What changed in this filing

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Item 1A. Risk Factors

2021-02-12 compared with 2020-02-14 · 74 added, 56 removed, 135 unchanged (49% of the section changed)

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Certain of the Company’s markets have recently experienced economic uncertainty characterized by increasing unemployment, limited availability of credit and decreased consumer and business spending.

In addition, certain geopolitical events, including ongoing trade negotiations and the ongoing negotiation of the United Kingdom’s withdrawal from the European Union (“Brexit”), have caused significant economic, market, political and regulatory uncertainty in some of the Company’s markets.

In addition, certain geopolitical events, including ongoing trade negotiations and the United Kingdom’s withdrawal from the European Union (“Brexit”), have caused significant economic, market, political and regulatory uncertainty in some of the Company’s markets.

Any decline in the economic condition or employment levels of the U.S.

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The value of the U.S.

dollar has recently strengthened considerably against a number of major foreign currencies, and

a continuation or extension of this strength relative to these other currencies could adversely impact the Company’s reported income from its international markets and cause its revenue in such markets, when translated into U.S.

dollar has recently weakened against a number of major foreign currencies, but an increase in strength relative to these other currencies could adversely impact the Company’s reported income from its international markets and cause its revenue in such markets, when translated into U.S.

dollars, to decline.

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In particular, Brexit has contributed to, and may continue to contribute to, European economic, market and regulatory uncertainty and could adversely affect European or worldwide economic, market, regulatory, or political conditions.

To the extent that adverse economic conditions and uncertainty in Europe (related to Brexit or otherwise) worsen, demand for the Company’s services may decline, which could significantly harm its business and results of operations.

Natural disasters and unusual weather conditions, pandemic outbreaks, terrorist acts, global political events and other serious catastrophic events could disrupt business and otherwise materially adversely affect our business and financial condition.

With operations in many states and multiple foreign countries, we are subject to numerous risks outside of our control, including risks arising from natural disasters, such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemic outbreaks and other global health emergencies, terrorist acts or disruptive global political events, or similar disruptions that could materially adversely affect our business and financial performance.

For example, the Company’s operations are heavily dependent on the ability of employees and consultants to travel from business to business and from location to location.

Any public health emergencies, including a real or potential global pandemic such as those caused by the avian flu, SARS, Ebola, Coronavirus, or even a particularly virulent flu, could decrease demand for our services and our ability to offer them.

Uncharacteristic or significant weather conditions can affect travel and the ability of businesses to remain open, which could lead to decreased ability to offer our services and materially adversely affect our short-term results of operations.

In addition, these events could result in delays in placing employees and consultants, the temporary disruption in the transport of employees and consultants overseas and domestically, the inability of employees and consultants to reach or have transportation to clients directly affected by such events and disruption to our information systems.

Although it is not possible to predict such events or their consequences, these events could materially adversely affect our reputation, business and financial condition.

extent that adverse economic conditions and uncertainty in Europe (related to Brexit or otherwise) worsen, demand for the Company’s services may decline, which could significantly harm its business and results of operations.

The currently evolving situation of the outbreak of a novel coronavirus disease ("COVID-19") has impacted demand for the Company’s services, disrupted the Company’s operations and may continue to do so.

The COVID-19 outbreak has emerged as a serious threat to the health and economic well-being of the Company’s clients, candidates, employees, and the overall economy.

Since the beginning of the outbreak, many counties, states and countries have taken dramatic action including, without limitation, ordering all non-essential workers to stay home, mandating the closure of schools and non-essential business premises and imposing isolation measures on large portions of the population.

These measures, while intended to protect human life, have had serious adverse impacts on domestic and foreign economies and the severity and the duration of these is highly uncertain.

The effectiveness of economic stabilization efforts, including proposed government payments to affected citizens and industries, continue to be uncertain and many economists are predicting extended local or global recessions.

The accelerating number of deaths and hospitalizations resulting from this disease are further exacerbating the uncertainties and challenges facing the Company’s business.

Actions intended to mitigate the spread of COVID-19 have caused a dramatic increase in unemployment in the United States and in certain other regions in which the Company operates and created significant uncertainty and volatility in the Company’s business.

Mandated business closures and slowing economic activity have reduced use of temporary workers and reduced businesses’ recruitment of new employees resulting in less demand for the Company’s services, which may in the future materially harm the Company’s business and financial condition.

Many of the Company’s clients have or may be required to or choose to voluntarily close their worksites and the Company has at various times during the pandemic witnessed a significant drop in the demand of the Company’s services by clients, particularly the Company’s recruiting and temporary staffing clients, most of whom are small and midsize businesses that are feeling the crisis.

Deterioration in economic conditions or the financial or credit markets could also have an adverse impact on the Company’s clients’ ability to pay for services the Company has already provided.

Furthermore, the spread of COVID-19 may adversely impact the Company’s ability to recruit sufficient candidates for certain industries or regions in which the Company operates.

The Company has transitioned a significant number of the Company’s corporate employee population to a remote work environment in an effort to mitigate the spread of COVID-19.

This transition to remote working and the spread of COVID-19 may negatively impact the availability of key personnel necessary to conduct the Company’s business and the business and operations of the Company’s third-party service providers who perform critical services for the Company’s business.

This transition to remote working has also increased the Company’s vulnerability to risks related to the Company’s computer and communications hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity attacks.

The Company is continuing to monitor the spread of COVID-19, including the new recently announced variants of the disease, and related risks, including risks related to efforts to mitigate the disease’s spread.

The rapid development and fluidity of the situation, however, precludes any prediction as to its ultimate impact on us.

If the spread and related business restrictions continue, such impact could grow and the Company’s business, financial condition, results of operations and cash flows could be materially adversely affected.

The continued spread and related business restrictions could also adversely impact global economies and financial markets resulting in an economic downturn that would likely impact demand for the Company’s services.

While the Company has navigated the COVID-19 pandemic thus far, the ongoing surge of the COVID-19 pandemic in the United States, the United Kingdom and the European Union, among other territories, will have a continued negative impact on the Company’s business.

Any of the above factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase the Company’s costs, severely negatively impact the Company’s revenue, net income, and other results of operations, and impact the Company’s liquidity position.

The duration of any such impacts cannot be predicted and such impacts may also have the effect of heightening many of the other material risks the Company faces.

With operations in many states and multiple foreign countries, the Company is subject to numerous risks outside of the Company's control, including risks arising from natural disasters, such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemic outbreaks such as the COVID-19 pandemic and other global health emergencies, terrorist acts or disruptive global political events, or similar disruptions that could materially adversely affect the Company's business and financial performance.

Historically, the Company’s operations are heavily dependent on the ability of employees and consultants to travel from business to business and from location to location.

Any public health emergencies, including a real or potential global pandemic such as those caused by the avian flu, SARS, Ebola, coronavirus, or even a

particularly virulent flu, could decrease demand for the Company's services and the Company's ability to offer them.

Uncharacteristic or significant weather conditions can affect travel and the ability of businesses to remain open, which could lead to decreased ability to offer the Company's services and materially adversely affect the Company's short-term results of operations.

Although it is not possible to predict such events or their consequences, these events could materially adversely affect the Company's reputation, business and financial condition.

Risks Related to the Company’s Operations

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Candidates generally seek temporary or regular positions through multiple sources, including the Company and its competitors.

Unemployment in the United States has been low in the past couple of years and has recently decreased further;

some economists have speculated that in certain markets, the U.S.

could be at or near full employment.

This phenomenon has made finding sufficient eligible candidates to meet employers’ demands more challenging and further decreases in the employment rates could compound these difficulties.

Before the COVID-19 pandemic, unemployment in the United States was at historic lows.

When unemployment levels are low, finding sufficient eligible candidates to meet employers’ demands is more challenging.

Any shortage of candidates could materially adversely affect the Company.

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As the employer of record of its temporary employees, the Company incurs a risk of liability to its temporary employees for various workplace events, including claims of physical injury, discrimination, harassment or failure to protect confidential personal information.

Furthermore, as the employer of record for some individuals who have been placed in client workplaces where exposure to COVID-19 is possible, the Company may be subject to risk of liability should such employees allege their workplaces failed to adequately mitigate the risk of exposure to COVID-19.

In addition, in order to facilitate remote working arrangements, some of the Company’s temporary workers are accessing client workspaces from their personal devices through cloud-based systems, which could increase cybersecurity risks to the Company’s clients for which they may hold the Company liable.

While such claims have not historically had a material adverse effect upon the Company, there can be no assurance that such claims in the future will not result in adverse publicity or have a material adverse effect upon the Company.

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The Company maintains insurance with respect to many of such claims.

insurance or by reason of such claims being outside the scope of the Company’s insurance) will not have a material adverse effect upon the Company.

While such claims have not historically had a material adverse effect upon the Company, there can be no assurance that the Company will continue to be able to obtain insurance at a cost that does not have a material adverse effect upon the Company or that such claims (whether by reason of the Company not having sufficient insurance or by reason of such claims being outside the scope of the Company’s insurance) will not have a material adverse effect upon the Company.

The Company is dependent on its management personnel and employees and a failure to attract and retain such personnel could harm its business .

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The Company’s success depends on its ability to keep pace with rapid technological changes affecting both the development and implementation of its services and the staffing needs of its clients.

Technological advances such as artificial intelligence, machine learning, and automation are impacting industries served by all our lines of business.

Technological advances such as artificial intelligence, machine learning, and automation are impacting industries served by all the Company's lines of business.

In addition, the Company’s business relies on a variety of technologies, including those that support hiring and tracking, order management, billing, and client data analytics.

If the Company does not sufficiently invest in new technology and industry developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in response to such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s services, results of operations, and ability to develop and maintain its business could be negatively affected.

If the Company does not sufficiently invest in new technology and industry

developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in response to such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s services, results of operations, and ability to develop and maintain its business could be negatively affected.

The demand for the Company’s services related to Sarbanes-Oxley or other regulatory compliance may decline .

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to defer implementation of some of the provisions of Sarbanes-Oxley for up to five years after their initial public offering.

Similarly there are a number of proposals currently being considered by the U.S.

Similarly, a number of proposals have been recently or are currently being considered by the U.S.

Congress to further delay or, in some cases, remove the requirements of Sarbanes-Oxley for a number of public companies.

Further, many analysts are expecting the U.S.

Congress and President Trump to seek to repeal or modify legislation that is viewed as having over-regulated certain sectors of the U.S.

economy and decreased the incentive for U.S.

companies to go public and their ability to effectively compete with foreign competition.

These or other similar modifications of the regulatory requirements could decrease demand for Protiviti’s services.

Demand for the Company’s services from government and public sector clients related to the COVID-19 pandemic may decrease over time.

The Company has reported increased business from services rendered to the public sector during the pandemic due to, among other developments, the volume of unemployment claims and housing assistance claims, as well as the demands faced by public school districts that must meet the technical support requirements of virtual learning models.

This business has contributed to our revenue over the past year.

It is unknown to what extent business with state, local and other public sector clients may decrease as the effects of the pandemic lessen or change over time.

Demand for the Company’s services from government and public sector clients may also fall as clients adapt to the effects of the pandemic and their needs evolve.

The Company will continue to monitor the situation, but the future impact of the pandemic and its effects on the needs of the Company’s clients are impossible to fully predict, and there can be no assurance that the Company’s increased business in the public sector will be sustained.

Long-term contracts do not comprise a significant portion of the Company’s revenue.

Because long-term contracts are not a significant part of the Company’s staffing services business, future results cannot be reliably predicted by considering past trends or extrapolating past results.

Additionally, the Company’s clients will frequently enter into non-exclusive arrangements with several firms, which the client is generally able to terminate on short notice and without penalty.

The nature of these arrangements further exacerbates the difficulty in predicting our future results.

Additionally, the Company’s clients will frequently enter non-exclusive arrangements with several firms, which the client is generally able to terminate on short notice and without penalty.

The nature of these arrangements further exacerbates the difficulty in predicting the Company's future results.

Protiviti may be unable to attract and retain key personnel.

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The various claims made in one or more of such lawsuits include, among other things, the misclassification of certain employees as exempt employees under applicable law, failure to comply with wage statement requirements, failure to compensate certain employees for time spent performing activities related to the interviewing process, and other related wage and hour violations.

Such suits seek, as applicable, unspecified amounts for unpaid overtime compensation, penalties, and other damages, as well as attorneys’ fees.

Such suits seek, as applicable, unspecified amounts for unpaid overtime

compensation, penalties, and other damages, as well as attorneys’ fees.

It is not possible to predict the outcome of these lawsuits.

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Additionally, trade unions in some countries have used the political process to target the industry, in an effort to increase the regulatory burden and expense associated with offering or utilizing temporary staffing solutions.

The countries in which we operate may, among other things:

The countries in which the Company operates may, among other things:

• create additional regulations that prohibit or restrict the types of employment services that the Company currently provides;

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It is not possible to predict the outcome of such litigation;

however, such litigation or any future lawsuits or proceedings related to the Company’s compliance with government regulation or licensing requirements could consume substantial amounts

of the Company’s financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome of any such lawsuits or other proceedings.

however, such litigation or any future lawsuits or proceedings related to the Company’s compliance with government regulation or licensing requirements could consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome of any such lawsuits or other proceedings.

An unfavorable outcome with respect to such litigation or any future lawsuits or proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities that may have a material adverse effect upon the Company’s business, financial condition or results of operations.

The Company’s compliance policies and controls may not prevent violations that could result in significant fines and penalties.

The Company could also be exposed to fines and penalties under U.S.

or local jurisdiction trade sanctions and controls as well as laws prohibiting corrupt payments to governmental officials including the Foreign Corrupt Practices Act and similar laws that prohibit payments to foreign officials.

Failure to comply with local laws in a particular market may result in substantial liability and could have a significant and negative effect not only on our business in that market but also on our reputation generally.

Although the Company has implemented policies and procedures designed to ensure compliance with these laws, it cannot be sure that its employees, contractors or agents will not violate such policies.

Any such violations could materially damage the Company’s reputation, brand, business and operating results.

Further, changes in U.S.

laws and policies governing foreign trade or investment and use of foreign operations or workers, and any negative sentiments towards the United States as a result of such changes, could adversely affect the Company’s operations.

Health care reform could increase the costs of the Company’s temporary staffing operations .

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In 2015, the Company redesigned its employee benefits to offer health insurance coverage to its temporary candidates in order to meet the requirements of the PPACA’s employer mandate.

President Trump and the U.S.

Congress have and likely will continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the PPACA.

Congress has made several attempts to repeal or modify the PPACA and in 2019, the U.S.

Court of Appeals for the Fifth Circuit invalidated significant portions of the PPACA.

In 2020, the U.S.

House of Representatives petitioned the U.S.

Supreme Court to review the Fifth Circuit’s decision.

It is unclear at this point what the scope of any future such legislation will be and when it will become effective.

Because of the uncertainty surrounding this replacement health care reform legislation, we cannot predict with any certainty the likely impact of the PPACA’s repeal or the adoption of any other health care reform legislation on the Company’s financial condition or operating results.

Congress has made several attempts to repeal or modify the PPACA and in 2020, the United States Supreme Court heard an appeal of a decision from the U.S.

Court of Appeals for the Fifth Circuit that invalidated significant portions of the PPACA.

It is unclear at this point what the scope of any such future legislation will be and when it will become effective.

Because of the uncertainty surrounding proposed replacement health care reform legislation or any modifications to such legislation to deal with these court challenges, the Company cannot predict with any certainty the likely impact of the PPACA’s repeal or the adoption of any other health care reform legislation on the Company’s financial condition or operating results.

Whether or not there is alternative health care legislation enacted in the U.S., there is likely to be significant disruption to the health care market in the coming months and years and the costs of the Company’s health care expenditures may increase.

federal tax regulations and interpretations could adversely affect the Company.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law.

Notwithstanding the reduction in the corporate income tax rate, the overall impact of these changes on the Company’s results of operations will likely evolve as new regulations and interpretations relating to the TCJA are implemented.

In addition, various political figures have pledged their support to overturning or modifying key aspects of the TCJA which could further increase the uncertainty relating to the impact of this or any future tax legislation on the Company’s results of operations.

Risks Related to the Company’s Information Technology, Cybersecurity and Data Protection

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Changes in data privacy and protection laws and regulations in respect of control of personal information could increase the Company’s costs or otherwise adversely impact its operations.

In the ordinary course of business, the Company collects, uses, and retains personal information from its employees, employment candidates, and contractors, including, without limitation, full names, government-issued identification numbers, addresses, birth dates, and payroll-related information.

The possession and use of personal information in conducting the Company’s business subjects it to a variety of complex and evolving domestic and foreign laws and regulations regarding data privacy, protection and security, which, in many cases, apply not only to third-party transactions, but also to transfers of information among the Company and its subsidiaries.

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In addition, if the Company does not maintain adequate financial and management personnel, processes and controls, it may not be able to accurately report its financial performance on a timely basis, which could cause its stock price to fall.

Failure to identify and respond to risk issues in a timely manner could have a material adverse effect on our business.

Although we have processes in place to attempt to identify and respond to risk issues in a timely manner, our efforts may not be sufficient.

The Company’s culture may not sufficiently encourage timely identification and escalation of significant risk issues .

Failure to identify and respond to risk issues in a timely manner could have a material adverse effect on the Company's business.

Although the Company has processes in place to attempt to identify and respond to risk issues in a timely manner, the Company's efforts may not be sufficient.

The collective impact of the tone at the top, tone in the middle and tone at the bottom on risk management, compliance and responsible business behavior has a huge effect on timely escalation of risk issues, particularly those affecting core operations , and the Company’s processes, corporate culture and general ethical climate may not be sufficient to ensure timely identification and escalation of significant risk issues.

General Risk Factors

The Company’s compliance policies and controls may not prevent violations that could result in significant fines and penalties.

The Company could also be exposed to fines and penalties under U.S.

Failure to comply with local laws in a particular market may result in substantial liability and could have a significant and negative effect not only on the Company's business in that market but also on the Company's reputation generally.

Although the Company has implemented policies and procedures designed to ensure compliance with these laws, it cannot be sure that its employees, contractors or agents will not violate such policies.

Any such violations could materially damage the Company’s reputation, brand, business and operating results.

Further, changes in U.S.

federal tax regulations and interpretations could adversely affect the Company.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law.

Unresolved Staff Comments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors