What changed in this filing

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Item 1A. Risk Factors

2022-02-08 compared with 2021-02-09 · 90 added, 88 removed, 326 unchanged (35% of the section changed)

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The capital markets include asset managers, investment banks, commercial banks, insurance companies, exchanges, trading firms, and issuers;

the commodities markets include producers, traders and intermediaries within energy, metals, petrochemicals and agriculture.

the commodities markets include producers, traders and intermediaries within energy, petrochemicals, metals and agriculture.

Certain risk factors are applicable to certain of our individual segments while other risk factors are applicable Company-wide.

The Merger is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at all.

The Merger is subject to conditions, some of which may not be satisfied, or completed on a timely basis, if at all.

Failure to complete, or unexpected delays in completing, the Merger or any termination of the Merger Agreement could have material adverse effects on us.

On November 29, 2020, we, our wholly-owned subsidiary, Sapphire Subsidiary, Ltd., a Bermuda exempted company limited by shares (the “Merger Sub”), and IHS Markit, entered into an Agreement and Plan of Merger (as amended on January 20, 2021, the “Merger Agreement”), pursuant to which Merger Sub will merge with and into IHS Markit, with IHS Markit surviving such merger as a wholly-owned, our direct subsidiary.

Completion of the Merger is subject to a number of conditions, including, among other things, the receipt of approval from our shareholders and the shareholders of IHS Markit, and the receipt of certain regulatory approvals, as well as the accuracy of all representations and warranties of IHS Markit and the absence of a material adverse effect since the date of the merger agreement, which make the completion and timing of the Merger uncertain.

In addition, the ongoing COVID-19 pandemic could delay the receipt of certain regulatory approvals.

On November 29, 2020, we, our wholly-owned subsidiary, Sapphire Subsidiary, Ltd., a Bermuda exempted company limited by shares ( “Merger Sub”), and IHS Markit, entered into an Agreement and Plan of Merger (as amended on January 20, 2021, the “Merger Agreement”), pursuant to which Merger Sub will merge with and into IHS Markit, with IHS Markit surviving such merger as our wholly-owned, direct subsidiary.

The completion of the Merger is subject to a number of conditions, including, among other things, the receipt of certain regulatory approvals, as well as the accuracy of all representations and warranties of IHS Markit and the absence of a material adverse effect since the date of the Merger Agreement, which make the completion and timing of the Merger uncertain.

The failure to satisfy all of the required conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring at all.

There can be no assurance that the conditions to the completion of the Merger will be satisfied or waived or that the Merger will be completed.

In addition, either S&P Global or IHS Markit may terminate the Merger Agreement under certain circumstances, including if the Merger is not completed by the outside date determined pursuant to the Merger Agreement.

In certain circumstances, upon termination of the Merger Agreement, S&P Global would be required to pay a termination fee of $2.380 billion to IHS Markit, and in certain circumstances, IHS Markit would be required to pay a termination fee of $1.075 billion to S&P Global, upon termination of the Merger Agreement, each as contemplated by the Merger Agreement.

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Such action could include, among other things, seeking to enjoin the completion of the Merger or seeking divestiture of substantial assets of the parties.

In addition, shareholders of both S&P Global and IHS Markit have initiated private actions challenging, seeking to enjoin or seeking to impose conditions on the Merger.

We may be required to devote significant resources to resolve such matters which may have a negative effect on our ability to complete the Merger and if we do complete the Merger may have a material adverse effect on our financial position, results of operations and cash flows.

In response to feedback from U.S.

and foreign regulatory authorities, we and IHS Markit have agreed to divest certain businesses in order to procure regulatory approval of the Merger.

On July 31, 2021, S&P Global, IHS Markit and News Corporation entered into a stock and asset purchase agreement, pursuant to which IHS Markit will sell all right, title and interest to certain of its pricing information businesses, including its Oil Price Information Services (OPIS), Coal, Metals and Mining, and PetroChem Wire businesses, to News Corporation for a purchase price of $1.15 billion.

On December 27, 2021, S&P Global and IHS Markit announced agreements to sell IHS Markit’s Base Chemicals business to News Corporation for $295 million, and S&P Global’s CUSIP Global Services business to FactSet Research Systems for $1.925 billion.

S&P Global has also committed to divest its Leveraged Commentary and Data (LCD) business, together with a related family of leveraged loan indices, in connection with a conditional approval for the Merger from the European Commission.

The completion of each of these divestiture transactions is subject to a number of conditions, including, among other things, the receipt of certain regulatory approvals, which make the completion and timing of these transactions uncertain.

The failure to satisfy all of the required conditions could delay the completion of these transactions for a significant period of time or prevent each from occurring at all.

There can be no assurance that the conditions to the completion of any of these transactions will be satisfied or waived or that these transactions will be completed (and, if such transactions are not completed, it may materially adversely affect the completion of the Merger).

If the Merger is not completed, we may be materially adversely affected and, without realizing any of the benefits of having completed the Merger, will be subject to a number of risks, including the following:

the market price of our common stock could decline;

if the Merger agreement is terminated and our board seeks another business combination, shareholders cannot be certain that we will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that IHS Markit has agreed to in the Merger Agreement;

we will not realize the benefit of the time and resources, financial and otherwise, committed by our management to matters relating to the Merger that could have been devoted to pursuing other beneficial opportunities;

if the Merger Agreement is terminated, we will not realize the benefit of the time and resources, financial and otherwise, committed by our management to matters relating to the Merger that could have been devoted to pursuing other beneficial opportunities;

we may experience negative reactions from the financial markets or from their respective customers, suppliers or employees;

and we will be required to pay its expenses relating to the Merger, such as legal, accounting and financial advisory fees, whether or not the Merger is completed.

and we will be required to pay our expenses relating to the Merger, such as legal, accounting and financial advisory fees, whether or not the Merger is completed.

In addition, if the Merger is not completed, we could be subject to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against such party to perform its obligations under the Merger Agreement.

Any of these risks could materially and adversely impact our ongoing business, financial condition, results of operations and the market price of our common stock.

Similarly, delays in the completion of the Merger could, among other things, result in

additional transaction costs, loss of revenue or other negative effects associated with delay and uncertainty about completion of the merger and could materially and adversely impact our ongoing business, financial condition, results of operations and the market price of our common stock.

We are subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our business and operations.

In connection with the pendency of the Merger, it is possible that some customers, suppliers, partners and other persons with whom we have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with us as a result of the Merger or otherwise, which could negatively affect our revenue, earnings and/or cash flow, as well as the market price of our common stock, regardless of whether the Merger is completed.

In addition, under the terms of the Merger Agreement, we are subject to certain restrictions on the conduct of its business prior to completing the Merger, which may adversely affect our ability to execute certain of its business strategies, including the ability in certain cases to acquire or dispose of assets or pay dividends or incur capital expenditures above a certain amount.

Similarly, delays in the completion of the Merger could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with delay and uncertainty about completion of the merger and could materially and adversely impact our ongoing business, financial condition, results of operations and the market price of our common stock.

We are subject to business uncertainties and contractual restrictions while the Merger and related divestitures are pending, which could adversely affect our business and operations.

In connection with the pendency of the Merger and related divestitures, it is possible that some customers, suppliers, partners and other persons with whom we have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with us as a result of the Merger, a divestiture or otherwise, which could negatively affect our revenue, earnings and/or cash flow, as well as the market price of our common stock, regardless of whether the Merger or any such divestiture is completed.

In addition, under the terms of the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Merger, which may adversely affect our ability to execute certain of our business strategies, including the ability in certain cases to acquire or dispose of assets or pay dividends or incur capital expenditures above a certain amount.

Such limitations could adversely our business and operations prior to the completion of the Merger.

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addressing possible differences in business backgrounds, and management philosophies;

and unforeseen expenses or delays associated with the Merger.

managing the impact of divestitures;

and unforeseen expenses or delays associated with the Merger (which has already been delayed beyond our initial expectations of closing in 2021).

Many of these factors will be outside of our control, and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and other adverse impacts, which could materially affect the combined company’s business, financial condition and results of operations.

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The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized on a timely basis, if at all.

We expect to incur substantial expenses and devote significant resources in connection with the completion of the Merger and the integration of the IHS Markit and our businesses.

We expect to incur substantial expenses, and devote significant resources, in connection with the completion of the Merger and the integration of a large number of processes, policies, procedures, operations, technologies and systems of S&P Global and IHS Markit in connection with the Merger.

The management of the combined company may face significant challenges in implementing such integration, many of which may be beyond the control of management and which may result in increased costs and diversion of management’s time and energy, as well as materially adversely impact the anticipated synergies of the Merger and the business, financial condition and results of operations of the combined company.

The integration process and other disruptions resulting from the Merger may also adversely affect the combined company’s relationships with employees, suppliers, customers, distributors and others with whom S&P Global and IHS Markit have business or other dealings, and difficulties in integrating the businesses of S&P Global and IHS Markit could harm the reputation of the combined company.

We expect to incur substantial expenses and devote significant resources in connection with the completion of the Merger and related divestitures, and the integration of the businesses of S&P Global and IHS Markit.

We expect to incur substantial expenses, and devote significant resources, in connection with the completion of the Merger and related divestitures, and the integration of a large number of processes, policies, procedures, operations, technologies and systems of S&P Global and IHS Markit in connection with the Merger.

anticipated synergies of the Merger and the business, financial condition and results of operations of the combined company.

The integration process and other disruptions, including increased cyber security risk, resulting from the Merger may also adversely affect the combined company’s relationships with employees, suppliers, customers, distributors and others with whom S&P Global and IHS Markit have business or other dealings, and difficulties in integrating the businesses of S&P Global and IHS Markit could harm the reputation of the combined company.

These incremental transaction-related costs may exceed the savings the combined company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs.

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During the pendency of the Merger, our ability to execute share repurchases will be restricted.

While the Merger is pending, we will have limited opportunities to launch repurchase programs and there can no guarantee that we will be able to successfully execute a repurchase program when a window of opportunity presents itself.

While the Merger is pending, we will have limited opportunities to launch repurchase programs and there can be no guarantee that we will be able to successfully execute a repurchase program when a window of opportunity presents itself.

COVID-19 Risks

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COVID-19 has spread globally, including in the United States, the United Kingdom, the European Union and other jurisdictions in which we operate.

Governments across the world have taken steps to contain the virus by restricting human movement through numerous measures including travel bans and restrictions, social distancing, quarantines, shelter in place orders, enhanced health screenings at ports of entry and elsewhere, and business shutdowns, including those in response to the outbreaks of the Delta variant in the second and third quarters of 2021 and the Omicron variant in the fourth quarter of 2021.

Continuation of the shutdown of businesses and entire industries, increases in unemployment, implementation of furloughs, lost wages across populations and a significant drop in consumer and business spending, resulted in a recession in the United States during 2020.

While vaccines have become available, their availability and distribution is at the discretion of government agencies and it is difficult to ascertain how and when they will impact economic activity.

There are no comparable recent events that can provide guidance as to the effect of the COVID-19 global pandemic, and, as a result, the ultimate impact of the coronavirus outbreak or a similar health epidemic is highly uncertain.

While vaccines have become available, their availability and their efficacy against the Omicron variant and possible future variants are uncertain, so it remains difficult to ascertain how COVID-19 will impact economic activity.

The effects of COVID-19 have impacted our operations and may ultimately have a material adverse impact on our results of operations in the future.

The extent to which the pandemic will continue to affect our businesses, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted.

The extent to which the pandemic will continue to affect our businesses, financial condition and results of operations will depend on future developments, which are uncertain and cannot be predicted.

Increased volatility and uncertainty in the global economy, and the financial and commodities markets

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The success of these measures is unknown, and they may not be sufficient to address the market dislocations or avert severe and prolonged reductions in economic activity.

Even after the pandemic subsides, the U.S.

economy and other major economies may continue to experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the U.S.

Our businesses would be materially and adversely affected in the event of prolonged recessions in the U.S.

and other major markets.

Because there are no comparable recent events that can provide guidance on the impact to the global economy, we cannot predict the extent to which our business may be impacted.

In addition, the increase in revenue of Ratings in 2020 was primarily driven by higher corporate bond issuance in the U.S.

mainly resulting from historically low borrowing costs, increased borrowing demand from companies to increase their liquidity in light of uncertainties associated with COVID-19, and central bank lending actions.

There can be no guarantee that such favorable conditions would continue in the future, and our businesses, financial condition and results of operations could be negatively affected absent such favorable conditions.

Moreover, the unprecedented volatility observed in the markets since the outset of COVID-19 may result in sudden unexpected changes in market structures that were not previously anticipated by laws, rules, regulations or general market practices.

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As a result of the impact on our clients, our subscription services may face pricing pressure on renewals, delayed renewals, and challenges to new sales which would in turn reduce revenue, ultimately impacting our results of operations.

Limited human mobility has, among other things, significantly reduced demand for energy used in transportation, and the decrease in demand has been exacerbated by political tensions between large oil producing countries.

This could put additional pressure on Platts clients and translate into slower demand for our subscription and related products and services.

The pandemic has impacted human mobility and, among other things, has impacted the supply and demand for energy used in transportation, which is also impacted by political tensions between large oil producing countries.

This uncertainty could put pressure on Platts clients and translate into slower demand for our subscription and related products and services.

Moreover, while our business continuity program has been effective to date, the current restrictions on human mobility limit our ability to interact with subscribers and effectively demonstrate new products and may have a negative effect on our ability to secure new subscriptions and renewals.

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Our business continuity program has been effective to date.

Since mid-March 2020, nearly our entire employee population was working remotely.

Since mid-March 2020, nearly our entire employee population has been working remotely.

While we have been able to continue our operations during this time, maintaining a remote work environment for an extended period of time may have a material adverse effect on our productivity and our ability to meet the needs of our clients and exposes us to operational risks.

See the below risk factor entitled “Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability”.

In addition, a portion of our information technology resources have been diverted to establishing and maintaining an infrastructure that supports a sustained remote working environment.

Such efforts limit the resources available for improvement and innovation projects.

Moreover, given the extent to which we are utilizing a remote working environment, we face increased vulnerability.

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Because we operate globally and have significant businesses in many markets, increased volatility or an economic slowdown in any of those markets could adversely affect our results of operations.

conditions that either reduce investor demand for debt securities or reduce issuers’ willingness or ability to issue such securities tend to reduce the number and dollar volume of debt issuances for which Ratings provides credit ratings.

• Since a significant component of our credit-rating based revenue is transaction-based, and is essentially dependent on the number and dollar volume of debt securities issued in the capital markets, unfavorable financial or economic conditions that either reduce investor demand for debt securities or reduce issuers’ willingness or ability to issue such securities tend to reduce the number and dollar volume of debt issuances for which Ratings provides credit ratings.

• Our Indices business is impacted by market volatility, asset levels of investment products tracking indices, and trading volumes of certain exchange traded derivatives.

Volatile capital markets, as well as changing investment styles, among other factors, may influence an investor’s decision to invest in and maintain an investment in an index-linked investment product.

Volatile capital markets, as well as changing investment styles, among

other factors, may influence an investor’s decision to invest in and maintain an investment in an index-linked investment product.

• Increases in interest rates or credit spreads, volatility in financial markets or the interest rate environment, significant political or economic events, defaults of significant issuers and other market and economic factors may negatively impact the general level of debt issuance, the debt issuance plans of certain categories of borrowers, the level of derivatives trading and/or the types of credit-sensitive products being offered, any of which could have a material adverse effect on our business, financial condition or results of operations.

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Unauthorized disclosure of this information could cause our customers to lose faith in our ability to protect their confidential information and therefore cause customers to cease doing business with us.

• We experience cyber attacks of varying degrees on a regular basis.

• We experience cyber attacks and data breaches of varying degrees on a regular basis.

Although there has not been a cyber attack that has had a material adverse effect on the Company to date, there can be no assurance that there will not be a material adverse effect in the future.

• We are regularly exposed to vulnerabilities in widely deployed third-party software we deploy in the ordinary course of business, such as the recently identified Log4J vulnerability.

While such vulnerability did not result in a material adverse effect on the Company, it and similar incidents require the us to devote time and resources to remediation on a regular basis.

Notwithstanding our efforts, there can be no assurance that we will not suffer a material adverse effect resulting from vulnerabilities in widely deployed software.

• Breaches of our or our vendors’ systems and networks, whether from circumvention of security systems, denial-of-service attacks or other cyber attacks, hacking, computer viruses or malware, employee error, malfeasance, physical breaches or other actions, may cause material interruptions or malfunctions in our or such vendors’ websites, applications or data processing, or may compromise the confidentiality and integrity of material information regarding us, our business or our customers.

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Despite our efforts to ensure the integrity of our systems, as cyber threats evolve and become more difficult to detect and successfully defend against, one or more cyber threats might defeat the measures that we or our vendors take to anticipate, detect, avoid or mitigate such threats.

Certain techniques used to obtain unauthorized access, introduce malicious software, disable or degrade service, or sabotage systems may be designed to remain dormant until a triggering event and we may be unable to anticipate these techniques or implement adequate preventative measures since techniques change frequently or are not recognized until launched.

Certain techniques

used to obtain unauthorized access, introduce malicious software, disable or degrade service, or sabotage systems may be designed to remain dormant until a triggering event and we may be unable to anticipate these techniques or implement adequate preventative measures since techniques change frequently or are not recognized until launched.

• Given the extent to which our businesses are privy to material non-public information concerning our customers, our data could be improperly used, including for insider trading by our employees and third party vendors with access to key systems.

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Changes in the legislative, regulatory, and commercial environments in which we operate may materially and adversely impact our ability to collect, compile, use, and publish data and may impact our financial results.

• Global privacy legislation, enforcement, and policy activity in this area are rapidly expanding and creating a complex regulatory compliance environment.

• Global privacy, data localization and data protection legislation, enforcement, and policy activity in this area are rapidly expanding and creating a complex regulatory compliance environment.

Costs to comply with and implement these privacy-related and data protection measures could be significant.

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• Certain types of information we collect, compile, use, and publish, including offerings in all our businesses, and particularly our Market Intelligence business, are subject to regulation by governmental authorities in jurisdictions in which we operate.

In addition, there is increasing concern among certain privacy advocates and government regulators regarding marketing and privacy matters, particularly as they relate to individual privacy interests.

In addition, there is increasing concern among certain privacy and data protection advocates and government regulators regarding marketing and privacy matters as well as data protection, particularly as they relate to individual privacy and perceived national security interests.

• There has been increased public attention regarding the use of personal information and data transfer, accompanied by legislation and regulations intended to strengthen data protection, information security and consumer and personal privacy.

The law in these areas continues to develop and the changing nature of privacy laws in the U.S., the European Union (“EU”) and elsewhere could impact our processing of personal and sensitive information of our employees, vendors and customers.

• The EU's comprehensive General Data Privacy Regulation (the “GDPR”) became fully effective in 2018.

GDPR requires companies to satisfy requirements regarding the handling of personal and sensitive data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves.

• Failure to comply with GDPR requirements could result in penalties of up to 4% of worldwide revenue.

GDPR and other similar laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.

• The California Consumer Privacy Act (“CCPA”) became fully effective January 1, 2020, requiring, among other things, covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information.

The CCPA provides a new private right of action for data breaches and requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties.

The law in these areas continues to develop and the changing nature of privacy and data protection laws in the U.S., the European Union (“EU”) and elsewhere could impact our processing of personal and sensitive information of our employees, vendors and customers and other data.

• Failure to comply with these requirements could result in significant penalties.

The EU’s comprehensive General Data Privacy Regulation (“GDPR”), for example, provides for penalties of up to 4% of worldwide revenue, although the market is yet to see a penalty at the very top end of this range.

Such laws and regulations, as well as any associated inquiries or investigations or any other government actions, may also be costly to comply with, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.

• Our reputation and brand and our ability to attract new customers could also be adversely impacted if we fail, or are perceived to have failed, to properly respond to security breaches of our or third party’s information technology systems.

Such failure to properly respond could also result in similar exposure to liability.

• We devote meaningful time and financial resources to compliance with the GDPR, the CCPA and other current and future applicable international and U.S.

privacy, cybersecurity and related laws.

• We devote meaningful time and financial resources to compliance with current and future applicable international and U.S.

privacy, cybersecurity, data protection and related laws.

We have made capital investments and other expenditures to address cybersecurity preparedness and prevent future breaches, including costs associated with additional security technologies, personnel, experts and credit monitoring services for those whose data has been breached, but there can be no assurance that we will not need to make significant additional expenditures.

These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach our information technology systems.

• In addition, the EU and other jurisdictions, including China, are considering imposing or have already imposed additional restrictions, including in relation to cross-border transfers of personal data.

• In addition, the EU and other jurisdictions, including the People’s Republic of China, are considering imposing or have already imposed additional restrictions, including in relation to cross-border transfers of personal and other types of data.

These requirements are increasing in complexity and number, change frequently and increasingly conflict among the various countries in which we operate, which could result in greater compliance risk and cost for us.

• Continued privacy concerns may result in new or amended laws and regulations.

• Continued privacy and data protection concerns may result in new or amended laws and regulations.

Future laws and regulations with respect to the collection, compilation, use, and publication of information and consumer privacy could result in limitations on our operations, increased compliance or litigation expense, adverse publicity, or loss of revenue, which could have a material adverse effect on our business, financial condition, and results of operations.

It is also possible that we could be prohibited from collecting or disseminating certain types of data, which could affect our ability to meet our customers’ needs.

• We may also from time to time be subject to, or face assertions that we are subject to, additional obligations relating to personal data by contract or due to assertions that self-regulatory obligations or industry standards apply to our practices.

• We may also from time to time be subject to, or face assertions that we are subject to, additional obligations relating to personal and other data by contract or due to assertions that self-regulatory obligations or industry standards apply to our practices.

Exposure to litigation and government and regulatory proceedings, investigations and inquiries could have a material adverse effect on our business, financial condition or results of operations.

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• In the past several years, the U.S.

Congress, the International Organization of Securities Commissions ("IOSCO"), the SEC and the European Commission, including through the European Securities Market Authority ("ESMA"), as well as regulators in other countries in which Ratings operates, have been reviewing the role of rating agencies and their processes and the need for greater oversight or regulations concerning the issuance of credit ratings or the activities of credit rating agencies.

Congress, the International Organization of Securities Commissions ("IOSCO"), the SEC, the European Commission, including through the European Securities Market Authority ("ESMA") and the UK Financial Conduct Authority (“FCA”), as well as regulators in other countries in which Ratings operates, have been reviewing the role of rating agencies and their processes and the need for greater oversight or regulations concerning the issuance of credit ratings or the activities of credit rating agencies.

Other laws, regulations and rules relating to credit rating agencies are being considered by local, national and multinational bodies and are likely to continue to be considered in the future, including provisions seeking to reduce regulatory and investor reliance on credit ratings, and liability standards applicable to credit rating agencies.

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In addition, there may be uncertainty over the scope, interpretation and administration of such laws and regulations.

We may be required to incur significant expenses in order to comply with such laws and regulations and to mitigate the risk of fines, penalties or other sanctions.

We may be required to incur significant expenses and/or take actions inconsistent with our business objectives in order to comply with such laws and regulations and to mitigate the risk of fines, penalties or other sanctions.

Legal proceedings could become increasingly lengthy and there may be uncertainty over and exposure to liability.

It is difficult to accurately assess the future impact of legislative and regulatory requirements on our business and our customers’ businesses, and they may affect Ratings’ communications with issuers as part of the rating assignment process, alter the manner in which Ratings’ ratings are developed, affect the manner in which Ratings or its customers or users of credit ratings operate, impact the demand for ratings and alter the economics of the credit ratings business.

It is difficult to accurately assess the future impact

of legislative and regulatory requirements on our business and our customers’ businesses, and they may affect Ratings’ communications with issuers as part of the rating assignment process, alter the manner in which Ratings’ ratings are developed, affect the manner in which Ratings or its customers or users of credit ratings operate, impact the demand for ratings and alter the economics of the credit ratings business.

Each of these developments increases the costs and legal risk associated with the issuance of credit ratings and may have a material adverse effect on our operations, profitability and competitiveness, the demand for credit ratings and the manner in which such ratings are utilized.

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Indices has taken steps to align its governance regime, control framework and operations with the Financial Benchmark Principles and engages an independent auditor to perform an annual reasonable assurance review of its adherence to the Financial Benchmark Principles.

• The benchmark industry is subject to regulation in the EU (the “EU Benchmark Regulation”) as well as potential increased regulation of financial benchmarks in other jurisdictions.

• The benchmark industry is subject to regulation in the EU (the “EU Benchmark Regulation”) as well as the evolving regulation of financial and commodity benchmarks in other jurisdictions.

The EU Benchmark Regulation was published on June 30, 2016, with provisions applicable to Indices and Platts, effective from January 1, 2018.

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Indices and Platts are now both supervised by the Netherlands Authority for the Financial Markets.

This legislation will likely cause additional operating obligations, greater compliance risk and costs for Indices and Platts but they are not expected to be material at this time, although the exact impact remains unclear.

This legislation will likely cause additional operating obligations, greater compliance risk and costs for Indices and Platts but they are not expected to be material at this time.

• Indices is subject to the benchmark regulation in Australia under which it is required to obtain a license from and be subject to the supervision of the Australian Securities and Investment Commission regarding its administration of the S&P ASX 200 index.

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• In addition to the Merger, we have made and expect to continue to make acquisitions or enter into other strategic transactions to strengthen our business and grow our Company.

Such transactions present significant challenges and risks.

• The market for acquisition targets and other strategic transactions is highly competitive, especially in light of industry consolidation, which may affect our ability to complete such transactions.

Such transactions present significant challenges and risks, as the market for acquisitions and other strategic transactions is highly competitive, especially in light of industry consolidation, which may affect our ability to complete such transactions.

• If we are unsuccessful in completing such transactions or if such opportunities for expansion do not arise, our business, financial condition or results of operations could be materially adversely affected.

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• Some of our products support the investment processes and other activities of our clients, which, in the aggregate, manage trillions of dollars of assets.

Use of our products as part of such activities, including the investment process creates the risk that clients, or the parties whose assets are managed by our clients, may pursue claims against us for

very significant dollar amounts, which could have a material adverse effect on our business, financial condition or results of operations.

Use of our products as part of such activities, including the investment process, creates the risk that clients, or the parties whose assets are managed by our clients, may pursue claims against us for very significant dollar amounts, which could have a material adverse effect on our business, financial condition or results of operations.

• The products we develop or license, and the proprietary methodologies, models and processes on which these products rely, may contain undetected errors or defects, despite testing and/or other quality assurance practices.

Such errors may exist during any part of a product’s life cycle and may persist notwithstanding testing and/or other quality assurance practices.

Ineffective or insufficient collaboration within the Company increases the risk that such errors may not be detected.

Deploying products containing such errors may damage our reputation, and the costs associated with remediating such errors may have an impact on our profitability.

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The foregoing and other unforeseen factors could also result in business being disrupted for a period of time as well as additional commitments of financial resources.

• Enhancing existing products and developing new products often requires effective collaboration across various functions and business lines of the Company.

Ineffective or insufficient collaboration across functions and business lines decreases our ability to expand geographically, enhance products, innovate, increase sales, leads to brand confusion and may result in a material adverse effect on our financial condition or results of operations.

A significant increase in operating costs and expenses could have a material adverse effect on our profitability.

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• We make significant investments in information technology data centers and other technology initiatives and we cannot provide assurances that such investments will result in increased revenues.

• Although we believe we are prudent in our investment strategies and execution of our implementation plans, there is no assurance as to the ultimate recoverability of these investments.

• Although we believe we are prudent in our investment strategies and execution of our implementation plans, there is no assurance as to the ultimate recoverability or effectiveness of these investments.

Despite our existing strategies and while not material to our operations, we did experience increased attrition in 2021.

Increased availability of free or relatively inexpensive information sources may reduce demand for our products and could have a material adverse effect on our business, financial condition or results of operations.

• In recent years, more public sources of free or relatively inexpensive information have become available, particularly through the Internet, and advances in public cloud computing and open source software may continue.

• Public sources of free or relatively inexpensive information can reduce demand for our products and services.

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• Alternatively, customers may use other strategies to reduce their overall spending on financial and commodity market products and services by consolidating their spending with fewer vendors, including by selecting other vendors with lower-cost offerings, or by self-sourcing their need for financial and commodity market products and services.

If customers elect to consolidate their spending on financial and commodity market products and services with other vendors and not us, if we lose business to lower priced competitors, or if customers elect to self-source their product and service needs, our business, financial condition or results of operations could be materially and adversely affected.

If customers elect to consolidate their spending on financial and commodity market products and services with other

vendors and not us, if we lose business to lower priced competitors, or if customers elect to self-source their product and service needs, our business, financial condition or results of operations could be materially and adversely affected.

• A material portion of our revenues in our Indices business is concentrated in some of our largest customers, who have significant assets under management in index funds and exchange-traded funds.

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• Our products contain intellectual property delivered through a variety of digital and other media.

Our ability to achieve anticipated results depends in part on our ability to defend our intellectual property rights against infringement and

misappropriation.

Our ability to achieve anticipated results depends in part on our ability to defend our intellectual property rights against infringement and misappropriation.

Our business, financial condition or results of operations could be materially and adversely affected by inadequate or changing legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets.

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At this time, we cannot predict the scope or nature of these changes or assess what the overall effect of such potential changes could be on our results of operations or cash flows.

Regulatory changes and economic conditions leading up to and following the United Kingdom’s withdrawal from the EU could have a material adverse effect on our business and results of operations.

• Voters in the United Kingdom ("UK") approved an exit from the EU via a referendum in 2016 and in 2017, the UK invoked Article 50 of the Treaty on the EU, commencing the process to leave the EU (“Brexit”) and on January 31, 2020, the UK formally exited the EU.

The EU and the UK concluded the EU-UK Trade and Cooperation Agreement on December 24, 2020, which took effect provisionally on January 1, 2021 following the end of the formal transition period.

• Brexit could lead to legal uncertainty and potentially divergent national laws and regulations between the UK and the EU as the UK determines which EU laws to replace or replicate and the EU determines how to treat regulated activities (e.g., the activities of credit rating agencies) originating in the UK.

Regulatory changes and economic conditions relating to the United Kingdom’s withdrawal from the EU could have a material adverse effect on our business and results of operations.

• The United Kingdom’s exit from the EU on January 31, 2020 (“Brexit”) could lead to legal uncertainty and potentially divergent national laws and regulations between the UK and the EU as the UK determines which EU laws to replace or replicate and the EU determines how to treat regulated activities (e.g., the activities of credit rating agencies) originating in the UK.

Our businesses are subject to increasing regulation of the financial services and commodities industries in Europe.

Potential changes in EU regulation, divergent interpretations by the UK of any replicated EU laws and/or additional regulation in the UK could cause additional operating obligations and increased costs for our businesses.

In particular, our Ratings business, for the first time, is subject to regulation by the Financial Conduct Authority effective January 1, 2021.

Potential changes in EU regulation, divergent interpretations by the UK of any replicated EU

laws and/or additional regulation in the UK could cause additional operating obligations and increased costs for our businesses.

• Changes to UK immigration policy as a result of Brexit could adversely affect our ability to retain talent for our European operations.

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Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.

• In addition to the COVID Risks outlined above, should we experience a local or regional disaster or other business continuity problem, such as an earthquake, hurricane, flood, terrorist attack, another outbreak of pandemic or contagious diseases, security breach, cyber attack, power loss, telecommunications failure or other natural or man-made disaster, our ability to continue to operate will depend, in part, on the availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations.

• In addition to the COVID-19 Risks outlined above, should we experience a local or regional disaster or other business continuity problem, such as an earthquake, hurricane, flood, civil unrest, protests, terrorist attack, another outbreak of pandemic or contagious diseases, security breach, cyber attack, data breach, power loss, telecommunications failure or other natural or man-made disaster, our ability to continue to operate will depend, in part, on the availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations.

In such an event, we could experience operational challenges with regard to particular areas of our operations, such as key executive officers or personnel, that could have a material adverse effect on our business.

• We regularly assess and take steps to improve our existing business continuity plans and key management succession.

materially interrupt our business operations and result in material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.

However, a disaster on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and result in material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.

Outsourcing certain aspects of our business could result in disruption and increased costs.

• We have outsourced certain functions to third-party service providers to leverage leading specialized capabilities and achieve cost efficiencies.

• We have outsourced certain functions to third-party service providers to leverage leading specialized capabilities and achieve cost efficiencies, and such functions may be further outsourced.

Outsourcing these functions involves the risk that the third-party service providers may not perform to our standards or legal requirements, may not produce reliable results, may not perform in a timely manner, may not maintain the confidentiality of our proprietary information, or may fail to perform at all.

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• We also do not have fully redundant systems for most of our smaller office locations and low-risk systems, and our disaster recovery plan does not include restoration of non-essential services.

If a disruption occurs in one of our locations or systems and our personnel in those locations or those who rely on such systems are unable to utilize other

systems or communicate with or travel to other locations, such persons’ ability to service and interact with our clients and customers may suffer.

If a disruption occurs in one of our locations or systems and our personnel in those locations or those who rely on such systems are unable to utilize other systems or communicate with or travel to other locations, such persons’ ability to service and interact with our clients and customers may suffer.

• We cannot predict with certainty all of the adverse effects that could result from our failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions.

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The development, maintenance and support of our products and services are dependent upon the knowledge, experience and ability of our highly skilled, educated and trained employees.

Accordingly, our business is dependent on successfully attracting and retaining talented employees.

Accordingly, our business is dependent on successfully attracting, retaining and training talented employees in a highly competitive business environment.

If the Company is less successful in its recruiting efforts, or if it is unable to retain key employees, its ability to develop and deliver successful products and services or achieve strategic goals may be adversely affected.

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• Given our role in the financial and commodities markets, our ability to attract and retain customers is uniquely affected by external perceptions of our reputation, credibility, and brand.

• We provide credit ratings, pricing and valuation services, benchmark products, and indices, many of which depend on contributions or inputs from third parties or market participants.

Our customers and other market participants expect us to be able to demonstrate that our products and services are produced independently and are not readily subject to manipulation.

We believe our products and services are designed with appropriate methodologies, processes, and procedures to maintain independence and integrity;

however, we may not be able to prevent third parties or market participants from working together or colluding to try to manipulate their inputs and thus the resulting outputs of our products and services.

From time to time, we are involved in third-party investigations or litigation related to the commodities and asset classes our products and services serve.

Any failures, negative publicity, investigations, or lawsuits that implicate the independence and integrity of our pricing and valuation services, benchmarks, and indices could result in a loss of confidence in the administration of these products and services and could harm our reputation and our business.

• Negative perceptions or publicity could damage our reputation with customers, prospects, regulators, and the public generally, which could negatively impact, among other things, our ability to attract and retain customers, employees and suppliers, as well as suitable candidates for acquisition or other combinations.

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or other sources of law,

▪ changes in applicable laws and regulatory requirements,

▪ the possibility of nationalization, expropriation, price controls and other restrictive governmental actions,

◦ changes in applicable laws and regulatory requirements, including data localization requirements,

◦ the possibility of nationalization, expropriation, price controls, withdrawal of licenses to operate, and other restrictive governmental actions,

◦ competition with local rating agencies that have greater familiarity, longer operating histories and/or support from local governments or other institutions, and

▪ civil unrest, protests, terrorism, unstable governments and legal systems, and other factors.

◦ civil unrest, protests, terrorism, unstable governments, geopolitical uncertainties and legal systems, and other factors.

Adverse developments in any of these areas could have a material adverse effect on our business, financial condition or results of operations.

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Violations of such laws and regulations may result in fines and penalties, criminal sanctions, administrative remedies, or restrictions on business conduct and could have a material adverse effect on our reputation, our ability to attract and retain employees, our business, financial condition or results of operations.

• Embargoes and sanctions laws are changing rapidly for certain geographies, including with respect to Russia, Iran, and Venezuela.

These embargoes and sanctions laws may affect our ability to continue to market and/or sell our products and services into these geographies.

In addition, while we have a compliance program in place designed to reduce the likelihood of potential violations of import and export laws and sanctions, violations of these laws or sanctions could have an adverse effect on our reputation, business, financial condition and results of operations.

Unresolved Staff Comments

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