team. That was really a key focus is really thinking about, you know, how we can re-architect things, how we can do things in ways that are more efficient, that impact people more effectively, that impact the bottom line more effectively. And to me, that's really exciting. So Adrian, CX is obviously your wheelhouse. A lot of the conversation at PEGA World Inspire was of course about customer experience, customer service. How do you think the content went? You know, what were some of the highlights for you? And maybe what would you have liked to hear more of? Well, I think, so thanks, Dave. I actually really enjoyed it.  And I thought this is one of the best ones I've done in terms of its pace and its interactivity. I love the fact that Don was bouncing around the screen, kind of showing us around the menu and things. I thought that was great. The things that I thought really stood out for me was this idea of the context around accelerating digital transformation. And that's very contextual. It's almost been forced upon us. But then this idea of also the center out sort of thinking and the process fabric. Because it really reminded me of, and Don, you can maybe correct me if I'm wrong here, is like taking a systems thinking approach to delivering the right sort of outcomes for customers. Because it's always struck me that there's a contradiction at the heart of the rhetoric around customer centricity where people say they want to do the right things by customers, but then they force them down this channel-centric or process-centric way of thinking. And so actually I thought there was really refreshing to hear about the center out and process fabric sort of platform that Peg is building. And I thought it's really exciting because it felt like actually we're going to start to take a more systemic look and take to kind of delivering great service and great experience. I thought that was really great. There was one of my big headlines at the summit. So Don, if you're one of the things... Go ahead, please. Yeah, I think the whole idea, and Alan referred to center out as a business architecture. And I think that's really an important concept because this is really about the intersection of that business goal. How do I truly become customer-centric? And then how do I actually make my technology do it? And it's really important for that to work where you put your business logic in the technology. And if you continue to do it in this sort of channel-centric way or really data-centric, system-centric way that historically has been the approach, I don't think you can build a sustainable platform for great customer engagement. So I think that idea of a business architecture that you put in on a little bit is really central to how we've been thinking about this. Let's stay on that for a second. Because, but first of all, I just want to mention, you guys did a good job of not just trying to take a physical event, plug it into virtual. So congratulations on that.  I mean, that was, that's great. And the drop kick Murphries couldn't be live, but you guys still leverage that. So they're well done. One of the better ones that I've seen, but I want to stay on your point there. Alan talked about some of the mistakes that are made. And one of the questions I have for you guys is, you know, what is the state of customer experience today and why the divergence between great and good and pretty crappy. And Alan talked about, well, people try to impose business process top down or they try to infuse logic in the database, bottom up. You really got to do that middle out. So, Don, I want to come back to you. Is, let's explore that a little bit. What do you really mean by middle out? Where am I putting the actual business logic? Yeah, I think it's, I think this is important, right? And I think that a lot of times we have experiences as customers, right?  When the chatbot flipped me to the human, the human didn't know what I was doing with the chatbot. And that human eventually told me I had to call somebody. So I picked up the phone, I made the phone call and that person didn't know what I was doing on chat with the human or with the chatbot. So every time as a customer, I'm restarting. I'm re-explaining where I am, right? And that to me is a direct result of that kind of channel-centric thinking where all of my business logic ends up embedded in, well, hey, we're going to build a cool chatbot. And now we're going to build a cool chat system. And by the way, we're going to keep our contact centers running, but I'm not thinking holistically about the customer experience. And that's why we think the center out approach is so important because I want to go below the channel and I want to think about that customer journey. But what's the outcome I'm trying to get to? In the case of my interaction, I was just trying to increase my bandwidth so that I could do events like this, right? What's that outcome that I'm trying to get to? And how do I get the customer to that outcome in a way that's as efficient for the business and is easy for the customer as possible, regardless of what channel that they are on? And I think that's a little bit of a new way of thinking. And again, it means thinking not just about the customer goal, but having an opinion, whether you are a business leader or an IT person, about where that logic belongs in your architecture. So, Adrian, Don just described this sort of bot and human experience, which is mimics a lot of the human experience that we've all touched in the past. So, but the customer journey that Don talked about isn't necessarily one journey. There's multiple journeys. So what's your take on how organizations can do better with that kind of... Well, I think you're absolutely right, Dave. I mean, actually, during the summit, I was talking, I was listening to Paul Greenberg talk about the future of customer service. And Paul says something that I think was really straightforward, but it's, I mean, but really insightful. He said, like, you know, look, you know, we think, organizations think about customer journeys, but customers don't think about kind of journeys in the way that organizations do. They think discontinuously. So it's like, I'm going to go channel one, and then channel three, and then channel four, and then channel five, and then channel two, and then back to channel five again. And they expect those conversations to be picked up across those different channels. And so I think what we've got to do is develop, as Don said, build an architecture that works around trying to support the different kind of journeys, but allows that flexibility and that adaptability for customers to jump around and to have one of those continuous, but disconnected conversations. But it's up to us to try and connect them all to make them make, to deliver the service and the experience that the customers actually want. Oh, Shelly, you know, a lot of the customer experience actually starts with the employees. And employees don't like when the customer's yelling at them saying, I just answered all those questions. Why do I have to answer them again? So you've, you know, at your firm, you guys have written a lot about this. You've thought a lot about, you have some data. I know you shared on theCUBE one time that 80% of employees are disengaged. And so that affects the customer experience, doesn't it? Yeah, it does. And I think that when I'm listening to Don's explanation about his cable company, I'm having flashbacks to, you know, what feels like hundreds of my own experiences. And you're just thinking, this does not have to be this complicated. And, you know, 10 years ago, that same thing that Don just described happened with phone calls.  And you were equally as frustrated as a customer. Now what's happening a lot of times is that we're plugging technology in like a chat bot that's supposed to make things better, but we're not developing a system and processes throughout our organization and also change management, change management, what do I want to say, programs within the organization. And so we're kind of forgetting all of those things. So what's happening is that we're still having customers have those same experiences that are a decade old and technology is part of the mix and it really shouldn't be that way. And so, you know, one thing that I really enjoyed speaking about in voice was listening to Rich Gilbert from Affleck. And he was talking about, you know, that when you're moving from legacy processes to new ones, you have to plan for and invest in change management. And we talk about this all the time here at Futurum, you know, technology alone is never the answer. It's technology plus people. And so you have to invest in people, you have to invest in their training in order to be able to support and manage change and to drive change. And I think one really important part of that equation is also listening to your employees and getting their feedback and making them part of the process because when they are truly on your front lines dealing with customers, many times dealing with stressed, upset, frustrated customers, you know, they have a lot of insights and sometimes we don't bring them into those conversations certainly early enough in the process to help, to let them help guide us in terms of the solutions and the processes that we put in place. I think that's really important. Yeah, and a lot of the frustration, if I may, a lot of the frustration with some employees sometimes is those processes change and they're unknown. Going into it, we saw that with COVID, Don. And so your thoughts on this. Yeah, I mean, I think and the environment that employers are working in is changing rapidly. You know, we've got, we've got a customer, a large telecommunications company in the UK where their customer service requests are now being handled by about 4,000 employees pulled from their marketing department, working distributed, right? Because that's the world that we're in. You know, and the thing that I was gonna say to Andrew response to Shelley is, you know, Alan mentioned in his keynote this idea of design thinking. And one of the reasons why I think that's so important is that it's actually about giving the people on the front lines a voice. It's a format for engaging the employees who actually know the day-to-day experiences of the customers, the day-to-day experiences of customer service agent, and pulling them in to the solution. How do we develop the systems? How do we rethink our processes? How does that need to plug in to the various channels that we had? And that's why a lot of our focus is not just on the customer service technology, but the underlying low-code platform that allows us to build those processes and those chunks of the customer journey. We often refer to them as micro journeys that lead to a specific outcome.  And all of a sudden, you get better engagement, but you also get this incredible insight flowing into what you're doing because you're talking to the people who live this day in and day out. So we'll stay on that for a second. If we can, Shelley, go ahead, please. Sure, you all know, and when you have a chance to talk with those people, to talk with those frontline employees who are having an opportunity to work with low-code, no-code, and they get so excited about it and their jobs are completely the way they think about their jobs and their contribution to the company and their contribution to the customer and the customer experience is just so wonderful to see. And it's such an easy thing to do. So I think that that's really a critical part of the equation as it relates to success with these programs. Yeah, stay close to the customer. Yeah, please, Adrian, jump in. Can I jump in on that a little second? I think, Shelley, you're absolutely right. I think it's a really simple thing. You talk about engagement. And one of the key parts of engagement, it seems to me, is that, is giving people a voice and making them feel important and feel heard. And so to go and ask for their opinion and to help them get involved and make a difference to the work that they do, the outcomes that their customers receive and their overall sort of productivity and efficiency can only have a positive impact. And it's almost like it feels self-evident that you would do that, but unfortunately, it's not very common. Right, it does feel self-evident, but we miss on that front a lot. So I want to ask, I'm going to come back to the, we talked about people process, we'll come back to that, but I want to talk about tech. You guys announced, the big announcement was the Pega Process Fabric. You talked about that, Don, as a platform for digital platforms with all this cool microservices and dynamic APIs and being able to compose on the fly. So pretty cool, pretty cool stuff there.  Were you able to get kind of real-time reactions to the announcement? What was that like? Share with us, please. Yeah, so, I mean, we got well over a thousand questions in during the event and a lot of them were either about process fabric or comments about it. So I think people are definitely excited about this. And when you strip away all of the buzzwords around microservices and in cloud, et cetera, I think what we're really getting at here is that work is going to be increasingly more distributed. We are living proof of that right now, the four of us all coming here from different studios, but work is going to be distributed for a bunch of reasons because people are more distributed because organizations increasingly are building customer journeys that aren't just inside their walls but are connected to the partners in their ecosystem. I'm a bank, but I may as part of my mortgage process connect somebody up to a home insurer and all of a sudden the home buying process goes beyond my four walls. And then finally, as you get all of these employees engaged with building their low-code apps and being citizen developers, you want to let the thousands of flowers bloom, but you also need a way to connect that all back together. And process fabric is about putting the technology in place to allow us to take these distributed bits of work that we need to do and weave them together into experiences that are coherent for a customer and easy for an employee to navigate. Because I think it's going to be really, really important that we do that, even as we take our systems and break them up into microservices, well, customers don't interact with microservices. Customers interact with journeys, with experiences, with the processes you lay out and making sure that we can connect that up together into something that feels easy for the customer and the employee and gets them to that result they want quickly. That's what the vision of process fabric is all about. You know, it strikes me. I mean, I'm checking my notes here. You guys talked about a couple of examples. One was, I think we talked about the car as sort of a mobility experience. Maybe it makes me wonder with all this AI and autonomous vehicle stuff going on, at what point is owning and driving your own vehicle really going to be the, not the norm anymore, but you talked about this totally transformed, sorry to use that word, but experience around autos. And certainly financial services is maybe a little bit more near term. But I wonder, Shelly, you charm, you guys look ahead. How far can we actually go with AI in this realm? Well, I think we can go pretty far. And I think it'll happen pretty fast. And I think that we're seeing that already in terms of what happened when we had the coronavirus COVID-19. And of course, we're still navigating through that. Is that all of a sudden things that we talked about doing or thought about doing or plan doing, later on in this year, 2021, we had to do all those things immediately.  And we're finding that AI plays a tremendously important role in relieving the workload on the frontline workers and being able to integrate empathy into decision-making. And I go back to, I remember when you all first rolled out the empathy part of your platform, Dawn, and just watching a demo on that of how you can slide this empathy meter to be warmer and see in true dollars and cents over time the impact of treating your customers with more empathy, what that delivers to a company. And I think that AI that continues to build and learn. And again, what we're having right now is we're having this gigantic volume of needs of conversation of all these transactions that need to happen at once. And great volumes make for better outcomes as it relates to artificial intelligence and how learning can happen more quickly over time. So I think that we're definitely going to see more use of AI more rapidly than we might have seen it before. And I don't think that's going to slow down at all. Certainly, I mean, there's no reason for it to slow down. The benefits are tremendous. The benefits are tremendous. And let me step back and say, following a conversation with Rob Walker on responsible AI, that's a whole different ball of wax. And I think that's something that Pega has really embraced and planted a flag in. So I think that we'll see great things ahead with AI. And I think that we'll see the Pega team really leading as it relates to ethical AI. And I think that's tremendously important as well. Well, that's the other side of the coin. You know, I asked how far can we go? And I guess you're alluding to how far should we go? But Adrian, we also heard, we heard about agility and empathy. I mean, I want an empathic service provider. Are agility and empathy related to customer service? And how so? Well, so David, I think that's a great question. I think that you talk about agility and you talk about empathy. And I think the thing is what we probably know from our own experience is that being empathetic is sometimes going to be really hard. And it takes time and it takes practice to actually get better at it. It's almost like a new habit. Some people are naturally better at it than others. But, you know, organizationally, I mean, I talk about that we need to almost build almost like an empathetic musculature at an organizational level if we're going to achieve this. And it can be aided by technology, but when we develop new muscles, it takes time. And sometimes we go through a bit of pain in doing that. So I think that's where the agility comes in is that we have to test and learn and try new things and be willing to, you know, get things wrong and then correct and then kind of move on and then kind of learn from these kind of things. And so I think the agility and empathy does go hand in hand. And it's something that will drive kind of like growth and increasing empathetic interactions kind of as we go forward. But I think it's also just to build on Shelley's point. I think you're absolutely right that PEGA has been leading the way in this sort of dimension in terms of its T-switch and its empathetic advisor, but now the ethical AI kind of testing or the ethical bias in a testing is adds a dimension to that to make sure that it's not just about all horsepower but being able to make sure that you can steer your car to use your analogy. Well, and one real quick real world example here is, you know, okay, so we have this time when a lot of consumers are furloughed out of work stressed about finances. And we have, you know, a lot of PEGA's customers are in the financial services space. Some of the systems that they've established they've developed over time. The processes they've developed over time is, oh, I'm talking with Shelley Kramer and she has a, you know, blah, blah, blah account here. And, you know, this would be a great time to sell her on this additional service or whatever. And when you can, so that was our process yesterday, but when you're working with an empathic mindset and you're also needing to be incredibly agile because of current circumstances and situations, you can, you know, your technology, the platform that you're using can allow you to go, okay, I'm dealing with a really stressed customer. This is not the best time to offer any additional services. Instead, what we need to ask is this series of questions, you know, how can we help? Or here are some options or whatever. And I think it's little, little tweaks like that that can help you in the customer service realm be more agile, be more empathetic and really deliver an amazing customer experience as a result and that's the technology. If I can just add to that, you know, Alan mentioned in his keynote a specific example, which is Commonwealth Bank of Australia and they were able multiple times this year, once during the Australian wildfires and then again, in response to the COVID crisis to completely shift and turn on a dime, how they interacted with their customer and to move from a prioritization of maybe selling things to a prioritization of responding to a customer need and maybe offering payment deferrals or assistance to a customer. But back to what we were talking about earlier, that agility only happened because they didn't have the logic for that embedded in all their channels. They had it centralized. They had it in a common brain that allowed them to make that change in one place and instantly propagated to all of the 18 different channels in which they touched their customer. And so that being able to have agility in that empathy to my mind is explicitly tied to that concept of a center of business architecture that Alan was talking about. Yeah, absolutely. And this leads to a discussion about automation. I mean, again, how far can we go? How far should we go?  But the reality is machines have always replaced humans. It's just now it's the first time in terms of cognitive function. So it's a little different for us this time around, but it's clear, as I said, AI is coming whether we like it or not. Automation is very clearly on the top of people's mind. So how do you guys see the evolution of automation, the injection of automation into applications, the ubiquity of automations coming in this next decade? Shelley, let's start with you. You know, I was thinking you were going to ask Don that question, so I'm just listening and listening. Okay, well, we can start. We can go with Don, that's a problem. No, I'm happy to answer it, it's funny. It just wasn't what I expected. You know, we are really immersed in the automation space. So, you know, so I very much see the concerns that people on the front line have that, you know, automation is going to replace them and the reality of it is, if a job that someone does can be automated, it will be automated, it makes sense. It makes good business sense to do that. And I think that, you know, what we are looking at from a business agility standpoint from a business resilience standpoint, from a business survival standpoint is really how can we deliver most effectively to serve the needs of our customers, period. And how we can do that quickly and efficiently and without frustration and in a way that is cost effective. All of those things play into what makes a successful business today as well as what keeps employees, I'm sorry, as well as what keeps customers served, loyal, staying around. I think that we live in a time where, you know, customer loyalty is leading. And so I think that, you know, smart businesses have to look at how do we deepen the relationships that we have with customers? How can we use automation to do that? And the thing about it, you know, I'll go back to the example that Don gave about his cable company that all of us have lived through. It's just like, oh my gosh, there's got to be a better way. So compare that to, and I'm sure all of us can think of an experience where you had to deal with a customer service situation in some way or another. And it was the most awesome thing ever. And you walked away from it and you just went, oh my gosh, you know, I know I was talking to a bot here or there or I know I was doing this, but that solved my, I can't believe it was so easy. I can't believe it was so easy. I can't wait to buy something from this company again. Or you know what I'm saying? And that's really, I think the role that automation can play is that it can really help deepen existing relationships with our customers that can help us serve them better. And it can also help our employees do things that are more interesting and that are more relevant to the business. And I think that that's important too. So yes, jobs will go. Yes, automation will slide into places where we've done things manually and in repetitive processes before, but I think that's a good thing. So we got to end it shortly here, but I'll give you guys each a last opportunity to chime in. And Adrian, I want to start with you. I invoke the T word before transformation and kind of tongue-in-cheek joking. I know it's not your favorite word, but it is the industry's favorite word. But thinking ahead to the future, we've talked about AI, we've talked about automation, people, process and tech. What do you see as the future state of customer experience, this mix of human and machine? What do we have to look forward to? So I think, so first of all, let me kind of tackle the kind of transformation thing. I mean, I remember talking about this with Duncan McDonald, who is the CIO across at UPC, which is one of Pega's customers on my podcast the other week. And he talked about he's the co-sponsor of a three-year digital transformation kind of program, but then he appended the description of that by saying that it's a transformation program that will never end. That's the thing that I think about is because actually, if you think about what we're talking about here, we're not transforming to anything in particular. It's not like going from here to there. And actually the thing that we need to, I think we need to start thinking about is rather than transformation, we actually just think about kind of an evolution and are adopting an evolutionary state. And we talk about being responsive. We talked about being adaptable. We talk about being agile. We talk about testing and learning and all these different sort of things. That's evolutionary, right? It's not transformation, it's evolutionary. If you think about Charles Darwin and the theory of a species, that's an evolutionary process. And there's a quote, you mentioned I authored this book called Punk CX. There's a quote that I use in the book which is taken from a bad religion song called No Control. And it's called, there is no vestige of a beginning and no prospect of an end. And that quote comes from a 1788 book by James Hutton, which was one of the first treaties on geology. And what he found through all his studies was actually the formation of the earth and its continuous formation. There isn't a vestige of a beginning and a prospect of an end. It's a continuous process. And I think that's what we've got to embrace is that actually change is constant. And as Alan says, you have to build for change and be ready for change that have the right sort of like culture, the right sort of business architecture, the right sort of kind of technology to enable that because the world is getting faster and is getting more competitive. This is probably not the last crisis that we will face. And so like in most evolutionary sort of things, it wasn't the fittest and the strongest that survived. It was the ones that were most adaptable that survived. And I think that's kind of the thing that I want to kind of land on is actually how it's the ones that kind of grasp that, grasp that whole concept. They're the ones that are going to succeed out of this. And what they will do will be, we can't even kind of imagine what they're going to do right now. And thank you. And Shelly, it's not only responding to, as Adrienne was saying, a crisis, but it's also being in a position to very rapidly take advantage of opportunities. And that capability is going to be important. You guys are futurists, it's in the name, your thoughts. Well, I think that, you know, Adrienne's comments were incredibly salient, as always. And I think that that's the thing that this particular crisis that we are navigating through today has in many ways been bad. But in other ways, I think it's been incredibly good because it has forced us in a way that we really haven't had to deal with before to act quickly, to think quickly, to rethink and to embrace change. Oh, we've got to work from home. Oh, we've got 20 people that need to work from home. We have 20,000 people that need to work from home. What technology do we need? What, you know, how do we take care of our customers? All of these things we've had to figure out in overdrive. And humans generally speaking, aren't great at change. But what we are forced to do as a result of this pandemic is change and rethink everything. And I think that, you know, the point about transformation not being a beginning and an end, we are never, ever, ever done. It is evolutionary. And I think that as we look to the future and to one of your comments, we are going faster with more exciting technology solutions out there with people who are incredibly smart. And so I think that it's exciting. And I think that all we are going to see is more and more and more change. And I think that it will be a time of great resilience. And we'll see some businesses survive and thrive and we'll see other businesses not survive. And I, but that's been our norm as well. So I think it's really, I think we have some things to thank to thank this pandemic for, which is kind of weird, but I'm also, I try to be fairly optimistic. But I do, I think we've learned a lot. And I think we've seen some really amazing, exciting things from businesses who have done this. Yeah, well, thanks for sharing that silver lining, Shelley. And then Don, I'm going to ask you to bring us to the finish line. And I'm going to close my final question to you or pose it. You guys had the wrecking ball and I've certainly observed when it comes to things like digital transformations or whatever you want to call it that there was real complacency.  Well, this pandemic has clearly changed people's thinking. Automation is really top of mind now at executive. So you guys are in a good spot from that standpoint, but your final thoughts, please. Yeah, I want to concur with what Adrian and Shelley said. And if I can drop another rock quote in there, you know, this one is from Bob Dylan. And Dylan famously said the times they are changing, but the quote that I keep on my wall is one that he tossed off during an interview where he said, I accept chaos. I'm not sure if it accepts me, but I think digital transformation looks a lot less like that butterfly emerging from a cocoon to go off happy to smell the flowers and looks much more like accepting that we are in a world of constant and unpredictable change. And I think one of the things that the COVID crisis has done is sort of snapped us awake to that world. I was talking to the CIO of a large media company who's one of our customers and he brought up the fact that, you know, like Karim said, we're all agile now. I've been talking about five years trying to get this company to operate in an agile way. And all of a sudden we had to do it. We had no choice. We had to respond. We had to try new things. We had to fail fast. And my hope is, as we think about what customer engagement and automation and business efficiency looks like in the future, we keep that mindset of trying new things and continuously adapting, evolving. You know, at the end of the day, our company's brand promise is build for change. And we chose that because we think that that's what organization is the one thing they can design for. They can design for a future that will continue to change. And if you put the right architecture in place, if you take that center out mindset, you can support those immediate needs but set yourself up for a future of continuous change and continuous evolution and adaptation. Well, guys, I'll quote somebody less famous, Jeff Frick, who said that the answer to every question lives somewhere in a cube interview. And you guys have given us a lot of answers. I really appreciate your time. I hope that next year at Pega World Inspire we can see each other face to face and do some live interviews but really appreciate the insights and all your good work. Thank you. Thank you. Absolutely. And thank you for watching everybody. This is Dave Vellante and our coverage of Pega World Inspire 2020. We'll be right back right after this short break.


Before jumping into the questionnaire, let's first just take a quick look at the form 1040 to see where the dependents would be recorded They're going to be down here under the dependents. Typically, we'll have the name Social Security number Relationship and then checking off if they qualify for the child tax credit or the credit for other dependents That's the first thing that will typically be coming to mind when you're thinking about the dependent What's the benefit of the dependent usually child tax credit or other dependent credit? But there could also be an impact on a change to the filing status Possibly moving someone up from single to head of household if I go to page 2 There could possibly be a change in the tax tables being used if there was a change to filing status such as single To head of household, but mainly we're talking here line 19 The child tax credit or credit for other dependents now normally It's pretty straightforward to see whether someone is going to be qualifying as a child because if it's a young child Then obviously you would think that they would be a dependent fairly straightforward But you can imagine situations where there's going to be gray area a lot of situations in which case you might want to go Through the formal questionnaire now as we think of the formal questionnaire We usually think first in terms of a qualifying child and does the child then qualify for the child tax credit Because that is going to be usually the most beneficial Component and then if they don't qualify for the child tax credit, do they qualify for the other? Dependents so then that's going to be the format of the questionnaire So let's jump on over to the questionnaire here and you could see the general kind of questions will be one Do you have a qualifying child? We're going to go through those basically questions step two is your qualifying child is Your qualifying child your dependent on question number two and then question number three or step three Does your qualifying child qualify you for the child tax credit or credit for other? Dependents so if they're qualifying child then do they qualify to give you the biggest benefit? Which is going to be the child tax credit if not, then they're going to default to the other dependents credit For is your quality is your qualifying relative your dependent? So now we're moving from qualifying child to a qualifying Relative and asking if they're a dependent basically for fitting the whole concept of getting the child tax credit Basically moving to see whether we qualify for the other dependent credit step five Does your qualifying relative qualify you for the credit for other? Dependents and then you've got your definitions and what not down below so you can see the structure of this Qualifying child versus other dependent when they're qualifying child the question is do they qualify you for the child tax credit? Which will be more beneficial if not other dependents if they're not a qualifying child and they're another dependent Then the only thing you're looking to get then from a tax standpoint would be the other dependent Okay, let's go into it in more detail. So step one. Do you have a qualifying child? So a qualifying child is a child who is your son daughter step child foster child brother sister step brother step sister Half brother half sister or descendant of any of them for example your grandchild niece or nephew So it's kind of like a relationship test quite broad there and Under age 19 at the end of 2022 and younger than you so obviously They would normally be younger than you you would expect unless there was an unusual situation or your spouse if filing jointly So we're really usually looking at this threshold of under 19 but The it or it moves up to 24 so under age 24 at the end of 2022 a student Which is defined later and younger than you so we've got the threshold of being 19, but that 19 pushes up to 24 But for a qualifying child if they're a student and then of course we'll have to look in the definition of what qualifies for a student Because we could get into the weeds in terms of the gray area as to whether they qualify for that So or any age and permanently and totally disabled so if they're totally disabled then the age of requirement is removed and Who don't provide over half their support for 2022 so that could be like the support test If you want more questions about the support test you could see publication 501 but basically you provide more than half of the support and Who isn't filing a joint return for 2022? So usually obviously if they were filing a joint return They wouldn't usually be a dependent of yours Because now they're filing as a joint return because they're married or something like that But there could be an exception to that rule or is filing a joint return for 2022 Only to claim a refund of withheld income tax or estimated tax paid So if you have that exception you can take a look at publication 501 for that so again general age rule 19 pushes up to 24 if they're a student that's the age Test and then do you provide the support test in essence? You provide over half the support for 2022 and then the filing Test dude, you know, they don't file a joint return if they file a joint return normally that would be non you know, then they'd be fine married filing joint and Who lived with you for more than half of 2022? So if the child didn't live with you for the required time you can see exceptions to time to lived with you so now they lived with you for more than half of 2022 so you've got the support test and the lived with you test here and The exceptions could include things like well, what would happen if they were At a medical area or getting treatment or something like that Does that account for them living with me for more than half of 2022 caution? If the child meets the conditions to be a qualifying child of any other person other than your spouse if filing jointly For 2022 see qualifying child of more than one person later You can imagine situations where you have a joint custody situation where it's like okay Now this child actually qualifies for two individuals here. And so what do I what do I do in that situation? So situation you can we could dive into the weeds of that particular situation But we won't right now. So do you have a childhood meets the conditions out to be your qualifying child? So given those questionnaires if the answer is yes, then we go to step two if no Then we go to step four So if yes, then we want to move forward and say do we qualify now for the qualified child tax credit? Or for the other dependent credit for the qualifying child if they don't qualify then and I say no here Then we're gonna say do they qualify for an other dependent possibly getting the lower credit in that case Step two is your qualifying child. You're dependent So one was the child a US citizen US national US resident alien or resident of Canada or Mexico If there's questions on that you could see publication 519 So the definition of a US national or US resident alien if the child was adopted see exception to the citizen test later if yes, then we continue if no They can't claim the child as a dependent. So we'll assume yes was the child married. So Yeah, if yes see married person later if no Then we're gonna continue typically we would assume they weren't married because if they were married Then they wouldn't be a dependent because they would be filing a married filing joint return We would assume normally so could you or your spouse of filing jointly be claimed as a dependent on someone else's 2022 return if the person who claimed you on their 2022 return is not required to file and isn't filing a 2022 tax return or is filing a 2022 return only to claim a refund withheld an income tax or estimated tax paid check. No, so So obviously would muddy the water a bit if you yourself were gonna be able to be claimed by someone else as A dependent so because you would think that if someone is a dependent of yours Then normally you wouldn't be a dependent of someone else, right? So that would again be another kind of Somewhat more unusual type of situation, although obviously that would could it will happen in life a lot So if yes stop you can't claim any dependence complete the rest of form 1040 if no So you can claim this child as a dependent meaning you can't be claimed as anyone else as a dependent So then you're here complete columns one through three of the dependent section on page one of form 1040 or 1040 SR for this child then go to step three


Bola buddies tonight 10 15 p.m. Eastern Standard Time on whatnot. I am gonna pick one of these jars Let me know in the comments if you want to see the big one the circle fish bowl one or the medium-sized one I'm bringing one of these to what not tonight. We are gonna unjar it and sell it So hope to see you guys tonight bookmark it