What changed in this filing

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Item 1A. Risk Factors

2021-02-11 compared with 2020-02-13 · 93 added, 108 removed, 191 unchanged (51% of the section changed)

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Our revenues are based on the market value and composition of the assets under our management, all of which are subject to fluctuation caused by factors outside of our control.

We derive our revenues primarily from investment advisory services provided by our subsidiaries to individual and institutional investors in the U.S.

mutual funds and other investment products .

We derive our revenues primarily from investment advisory services provided by our subsidiaries to individual and institutional investors.

Our investment advisory fees typically are calculated as a percentage of the market value of the assets under our management.

We generally earn higher fees on assets invested in our equity funds and equity investment portfolios than we earn on assets invested in our fixed income funds and portfolios.

Among equity products , there is a significant variation in fees earned from index-based products at the low end and emerging markets products at the high end.

Fees also vary across the fixed income products , though not as widely as equity products , with stable value products and money market products at the lower end and non-U.S.

dollar denominated bond products at the high end.

As a result, our revenues are dependent on the value and composition of the assets under our management, all of which are subject to substantial fluctuation due to many factors, including:

• Investment Performance.

If the investment performance of our managed investment portfolios is less than that of our competitors or applicable third-party benchmarks, we could lose existing and potential customers and suffer a decrease in assets under management.

Institutional investors in particular, consider changing investment advisers based upon poor relative investment performance.

Individual investors in contrast are more likely to react to poor absolute investment performance.

If the investment performance of our managed investment portfolios is less than that of our competitors or applicable third-party benchmarks, we could lose existing and potential clients and suffer a decrease in assets under management.

• General Market Declines.

We derive a significant portion of our revenues from advisory fees on sponsored portfolios.

We derive a significant portion of our revenues from advisory fees on managed investment portfolios.

A downturn in stock or bond prices would cause the value of assets under our management to decrease, and may also cause investors to withdraw their investments, thereby further decreasing the level of assets under our management.

A decline in equity market valuations may cause investors to transition to lower-fee portfolios such as fixed income, reducing our overall profitability.

In addition, international markets, particularly emerging markets, which are often smaller, may not have the liquidity of established markets, may lack established regulations, and may experience significantly more volatility than established markets.

• Investor Mobility.

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• Capacity Constraints.

Prolonged periods of strong relative investment performance and/or strong investor inflows has resulted in and may result in capacity constraints within certain strategies, which can lead to, among other things, the closure of those strategies from additional investor inflows.

If certain of our strategies are capacity constrained, our investment results in subsequent periods may be negatively impacted.

• Investing Trends.

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• Interest Rate Changes.

Investor interest in and the valuation of our fixed income investment funds and portfolios are affected by changes in interest rates.

Investor interest in and the valuation of our fixed income and multi-asset investment portfolios are affected by changes in interest rates.

• Geo-Political Exposure.

Our managed investment portfolios may have significant investments in international markets that are subject to risk of loss from political or diplomatic developments, government policies, civil unrest, currency fluctuations, illiquidity and capital controls, and changes in legislation related to foreign ownership.

Our managed investment portfolios may have significant investments in markets that are subject to risk of loss from political or diplomatic developments, government policies, civil unrest, currency fluctuations, illiquidity and capital controls, and changes in legislation related to ownership limitations.

A decrease in the value of assets under our management, or an adverse change in their composition, particularly in market segments where our assets are concentrated, could have a material adverse effect on our investment advisory fees and revenues.

For any period in which revenues decline, net income and operating margins will likely

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decline by a greater proportion because certain expenses will be fixed over that finite period and may not decrease in proportion to the decrease in revenues.

A significant majority of our revenues are based on contracts with the U.S.

For any period in which revenues decline, net income and operating margins will likely decline by a greater proportion because certain expenses will be fixed over that finite period and may not decrease in proportion to the decrease in revenues.

A majority of our revenues are based on contracts with the U.S.

mutual funds that are subject to termination without cause and on short notice.

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We operate in an intensely competitive industry.

Competitive pressures may result in a loss of customers and their assets or compel us to reduce the fees we charge to clients, thereby reducing our revenues and net income.

Competitive pressures may result in a loss of clients and their assets or compel us to reduce the fees we charge to clients, thereby reducing our revenues and net income.

We are subject to competition in all aspects of our business from other financial institutions.

Some of these financial institutions have substantially greater resources than we do and may offer a broader range of financial products across more markets.

Some of these financial institutions have greater resources than we do and may offer a broader range of financial products across more markets.

Some competitors operate in a different regulatory environment than we do which may give them certain competitive advantages in the investment products and portfolio structures that they offer.

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As a result, investment advisors that emphasize passive products have gained and may continue to gain market share from active managers like us.

While we believe there will always be demand for good active management, we cannot predict how much market share these competitors will gain.

If current or potential customers decide to move their assets to one of our competitors, we could face a significant decline in market share, assets under management, revenues, and net income.

While we believe there will always be demand for strong performing active management, we cannot predict how much market share these competitors will gain.

As part of our continued efforts to attract and retain clients, we develop and launch new products and services, which may require expenditure of resources and may expose us to new regulatory or compliance requirements as well as increased risk of operational or client service errors.

In the event that we decide to reduce the fees we charge for investment advisory services in response to competitive pressures, which we have done selectively in the past, revenues and operating margins could be adversely impacted.

Our success depends on our key personnel and our financial performance could be negatively affected by the loss of their services.

Our success depends on our highly skilled personnel, including our portfolio managers, investment analysts, sales and client relationship personnel, and corporate officers, many of whom have specialized expertise and extensive experience in our industry.

Strong financial services professionals are in demand, and we face significant competition for highly qualified employees.

Our U.S.-based associates do not have employment contracts, while our associates outside the U.S.

have employment contracts where basic employment terms are confirmed in writing.

Generally, our associates can terminate their employment with us at any time.

We cannot assure that we will be able to attract or retain key personnel.

Due to the global nature of our investment advisory business, our key personnel may have reasons to travel to regions susceptible to higher risk of civil unrest, organized crime or terrorism and we may be unable to ensure the safety of personnel traveling to these regions.

We have near- and long-term succession planning processes, including programs to develop our future leaders, which are intended to address future talent needs and minimize the impact of losing key talent.

However, in order to retain or replace our key personnel, we may be required to increase compensation, which would decrease net income.

The loss of key personnel could damage our reputation and make it more difficult to retain and attract new employees and investors.

Losses of assets from our client investors would decrease our revenues and net income, possibly materially.

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Our operations are complex and a failure to perform operational processes could have an adverse effect on our reputation and decrease our revenues.

We provide investment management, product administration, product recordkeeping, and tax reporting services to our clients.

In certain cases, we rely on third-party vendors in the execution and delivery of these services.

Our operations are complex and a failure to properly execute operational processes could have an adverse effect on our reputation and decrease our revenues.

We provide global investment management and administrative services to our clients.

In certain cases, we rely on third-party service providers for the execution and delivery of these services.

There can be no assurance that these vendors will properly perform these processes or that there will not be interruptions in services from these third parties.

Failure to properly execute or oversee these services could subject us to regulatory sanctions, fines, penalties, or litigation.

Failure to properly execute or oversee these services could have an adverse impact on our business, financial results and reputation, and subject us to regulatory sanctions, fines, penalties, or litigation.

New investment strategies, investment vehicles, distribution channels, or other evolutions of our business may increase the risk that our existing systems may not be adequate to control the risks introduced by such changes.

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The quantitative models we use may contain errors, which could result in financial losses or adversely impact product performance and client relationships.

We use various quantitative models to support investment decisions and processes, including those related to risk assessment, portfolio management, and activities.

We use various quantitative models to support investment decisions and investment processes, including those related to portfolio management, portfolio risk analysis, and client investment guidance.

Any errors in the underlying models or model assumptions could have unanticipated and adverse consequences on our business and reputation.

Changes to benchmark indices may impact our business.

The manner in which certain reference rates are calculated could impact the investment portfolios we manage.

The withdrawal and replacement of widely used benchmark indices such as the London Interbank Offered Rate (“LIBOR”) with alternative benchmark rates may introduce a number of risks for our business.

The FCA in the U.K., which regulates LIBOR, has announced that it will no longer compel panel banks to submit rates for LIBOR after 2021.

Changes in the method pursuant to which LIBOR is determined or the discontinuance of LIBOR may adversely affect the amount of interest payable or interest receivable on certain portfolio investments.

These changes may also impact the market liquidity and market value of these portfolio investments.

Any damage to our reputation could harm our business and lead to a loss of revenues and net income.

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Regulatory inquiries and rumors can tarnish or substantially damage our reputation, even if those inquiries are satisfactorily addressed.

Additionally, we are subject to the risk that our employees or third parties acting on our behalf may circumvent controls or act in a manner inconsistent with our policies and procedures.

Actual or perceived failure to adequately address the environmental, social, and governance ("ESG") expectations of our various stakeholders could lead to a tarnished reputation and loss of customers.

While we maintain policies, procedures, and controls to reduce the likelihood of unauthorized activities, we are subject to the risk that our associates or third parties acting on our behalf may circumvent controls or act in a manner inconsistent with our policies and procedures.

Real or perceived conflicts between our clients’ interests and our own, as well as any fraudulent activity or other exposure of client assets or information, may impair our reputation and subject us to litigation or regulatory action.

Any damage to our brand could impede our ability to attract and retain customers and key personnel, and reduce the amount of assets under our management, any of which could have a material adverse effect on our revenues and net income.

Any damage to our brand could impede our ability to attract and retain clients and key personnel, and reduce the amount of assets under our management, any of which could have a material adverse effect on our revenues and net income.

Our expenses are subject to significant fluctuations that could materially decrease net income.

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• expenses incurred in connection with our multi-year strategic plan to strengthen our long-term competitive position;

variations in the level of total compensation expense due to, among other things, changes in bonuses, stock-based awards, changes in employee benefit costs due to regulatory or plan design changes, changes in our employee count and mix, competitive factors, market performance, and inflation;

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• variations in the level of total compensation expense due to changes in, among other things, bonuses, stock-based awards, employee benefit costs due to regulatory or plan design changes, our employee count and mix, competitive factors, market performance, and inflation;

• changes in the level of our advertising and promotion expenses, including the costs of expanding investment advisory services to investors outside of the U.S.

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Rowe Price investment products, any financial support provided would reduce capital available for other purposes and may have an adverse effect on revenues and net income .

Our hedging strategies utilized to mitigate risk may not be effective, which could impact our earnings.

We employ hedging strategies related to our supplemental savings plan in order to hedge the liability related thereto.

In the event that our hedging strategies are not effective, the resulting impact may adversely affect our results of operations, cash flows or financial condition.

Amendments to tax laws may impact the marketability of the products and services we offer our clients or the financial position of the Company.

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These contracted third-party intermediaries generally offer their clients various investment products in addition to, and in competition with, our investment products, and have no contractual obligation to encourage investment in our products.

It would be difficult for us to acquire or retain the management of those assets without the assistance of the intermediaries, and we cannot assure that we will be able to maintain an adequate number of investment product offerings and successful distribution relationships.

In addition, some investors rely on third-party financial

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planners, registered investment advisers, and other consultants or financial professionals to advise them on the choice of investment adviser and investment product .

product offerings and successful distribution relationships.

In addition, some investors rely on third-party financial planners, registered investment advisers, and other consultants or financial professionals to advise them on the choice of investment adviser and investment product.

These professionals and consultants can favor a competing investment product as better meeting their particular clients' needs.

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Natural disasters and other unpredictable events could adversely affect our operations.

Armed conflicts, trade wars, tariffs or sanctions, terrorist attacks, cyber-attacks, power failures, climate change, and natural disasters could adversely affect our revenues, expenses, and net income by:

Armed conflicts, trade wars, tariffs or sanctions, terrorist attacks, cyberattacks, power failures, pandemics, climate change, increased severity of weather events, and natural disasters and other events outside of our control could adversely affect our revenues, expenses, and net income by:

• decreasing investment valuations in, and returns on, the investment portfolios that we manage,

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• requiring substantial capital expenditures and operating expenses to remediate damage, replace our facilities, and restore our operations.

A significant portion of our business operations are concentrated in the Baltimore, Maryland region and in London, England.

In addition, we maintain offices with associates in many other global locations such as Sydney, Australia;

A significant portion of our business operations are concentrated in the Baltimore, Maryland region, Colorado Springs, Colorado, and in London, England.

In addition, we maintain offices with associates in many other global locations, including Sydney, Australia;

Tokyo, Japan;

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We also rely to varying degrees on outside vendors for service delivery in addition to technology and disaster contingency support, and we cannot be assured that these vendors will be able to perform in an adequate and timely manner.

If we lose the availability of any associates, or if we are unable to respond adequately to such an event in a timely manner, we may be unable to timely resume our business operations, which could lead to a tarnished reputation and loss of customers that results in a decrease in assets under management, lower revenues, and materially reduced net income.

If we lose the availability of any associates, or, if we are unable to respond adequately to such an event in a timely manner, we may be unable to timely resume our business operations, which could lead to financial losses, a tarnished reputation and loss of clients that could result in a decrease in assets under management, lower revenues, and materially reduced net income.

Our business, financial condition, and results of operation may be adversely affected by the 2020 coronavirus outbreak.

Beginning in early 2020, global financial markets have been monitoring and reacting to the novel coronavirus pandemic.

The spread of the coronavirus has created significant volatility, uncertainty and economic disruption to the global economy and may impact our business, financial condition and results of operations.

While we have in place robust and well-established business continuity plans that address the potential impact to our associates and our facilities, and a comprehensive suite of technologies which enable our associates to work remotely and conduct business, no assurance can be given that the steps we have taken will continue to be effective or appropriate.

Additionally we must effectively manage the ongoing risks of a remote workforce, ensure a safe working environment for associates working onsite in our offices, and adequately manage the post-pandemic transition from remote to onsite or a hybrid working environment.

In the event that our associates become incapacitated by the coronavirus, our business operations may be impacted, which could lead to reputational and financial harm.

Since our revenue is based on the market value and composition of the assets under our management, the ultimate impact on global financial markets and our clients’ decisions related to this event could adversely affect the Company’s revenue and operating results.

Our investment income and asset levels may be negatively impacted by fluctuations in our investment portfolio.

We currently have a substantial investment portfolio.

All of these investments are subject to investment market risk, and our non-operating investment income could be adversely affected by the realization of losses upon the disposition of our investments or the recognition of significant impairments and the recognition of unrealized losses related to T.

Rowe Price products that are consolidated or accounted for under the equity method.

Separately from the investments we manage for our clients, we currently have a substantial investment portfolio.

In addition, related investment income has fluctuated significantly over the years depending upon the performance of our corporate investments, including the impact of market conditions and interest rates, and the size of our corporate money market and longer-term mutual fund holdings.

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These initiatives typically involve a number of risks and present financial, managerial and operational challenges to our ongoing business operations.

In addition, acquisitions and related transactions involve risks, including unanticipated problems regarding integration of investor account and investment security recordkeeping, additional or new

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regulatory requirements, operating facilities and technologies, and new employees;

In addition, acquisitions and related transactions involve risks, including unanticipated problems regarding integration of investor account and investment security recordkeeping, additional or new regulatory requirements, operating facilities and technologies, and new employees;

adverse effects on our earnings in the event acquired intangible assets or goodwill become impaired;

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We are exposed to risks arising from our international operations.

We operate in a number of jurisdictions outside of the U.S.

and have an equity investment in UTI.

We operate in a number of jurisdictions outside of the United States.

Our international operations require us to comply with the legal and regulatory requirements of various foreign jurisdictions and expose us to the political consequences of operating in foreign jurisdictions.

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• significant adverse changes in international legal and regulatory environments.

HUMAN CAPITAL RISKS.

Our success depends on our key personnel and our investment performance and financial results could be negatively affected by the loss of their services.

Strong financial services professionals are in demand, and we face significant competition for highly qualified employees.

Our U.S.-based associates do not have employment contracts, while our associates outside the U.S.

have employment contracts where basic employment terms are confirmed in writing.

Generally, our associates can terminate their employment with us at any time.

We cannot assure that we will be able to attract or retain key personnel.

We have near- and long-term succession planning processes,

including programs to develop our future leaders, which are intended to address future talent needs and minimize the impact of losing key talent.

However, in order to retain or replace our key personnel, we may be required to increase compensation, which would decrease net income.

The loss of key personnel could damage our reputation and make it more difficult to retain and attract new employees and investors.

Losses of assets from our client investors would decrease our revenues and net income, possibly materially.

LEGAL AND REGULATORY RISKS.

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A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanctions, could consume substantial expenditures of time and capital.

Any regulatory investigation and any failure to maintain compliance with applicable laws and regulations could severely damage our reputation, adversely affect our ability to conduct business, and decrease revenue and net income.

Legal and regulatory developments in the mutual fund and investment advisory industry could increase our regulatory burden, impose significant financial and strategic costs on our business, and cause a loss of, or impact the servicing of, our clients and fund shareholders.

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retirement system.

We could experience adverse business impacts if legislative and regulatory changes limit retirement plans to certain products and services, or favor certain investment vehicles, that we do not offer, materially limit retirement savings opportunities or foster substantial outflows from retirement savings plans for non-retirement purposes.

• There has been substantial regulatory and legislative activity at federal and state levels regarding standards of care for financial services firms, related to both retirement and taxable accounts.

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• The Federal Reserve Board has adopted final regulations related to non-bank Systemically Important Financial Institutions ("SIFIs"), and other jurisdictions are contemplating similar regulation.

At this time, US

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regulators have not designated mutual funds or traditional asset managers as non-bank SIFIs.

At this time, US regulators have not designated mutual funds or traditional asset managers as non-bank SIFIs.

However, if any T.

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Rowe Price affiliate was deemed a SIFI, increased regulatory oversight would apply to our business, which may include enhanced capital, liquidity, leverage, stress testing, resolution planning, and risk management requirements.

The Commodity Futures Trading Commission ("CFTC") has adopted certain amendments to its rules that would limit the ability of T.

Rowe Price investment products to use futures, swaps, and other derivatives without additional registration.

As such, we intend to register certain subsidiaries with the CFTC which would subject us to additional regulatory requirements and costs associated with registrations.

• The Commodity Futures Trading Commission ("CFTC") has adopted rules that would limit the ability of T.

Rowe Price investment products to use futures, swaps, and other derivatives.

We have registered certain subsidiaries with the CFTC, subjecting us to additional regulatory requirements and costs, but also providing us additional flexibility to utilize such products.

Nonetheless, there are still certain limitations on our investment products due to CFTC rules.

• There has been increased global regulatory focus on the manner in which intermediaries are paid for distribution of mutual funds.

Changes to long-standing market practices related to fees or enhanced disclosure requirements may negatively impact sales of mutual funds by intermediaries, especially if such requirements are not applied to other investment products.

We remain subject to various state, federal and international laws and regulations related to data privacy and protection of data we maintain concerning our customers and employees.

These requirements continue to evolve.

For example, California has adopted regulations, effective in January 1, 2020, which, among other things, significantly increased the potential penalties for non-compliance.

• We remain subject to various state, federal and international laws and regulations related to data privacy and protection of data we maintain concerning our clients and employees.

These requirements continue to evolve, most commonly in ways that increase the complexity and costs of compliance.

For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA") effective in January 1, 2020, which, among other things, significantly increased compliance obligations and the potential penalties for non-compliance, and California voters in November 2020 approved a replacement of this law effective January 1, 2023 with a new law that expands various requirements.

• After the 2008 financial crisis, global regulations on over-the-counter derivatives spearheaded by The Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and European Market Infrastructure Regulation in the European Union ("EU") have imposed clearing, margin, trade reporting, electronic trading and recordkeeping requirements on market participants.

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We are subject to regulatory and governmental inquiries and civil litigation.

An adverse outcome of any such proceeding could involve substantial financial penalties.

An adverse outcome of any such proceeding could involve substantial financial penalties and costs.

From time to time, various claims against us arise in the ordinary course of business, including employment-related claims.

There also has been an increase in litigation and in regulatory investigations in the financial services industry in recent years, including customer claims, class action suits, and government actions alleging substantial monetary damages and penalties.

There also has been an increase in litigation and in regulatory investigations in the financial services industry in recent years, including client claims, class action suits, and government actions alleging substantial monetary damages and penalties.

We carry insurance in amounts and under terms that we believe are appropriate.

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As our insurance policies come up for renewal, we may need to assume higher deductibles or co-insurance liabilities, or pay higher premiums, which would increase our expenses and reduce our net income.

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Net capital requirements may impede the business operations of our subsidiaries.

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We have a significant locally authorized and regulated presence in the United Kingdom (“UK”) to support our global investment management business.

The ultimate impact of the UK exit (“Brexit”) from the European Union (“EU”), on our business operations in the UK and Europe could vary depending on the details of the separation agreement or any subsequent trade relationship between the UK and EU.

While we cannot predict the outcome at this time, we have realigned our EU and UK operations so that we are as prepared if the EU and UK are unable to reach a separation agreement or future trade agreement.

We have realigned our European Union ("EU") and UK operations in response to the UK exit (“Brexit”) from the EU;

however, we cannot predict the ultimate impact of Brexit on our operations or our business.

We remain committed to our clients, associates and business expansion across the region.

TECHNOLOGY RISKS.

We require specialized technology to operate our business and would be adversely affected if we fail to maintain adequate infrastructure to conduct or expand our operations or if our technology became inoperative or obsolete.

We depend on highly specialized and, in many cases, proprietary or third-party licensed technology to support our business functions, including among others:

We require significant quantities and types of technology to operate our business and would be adversely affected if we fail to maintain adequate infrastructure to conduct or expand our operations or if our technology became inoperative or obsolete.

We depend on significant quantities of technology and, in many cases, highly specialized or proprietary or third-party licensed technology to support our business functions, including among others:

• securities analysis,

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• portfolio management,

customer service,

accounting and internal financial reporting processes and controls, and

• client service,

• accounting and internal financial reporting processes and controls,

• data security and integrity, and

• regulatory compliance and reporting.

All of our technology systems, including those provided by vendors, are vulnerable to disability or failures due to cyber-attacks, natural disasters, power failures, acts of war or terrorism, sabotage, and other causes.

All of our technology systems, including those provided by vendors, are vulnerable to disability or failures due to cyberattacks, natural disasters, power failures, acts of war or terrorism, sabotage, and other causes.

A suspension or termination of vendor-provided software licenses or related support, upgrades, and maintenance could cause system delays or interruption.

Although we have robust business and disaster recovery plans, if our technology systems were to fail and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could lead to a loss of customers and could harm our reputation.

A technological breakdown could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to disciplinary action and liability to our customers.

In addition, our continued success depends on our ability to effectively integrate operations across many countries, and to adopt new or adapt existing technologies to meet client, industry, and regulatory demands.

Although we have robust business and disaster recovery plans, if our technology systems, including those provided by vendors, were to fail and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could lead to a loss of clients and could harm our reputation.

A technological breakdown or disruption in services from a vendor could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to disciplinary action and liability to our clients.

In addition, our continued success depends on our ability to effectively integrate operations across many systems and/or countries, and to adopt new or adapt existing technologies to meet client, industry, and regulatory demands.

We might be required to make significant capital expenditures to maintain competitive infrastructure.

If we are unable to upgrade our infrastructure in a timely fashion, we might lose customers and fail to maintain regulatory compliance, which could affect our results of operations and severely damage our reputation.

If we are unable to upgrade our infrastructure in a timely fashion, we might lose clients and fail to maintain regulatory compliance, which could affect our results of operations and severely damage our reputation.

A cyberattack or a failure to implement effective information and cybersecurity policies, procedures and capabilities could disrupt operations and cause financial losses.

We are dependent on the effectiveness of the information and cybersecurity policies, procedures and capabilities we maintain to protect our systems and data.

An externally caused information security incident, such as a

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cyberattack, a phishing scam, virus, ransomware attack or denial-of-service attack, could materially interrupt business operations or cause disclosure or modification of sensitive or confidential client or competitive information.

An externally caused information security incident, such as a cyberattack, a phishing scam, virus, ransomware attack, denial-of-service attack, or an attack launched from within the Company could materially interrupt business operations or cause disclosure or modification of confidential client or competitive information.

In addition, our third-party vendors and other intermediaries with which we conduct business and transmit data could be subject to a successful cyberattack or other information security event, and we cannot ensure that such third parties have all appropriate controls in place to protect the confidentiality of information in the custody of those third parties.

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Our use of third-party vendors and cloud technologies could heighten this risk.

Should our technology operations be compromised, we may have to make significant investments to upgrade, repair or replace our technology infrastructure and may not be able to make such investments on a timely basis.

Although we maintain insurance coverage that we believe is reasonable, prudent and adequate for the purpose of our business, it may be insufficient to protect us against all losses and costs stemming from breaches of security, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events.

We could be subject to losses if we fail to properly safeguard and maintain sensitive and confidential information.

Should the technology operations on which we rely be compromised, we may have to make significant investments to upgrade, repair or replace our technology infrastructure or third-party vendors and may not be able to make such investments on a timely basis.

Although we maintain insurance coverage that we believe

is reasonable, prudent and adequate for the purpose of our business, it may be insufficient to protect us against all losses and costs stemming from breaches of security, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events.

We could be subject to losses if we fail to properly safeguard and maintain confidential information.

As part of our normal operations, we maintain and transmit confidential information about our clients, associates and other parties, as well as, proprietary information relating to our business operations.

We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data, is either prevented or detected in a timely manner.

We maintain a system of internal controls designed to provide reasonable assurance that both inadvertent errors and fraudulent activity, including misappropriation of assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data, is either prevented or detected in a timely manner.

We also leverage cloud-based solutions for the transmission and storage of this information.

Our systems, or those of third-party service providers we may use to maintain and transmit such information, could be victimized by unauthorized users or corrupted by computer viruses or other malicious software code.

Additionally, authorized persons could inadvertently or intentionally release confidential or proprietary information.

Additionally, authorized persons could inadvertently or intentionally release or alter confidential or proprietary information.

Such disclosure could, among other things:

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• allow competitors access to our proprietary business information,

subject us to liability for a failure to safeguard personal or confidential data,

result in the termination of contracts by our existing customers,

subject us to regulatory action, and

• subject us to liability for a failure to safeguard data of clients, associates, and other parties,

• result in the termination of contracts by our existing clients,

• subject us to regulatory action and potential litigation, and

• require significant capital and operating expenditures to investigate and remediate the breach.

Furthermore, if any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to personal or confidential data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.

Furthermore, if any person, including any of our associates, negligently disregards or intentionally breaches our established controls with respect to confidential data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.

We are subject to numerous laws and regulations designed to protect this information, such as U.S.

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In addition to the EU’s General Data Protection Regulation , other governmental authorities throughout the U.S.

and around the world are considering similar types of legislative and regulatory proposals concerning data protection.

For example, the California Consumer Privacy Act of 2018 (the “CCPA"), came into effect on January 1, 2020.

and around the world are considering or enacting similar types of legislative and regulatory proposals concerning data protection.

For example, the CCPA came into effect on January 1, 2020.

The CCPA requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, and allows consumers to opt out of any sales of their data to third parties and provides a new cause of action for data breaches.

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Each of these privacy, security, and data protection laws and regulations could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

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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