What changed in this filing

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Item 1A. Risk Factors

2024-02-20 compared with 2023-02-10 · 90 added, 68 removed, 152 unchanged (51% of the section changed)

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In the recent past, certain of the Company’s markets experienced economic uncertainty characterized by increasing unemployment, limited availability of credit, significant inflation and decreased consumer and business spending.

In addition, certain geopolitical events, including the spread of COVID-19 and Russia’s invasion of Ukraine, have caused significant economic, market, political or regulatory uncertainty in some of the Company’s markets.

In addition, certain geopolitical events, including the ongoing war between Russia and Ukraine, the war between Israel and Hamas, and the expanding conflict throughout the Middle East have caused significant economic, market, political or 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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dollar strengthens relative to other currencies, the Company’s reported income from these operations could decrease.

For example, in 2022, the Company’s revenues were unfavorably impacted by currency exchange rates as the U.S.

dollar strengthened against the Euro and British pound.

The outbreak of a novel coronavirus disease ( “ COVID-19 ”) in 2020 impacted demand for the Company’s services, disrupted the Company’s operations, and may continue to do so.

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

At various times during the outbreak, many counties, states and countries took dramatic action including, without limitation, ordering all nonessential workers to stay home, mandating the closure of schools and nonessential business premises, and imposing isolation measures on large portions of the population.

These measures, while intended to protect human life, had serious adverse impacts on domestic and foreign economies and may do so in the future if they are reintroduced.

The emergence of new variants of the coronavirus or of other illnesses may cause a rapid deterioration of economic conditions and the financial and credit markets, which could have a material adverse impact on the Company’s business, financial condition, results of operations, and cash flows.

While the Company has navigated the COVID-19 pandemic thus far, its continuation or worsening may have a negative impact on the Company’s business.

For example, in 2023, the U.S.

dollar strengthened against the Canadian Dollar and Australian Dollar, as well as weakened against the Euro, British Pound and Brazilian Real, the net of which resulted in a nominal impact to the Company’s revenues.

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 the Company ’ s business and financial condition.

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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.

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 may increase in frequency or severity due to climate change, which may increase the Company’s expenses, exacerbate other risks to the Company, and affect travel and the ability of businesses to remain open, which could lead to a decreased ability to offer the Company’s services and materially adversely affect the Company’s results of operations.

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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.

Failure to meet ESG commitments could harm the Company ’ s reputation.

The Company has public environmental, social, and governance (“ESG”) commitments, including environmental targets designed to have a positive impact on climate.

The Company’s ability to achieve these goals is subject to a multitude of risks that may be outside of the Company’s control.

The Company’s failure or perceived failure to achieve ESG goals or maintain ESG practices that meet evolving stakeholder expectations could harm the Company’s reputation, adversely impact the Company’s ability to attract and retain employees or clients, and expose the Company to increased scrutiny from the investment community and enforcement authorities.

The Company’s reputation also may be harmed by the perceptions that clients, employees and other stakeholders have about the Company’s action or inaction on social, ethical, or political issues.

Damage to the Company’s reputation and loss of brand equity may reduce demand for the Company’s services and thus have an adverse effect on future financial results, as well as require additional resources to rebuild the Company’s reputation and restore the value of the brands and could also reduce the Company’s stock price.

Risks Related to the Company’s Operations

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

Before the COVID-19 pandemic, unemployment in the U.S.

was at historic lows and during the second half of 2021, as the economy recovered, competition for workers in a number of industries became intense.

Unemployment in the U.S.

has been at historic lows in recent periods and competition for workers in a number of industries is intense.

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

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If cybersecurity incidents were to occur in such a way, the Company may face legal and contractual liability, reputational damage, loss of business, and other expenses.

The Company also incurs a risk of liability to its clients resulting from allegations of errors, omissions or theft by its temporary employees, or allegations of misuse of client confidential information.

The Company also incurs a risk of liability to its clients resulting from allegations of damages caused by temporary employees acting on phishing emails and cyber attacks and other errors, omissions or theft by its temporary employees, or allegations of compromise of client confidential information.

In some cases, the Company has agreed to indemnify its clients in respect of these types of claims.

The Company maintains insurance with respect to many such claims.

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.

While such claims have not historically had a material adverse effect on 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 on 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 on the Company.

Protiviti operates in a highly competitive business and faces competitors who are significantly larger and have more established reputations.

As with the Company’s talent solutions services business, the barriers to entry are quite low.

There are many competitors, some of which have greater resources than Protiviti and many of which have been in operation far longer than Protiviti.

In particular, Protiviti faces competition from the “Big Four” accounting firms, which have been in operation for a considerable period of time and have established reputations and client bases.

Because the principal factors upon which competition is based are reputation, technology, tools, project methodologies, price of services, and depth of skills of personnel, there can be no assurance that Protiviti will be successful in attracting and retaining clients or be able to maintain the technology, personnel, and other requirements to successfully compete.

Protiviti ’ s operations could subject it to liability.

The business of Protiviti consists of providing business consulting and internal audit services.

Protiviti risks liability from allegations of damages caused by errors, omissions or misconduct by its employees working on consulting engagements or from damages caused by its employees acting on phishing emails and cyber attacks, or allegations of compromise of client confidential information.

In some cases, the Company has agreed to indemnify its clients in respect of these types of claims.

Liability could be incurred, or litigation could be, and from time-to-time has been, instituted against the Company or Protiviti for claims related to these activities or to prior transactions or activities.

There can be no assurance that such liability or litigation will not have a material adverse impact on Protiviti or 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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There can be no assurance that the Company will be able to attract and retain the personnel that are essential to its success.

A failure to retain key management personnel could disrupt the Company’s succession strategy, hindering a smooth transition to new leadership and potentially disrupting the Company’s operations.

The Company ’ s results of operations and ability to grow could be materially negatively affected if it cannot successfully keep pace with technological changes impacting the development and implementation of its services and the evolving needs of its clients.

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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.

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 keep pace with 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 Company uses artificial intelligence in its services which may result in operational challenges, legal liability, reputational concerns and privacy and competitive risks.

The Company currently uses and intends to leverage its own and third parties’ artificial intelligence (“AI”) processes and algorithms and its own evolving and third parties’ cognitive, analytical and artificial intelligence applications in its daily operations for Protiviti and talent solutions, including by deploying generative AI into the Company’s talent solutions search operations.

Protiviti expanded its service offerings to include AI risk analysis, policy creation, governance, and technology selection and architecture.

The use of AI by talent solutions and provision of AI related services by Protiviti may result in operational challenges, legal liability, reputational concerns and privacy and competitive risks which could result in adverse effects to the Company’s financial condition, results or reputation.

Generative AI products and services leverage existing and widely available technologies, such as Chat GPT-4 and its successors, or alternative large language models or other processes.

The use of generative AI processes at scale is relatively new and may lead to challenges, concerns and risks that are significant or that the Company may not be able to predict, especially if its use of these technologies in the delivery of its services becomes more important to its operations over time.

Use of generative AI in search operations and services offerings may be difficult to deploy successfully due to operational issues inherent to the nature of such technologies.

AI algorithms use machine learning and predictive analytics, which may lead to flawed, biased, and inaccurate candidate and lead generation search results.

Datasets in AI training, development, or operations may be insufficient, of poor quality, reflect unwanted forms of bias, or raise other legal concerns (such as concerns regarding copyright protections or data protection).

Inappropriate or controversial data practices by, or practices reflecting inherent biases of, data scientists, engineers, and end-users of the Company’s systems could lead to mistrust, rejection or skepticism of the Company’s services by clients and candidates.

Further, unauthorized use or misuse of AI by the Company’s employees, vendors or others may result in disclosure of confidential company and customer data, reputational harm, privacy law violations and legal liability.

The Company’s use of AI may also lead to novel and urgent cybersecurity risks, including access to or the misuse of personal data, all of which may adversely affect its operations and reputation.

Uncertainty in the legal regulatory regime relating to AI may require significant resources to modify and maintain business practices to comply with U.S.

laws, the nature of which cannot be determined at this time.

Several jurisdictions around the globe, including Europe and certain U.S.

states, have already proposed or enacted laws governing AI.

For example, European regulators have proposed stringent AI regulations and laws, and the Company expects other jurisdictions will adopt similar legislation.

Other jurisdictions may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging, impossible or financially prohibitive.

The demand for the Company ’ s services related to regulatory compliance may decline.

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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.

During 2021 and 2022 the Company 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.

Demand for the Company ’ s services from government and public sector clients may decrease over time.

In recent periods, the Company reported increased business from services rendered to the public sector due to, among other developments, the volume of unemployment claims and housing assistance claims, as well as the demands faced by public school districts.

With the majority of COVID-19 legal restrictions lifted, many of the COVID-19 related projects have ended and the Company’s public sector business has shifted to different projects with public sector clients.

It is unknown whether the shift in projects with state, local and other public sector clients will ultimately maintain the same level of business or to what extent business with the public sector may decrease as the effects of the pandemic lessen or change over time.

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.

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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.

Protiviti is a services business and is dependent upon its ability to attract and retain qualified, skilled personnel.

While Protiviti has retained its key personnel to date, there can be no assurance that it will continue to be able to do so.

Protiviti operates in a highly competitive business and faces competitors who are significantly larger and have more established reputations.

As with the Company’s staffing services business, the barriers to entry are quite low.

There are many competitors, some of which have greater resources than Protiviti and many of which have been in operation far longer than Protiviti .

In particular, Protiviti faces competition from the “Big Four” accounting firms, which have been in operation for a considerable period of time and have established reputations and client bases.

Protiviti’s operations could subject it to liability.

The business of Protiviti consists of providing business consulting and internal audit services.

There can be no assurance that such liability or litigation will not have a material adverse impact on Protiviti or the Company.

If the Company does not effectively manage billable rates, the Company ’ s financial results could suffer.

Accurate and strategic pricing represents a key factor in our financial results.

If billable rates are too low, the Company’s service revenues may not cover operational costs whereas if billable rates are too high, the Company risks hindering client retention and limits competitiveness.

Legal and Regulatory Risks

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

The Company is defending several claims brought under the California Labor Code Private Attorney General Act (“PAGA”), which authorizes individuals to file lawsuits to seek civil penalties on behalf of themselves and other employees for alleged labor code violations, and the Washington Equal Pay and Opportunities Act which relates to disclosures within job postings.

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

However, these lawsuits may consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome of the lawsuits.

In addition, the Company and its

subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and legal or regulatory proceedings that arise in the ordinary course of business.

In addition, the Company and its subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and legal or regulatory proceedings that arise in the ordinary course of business.

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

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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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Further, lawsuits or other proceedings related to the Company’s compliance with government regulations or licensing requirements could materially adversely affect the Company.

For example, the Company is currently named as a defendant in litigation challenging its compliance with the Fair Credit Reporting Act.

For example, the Company is currently named as a defendant in litigation challenging its compliance with the Fair Credit Reporting Act, PAGA litigation in California alleging wage and hour and other Labor code compliance issues, and litigation in Washington relating to compliance with the Washington Equal Pay and Opportunities Act.

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

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These laws generally prohibit companies, their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector.

In addition, some of these laws have accounting provisions that require the Company to maintain accurate books and records and a system of

internal accounting controls.

In addition, some of these laws have accounting provisions that require the Company to maintain accurate books and records and a system of internal accounting controls.

Any violation of the FCPA or other applicable Anti-Bribery Laws could result in substantial fines, sanctions or civil and/or criminal penalties, debarment from business dealings with certain governments or government agencies or restrictions on the marketing of the Company’s products in certain countries, and damage to the Company’s reputation, which could harm the Company’s business, financial condition or results of operations.

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Penalties for noncompliance with these complex laws and regulations can be significant and include substantial fines, sanctions or civil and/or criminal penalties, and violations can result in adverse publicity, which could harm the Company’s business, financial condition or results of operations.

Although the Company has implemented policies and procedures designed to ensure compliance with Anti-Bribery Laws, economic sanctions, anti-forced labor and other laws and regulations, the Company cannot be sure that its employees, agents or other third parties will not violate such policies or applicable laws and regulations.

Although the Company has implemented policies and procedures designed to ensure compliance with Anti-Bribery Laws, U.S.

export control laws, economic sanctions, anti-forced labor and other laws and regulations, the Company cannot be

sure that its employees, agents or other third parties will not violate such policies or applicable laws and regulations.

Any such violations could result in significant fines and penalties, criminal sanctions against the Company, its officers or its employees, prohibitions on the conduct of its business, and materially damage the Company’s reputation, brand, business and operating results.

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

In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “PPACA”) was signed into law in the U.S.

In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “PPACA”) were signed into law in the U.S.

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

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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

Company and third-party computer, technology and communications hardware and software systems are vulnerable to damage, unauthorized access, and disruption that could expose the Company to material operational, financial, and reputational damage (including the unauthorized access to, or exposure of, personal and confidential information).

The Company’s ability to manage its operations through the use of these systems successfully is critical to its success and largely depends upon the efficient and uninterrupted operation of its computer, technology and communications systems, some of which are managed by third-party vendors.

The Company’s ability to manage its operations using these systems successfully is critical to its success and largely depends upon the efficient and uninterrupted operation of its and third parties’ computer, technology and communications systems, some of which are managed and run by third-party vendors.

The Company’s primary systems (and, as a result, its operations) are vulnerable to damage or interruption from power outages, computer, technology and telecommunications failures, computer viruses, security breaches, catastrophic events, and errors in usage by the Company’s or its vendors’ employees and contractors.

In addition, the Company’s systems contain personal and confidential information, including information of importance to the Company, and its employees, vendors, contractors, and clients.

Cyberattacks, including attacks motivated by the desire for monetary gain, geopolitics, grievances against the business services industry in general or against the Company in particular, may disable or damage its systems or the systems of its vendors or clients, or allow unauthorized access to, or exposure of, personal or confidential information, including information about employees, vendors, candidates, contractors and clients.

The Company’s security tools, controls and practices, including those relating to identity and access management, credential strength, and the security tools, controls and practices of its vendors and clients, may not prevent access, damage or disruption to Company or third-party systems or the unauthorized access to, exposure of, personal or confidential information.

There are many approaches through which such systems could be damaged or disrupted, or information exposed or accessed, including through system vulnerabilities, improperly obtaining and using user credentials or the misuse of authorized user access.

In the past, the Company and its third-party vendors have experienced other data security incidents resulting from unauthorized access to the Company's systems and other fraudulent activities.

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

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 damage or disruption to Company or third-party systems, or unauthorized access to, or exposure of, personal or confidential information, could harm the Company’s operations, reputation and brand, resulting in a loss of business or revenue.

In addition, the Company’s systems contain personal and confidential information and intellectual property, including information of importance to the Company, and its employees, vendors, contractors, and clients.

Cyberattacks, including attacks motivated by the desire for monetary gain, embarrassment, geopolitics, and grievances against the business services industry in general or against the Company in particular, could potentially disable or damage its systems or the systems of its vendors or clients, or allow unauthorized access to, or exposure of, intellectual property and personal or confidential information, including information about employees, vendors, candidates, contractors and clients.

The Company’s security tools, controls and practices, including those relating to identity and access management, credential strength, and the security tools, controls and practices of its vendors and clients, may not prevent or detect access, damage or disruption to Company or third-party computer, technology, and communications hardware and software systems or the unauthorized access to, or exposure of, intellectual property or personal or confidential information.

A failure to prevent or detect unauthorized access to Company or third-party systems could expose the Company to material operational, financial, and reputational damage.

There are many approaches through which such systems could be damaged or disrupted, or information exposed or accessed, including through system vulnerabilities, configuration errors, vendor vulnerabilities, failing to patch or upgrade systems, social engineering, cyberattacks, improperly obtaining and using user credentials, malfeasance or the misuse of authorized user access.

Periodic and continuous assessments are conducted by the Company to identify security risks, vulnerabilities, weaknesses or gaps, and a risk-based approach is then employed to address them, recognizing that not all risks or vulnerabilities, weaknesses or gaps can be eliminated in an economical or timely manner.

This risk-based approach prioritizes risks, vulnerabilities, weaknesses and gaps based on, among other factors, budgetary constraints, impact, likelihood of mitigation, and the broader risk landscape.

No security program can offer a guarantee against all potential incidents.

On an increasing frequency, the Company and its third-party vendors experience security incidents that have resulted in unauthorized access to the Company’s or its third-

party vendors’ computer, technology and communications hardware and software systems.

To date, no such incidents have been determined to have had a material impact on the Company.

The Company has transitioned a significant number of the Company’s employee population to remote work.

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

The damage or disruption to Company or third-party systems, or unauthorized access to, or exposure of, intellectual property or personal or confidential information, could harm the Company’s operations, reputation and brand, resulting in a loss of business or revenue.

It could also subject the Company to government sanctions, litigation from candidates, contractors, clients, and employees, and legal liability under its contracts, resulting in increased costs or loss of revenue.

The Company may also incur additional expenses, such as the cost of remediating incidents or improving security measures, the cost of identifying and retaining replacement vendors, increased costs of insurance, or ransomware payments.

The Company may also incur additional expenses, including the cost of remediating incidents or improving security measures, the cost of identifying and retaining replacement vendors, increased costs of insurance, or ransomware payments.

Cybersecurity threats continue to increase in frequency and sophistication, thereby increasing the difficulty of detecting and defending against them.

Furthermore, the potential risk of security breaches and cyberattacks may increase as the Company introduces new service offerings.

Any future events impacting the Company or its third-party vendors that damages or interrupts the Company's or its third party vendors’ systems or exposes data or other confidential information could have a material adverse effect on our operations, reputation, and financial results.

Any future events impacting the Company or its third-party vendors that damages or interrupts the Company’s or its third-party vendors’ computer, technology, and communications hardware and software systems or exposes intellectual property or data or other confidential information could have a material adverse effect on our operations, reputation, and financial results.

Changes in data privacy and protection laws and regulations in respect of control of personal information (and the failure to comply with such laws and regulations) could increase the Company ’ s costs or otherwise adversely impact its operations, financial results, and reputation.

In the ordinary course of business, the Company collects, uses, and retains personal information from its clients, employees, employment candidates, and contractors, including, without limitation, full names, government-issued identification numbers, addresses, birthdates, 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, which, in many cases, apply not only to third-party transfers, but also to transfers of information among the Company and its subsidiaries.

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

For example, the European Union’s General Data Protection Regulation (“GDPR”), which became effective in May 2018, imposes specific operational requirements for entities processing personal information, including requirements for data transfers to certain countries outside the European Union, and strong enforcement authorities and mechanisms.

Complying with the enhanced obligations imposed by the GDPR and other current and future laws and regulations relating to data transfer, residency, privacy and protection has increased and may continue to increase the Company’s operating costs and require significant management time and attention, while any failure by the Company or its subsidiaries to comply with applicable laws could result in governmental enforcement actions, fines, and other penalties that could potentially have an adverse effect on the Company’s operations, financial results and reputation.

Complying with the enhanced obligations imposed by the GDPR and other current and future laws and regulations relating to data storage, use, transfer, residency, privacy and protection has increased and may continue to increase the Company’s operating costs and require significant management time and attention, while any failure by the Company or its subsidiaries to comply with applicable laws could result in governmental enforcement actions, fines, and other penalties that could potentially have an adverse effect on the Company’s operations, financial results and reputation.

Risks Related to the Company’s Internal Controls and Accounting Policies

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If the Company’s management is unable to certify the effectiveness of its internal controls or if its independent registered public accounting firm cannot render an opinion on the effectiveness of its internal control over financial reporting, or if material weaknesses in the Company’s internal controls are identified, the Company could be subject to regulatory scrutiny and a loss of public confidence.

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.

In addition, if the Company does not maintain adequate financial and management personnel and 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 the Company ’ s business.

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Risks Associated With the Effects of Climate Change

The Company may be adversely affected by global climate change or by legal, regulatory or market responses to such change.

The physical effects of climate change could have a material adverse effect on our operations and business.

To the extent climate change causes changes in weather patterns, certain regions where we operate could experience increases in storm intensity, extreme temperatures, wildfires, rising sea-levels and/or drought.

extent climate change causes changes in weather patterns, certain regions where the Company operates could experience increases in storm intensity, extreme temperatures, wildfires, rising sea-levels and/or drought.

Over time, these conditions could result in increases in our operating costs or business interruptions.

For example, our headquarters is located in an area of California where the incidence of wildfire has increased over time and may continue to increase.

There can be no assurance that climate change will

not have a material adverse effect on our properties, operations or business.

In addition, we are in the process of establishing certain emissions targets and other environmental goals.

In addition, in 2023 the Company established certain emissions targets and other environmental goals and submitted them for validation to the Science Based Target initiative (“SBTi”).

Failure to achieve such goals, or a perception (whether valid or invalid) of our failure to achieve such goals, could result in market, reputational, regulatory or liability risks, client dissatisfaction, reduced revenue and profitability or shareholder lawsuits.

If we are unable to achieve our environmental goals, our business and reputation may be adversely affected.

General Risk Factors

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.

Not applicable.

If the Company is unable to achieve our environmental goals, our business and reputation may be adversely affected.

There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.

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What changed 10-K

Item 1A. Risk Factors