Barrett Business Services (BBSI) risk factors, FY2024 10-K

Risks Relating to Workers’ Compensation

1. 01Our ability to continue our business operations under our present service model is dependent on maintaining workers' compensation insurance coverage
2. 02For claims incurred under the insured program prior to July 1, 2021, the Company retains risk of loss up to the first $3.0 million per occurrence on policies issued after June 30, 2020, and $5.0 million per occurrence on policies issued before that date
3. 03Collateral requirements could increase beyond our ability to satisfy those requirements
4. 04Failure to manage the severity and frequency of workplace injuries will increase our workers’ compensation expenses

Risks Related to Technology

1. 05To succeed, we must constantly improve our technology to meet the expectations of our clients. If we fail to meet those expectations, we may lose clients and harm our business
2. 06We are dependent upon technology services, and if we experience damage, service interruptions or failures in our computer and telecommunications systems, our client relationships and our ability to attract new clients may be adversely affected
3. 07We depend on third-party software to provide our services and support our operations
4. 08We could be subject to reduced revenues, increased costs, liability claims, or harm to our reputation as a result of data theft, cyberattacks or other security vulnerabilities
5. 09Our business may be materially affected – either positively or negatively – by the emergence of disruptive new technologies or approaches enabled by the rapid pace of innovation unfolding in the artificial intelligence space
6. 10New service offerings may subject us to additional risks
7. 11To continue to grow revenues, we are dependent on retaining current clients and attracting new clients
8. 12Our business is subject to risks associated with geographic market concentration
9. 13Economic conditions may impact our ability to attract new clients and cause our existing clients to reduce staffing levels or cease operations
10. 14Our business depends on reliable access to labor, which may be affected by economic conditions, government policies, and public health crises
11. 15Our staffing business is vulnerable to economic fluctuations
12. 16Because we assume the obligation to make wage, tax and regulatory payments in respect of some employees, we are exposed to client credit risks
13. 17Increases in unemployment claims could raise our state and federal unemployment tax rates that we may not be able to pass on to our customers
14. 18If we are unable to maintain our brand image and corporate reputation, our business may suffer
15. 19Our service agreements may be terminated on short notice, leaving us vulnerable to a significant loss of customers in a short period of time, if business or regulatory conditions change or events occur that negatively affect our reputation
16. 20We may be exposed to employment‑related claims and costs and periodic litigation that could adversely affect our business and results of operations
17. 21possible claims relating to misuse of customer confidential information, misappropriation of assets or other similar claims
18. 22We are dependent on certain key personnel and recruitment and retention of key employees may be difficult and expensive
19. 23We depend on attracting and retaining qualified employees; during periods of economic growth, our costs to do so increase and attracting and retaining people becomes more difficult
20. 24We do not have an expansive in-house sales staff and therefore rely extensively on referral partners
21. 25Failure to maintain health insurance coverage or significant increases in the cost of health insurance coverage could adversely affect our business and results of operations
22. 26Our business is subject to risks associated with healthcare reforms
23. 27Failure to comply with applicable data security and privacy regulations related to our health care offering could adversely affect our business
24. 28We face competition from several other companies
25. 29aggressively price products and services and increase benefits in ways that we may not be able to match financially
26. 30Our investment portfolio is subject to market and credit risks, which could adversely impact our financial condition or results of operations
27. 31We may be unable to draw on our revolving credit facility in the future
28. 32Changes in our income tax positions or adverse outcomes resulting from on-going or future tax audits could harm our business, operating results, financial condition and prospects
29. 33Our long-term growth strategy may include acquisitions which could be unsuccessful or cause disruptions to our business, which could adversely impact our financial condition or results of operations

Risks Related to Our Regulatory Environment

1. 34Failure to interpret and comply with applicable federal and state payroll tax and unemployment tax laws could materially adversely affect our business, reputation, results of operations and financial condition
2. 35We operate in a complex regulatory environment, and failure to comply with applicable laws and regulations could adversely affect our business
3. 36If we are determined not to be an “employer” under certain laws and regulations, our clients may stop using our services, and we may be subject to additional liabilities
4. 37Changes in government regulations may result in restrictions or prohibitions applicable to the provision of employment services or the imposition of additional licensing, regulatory or tax requirements
5. 38increase taxes or make changes in the way in which taxes are calculated for providers of employment-related services
6. 39We may find it difficult to expand our business into additional states due to varying state regulatory requirements
7. 40Our wholly owned insurance companies are subject to substantial government regulation
8. 41Increasing regulatory focus on privacy and security issues and expanding laws and regulatory requirements could impact our business models and expose us to increased liability

Risks Related to Ownership of our Common Stock

1. 42Our stock price may be volatile or may decline, resulting in substantial losses for our stockholders
2. 43Maryland law and our Charter and bylaws contain provisions that could make the takeover of the Company more difficult