Cognizant Technology Solutions (CTSH) FY2025 10-K Risk Factors: 3 New, 3 Dropped

What the changes say

AI risks now cover public scrutiny and talent capacity, while competition explicitly includes digital and AI capabilities.
Sustainability risks were split into evolving obligations and external dependencies, while the prior NextGen execution risk was dropped.
Legal exposure is more specific, including client-customer claims, subcontractor disputes, acquisitions, securities actions and insurance limitations.
Geopolitical risk now expressly includes tariffs, trade restrictions and retaliation; delivery-risk language removes named conflicts.

What changed since the prior 10-K

New

NewRisks Related to our Business and Operations
Finally, AI technology is subject to heightened public and media scrutiny, including with respect to workplace impacts, privacy and ethical concerns. Negative public perception could adversely affect customer demand and our investments in AI technology, which could in turn adversely affect our business or reputation
Negative scrutiny of AI’s workplace, privacy and ethical effects could reduce customer demand, AI investment returns and Cognizant’s reputation, alongside skilled-worker shortages.
NewRisks Related to our Business and Operations
Evolving and conflicting sustainability and societal related expectations or standards could adversely affect our business or damage our reputation
Changing sustainability laws, disclosure standards and stakeholder expectations could increase compliance costs, cause sanctions or restrict market access, while suppliers and emissions technology remain uncertain.
NewLegal, Regulatory and Legislative Risks
While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as deductibles and caps on amounts recoverable
Client, subcontractor, acquisition and securities disputes could create significant liability and litigation costs that insurance exclusions, deductibles and coverage caps may not cover.

Dropped

DroppedRisks Related to our Business and Operations
Finally, AI technology may be viewed negatively by the public due to media scrutiny over issues such as job displacement, privacy and ethical AI concerns. This negative perception can adversely affect our investments in AI technology, both directly and indirectly
DroppedRisks Related to our Business and Operations
Our NextGen program and the associated reductions in headcount and consolidation of office space could disrupt our business and may not result in anticipated savings
DroppedRisks Related to our Business and Operations
Failure to meet ESG expectations or standards or achieve our ESG ambitions could adversely affect our business or damage our reputation

Reworded

82% rewrittenLegal, Regulatory and Legislative Risks
Our business subjects us to considerable potential exposure to litigation and legal claims and we could be materially adversely affected if we incur legal liability
Litigation exposure now expressly includes clients’ customers; the supplied text no longer includes the prior insurance limitation, addressed separately in 18.
Was: Our business subjects us to considerable potential exposure to litigation and legal claims and could be materially adversely affected if we incur legal liability
55% rewrittenRisks Related to our Business and Operations
Our use of AI technologies may not be successful and may present business, financial, legal and reputational risks
The supplied wording is unchanged, continuing to emphasize AI investment, operating costs and evolving legal compliance.
32% rewrittenRisks Related to our Business and Operations
Extreme weather and risks arising from the transition to a lower-carbon economy may impact our business
The supplied wording is unchanged, covering extreme weather, climate policies, infrastructure disruption and lower-carbon transition costs.
Was: Climate change, extreme weather and risks arising from the transition to a lower-carbon economy may impact our business
28% rewrittenRisks Related to our Business and Operations
If our risk management, business resilience and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation
Delivery coordination changed from “between” to “among,” and named Russia-Ukraine and Middle East conflicts were removed.
Was: If our risk management, business continuity and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation
25% rewrittenRisks Related to our Business and Operations
We face intense and evolving competition and our service offerings must keep pace with significant technological advances in the rapidly changing markets we compete in
Digital capabilities were expanded to explicitly include AI as a basis of competition.
24% rewrittenRisks Related to our Business and Operations
We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from cybersecurity incidents
Cybersecurity exposure now expressly includes vendors and vendor operations, in addition to Cognizant and clients.
23% rewrittenRisks Related to our Business and Operations
Our results of operations could be adversely affected by macroeconomic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated
The risk now adds geopolitical conditions, tariffs, trade restrictions and retaliation, while removing the specific 2024 discretionary-spending example.
Was: Our results of operations could be adversely affected by economic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated
22% rewrittenLegal, Regulatory and Legislative Risks
We are subject to numerous and evolving legal and regulatory requirements and client expectations in the many jurisdictions in which we operate, and violations of, unfavorable changes in or an inability to meet such requirements or expectations could harm our business
The supplied wording is unchanged, continuing to cover conflicting global laws, regulations and client expectations across numerous areas.

All 20 risk factors

Headings as the filing states them, in filing order.

Risks Related to our Business and Operations

01Our results of operations could be adversely affected by macroeconomic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated23% rewritten
02We face intense and evolving competition and our service offerings must keep pace with significant technological advances in the rapidly changing markets we compete in25% rewritten
03Our use of AI technologies may not be successful and may present business, financial, legal and reputational risks55% rewritten
04Finally, AI technology is subject to heightened public and media scrutiny, including with respect to workplace impacts, privacy and ethical concerns. Negative public perception could adversely affect customer demand and our investments in AI technology, which could in turn adversely affect our business or reputationNew
05Many of our contracts with clients are short-term, and our business, results of operations and financial condition could be adversely affected if our clients terminate their contracts on short notice
06Our failure to meet specified service levels or milestones required by certain of our client contracts may result in our client contracts being less profitable, potential liability for penalties or damages or reputational harm
07We may not be able to achieve our profitability goals and maintain our capital return strategy
08We face challenges related to growing our business organically as well as inorganically through acquisitions, and we may not be able to achieve our targeted growth rates or successfully acquire, invest in or integrate businesses
09We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from cybersecurity incidents24% rewritten
10Fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations, can adversely impact our profitability, results of operations and financial condition
11Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse impact upon our business, liquidity, results of operations and financial condition
12Extreme weather and risks arising from the transition to a lower-carbon economy may impact our business32% rewritten
13Evolving and conflicting sustainability and societal related expectations or standards could adversely affect our business or damage our reputationNew
14If our risk management, business resilience and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation28% rewritten

Legal, Regulatory and Legislative Risks

15Anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair our ability to serve our clients and materially adversely affect our business, results of operations and financial condition
16We are subject to numerous and evolving legal and regulatory requirements and client expectations in the many jurisdictions in which we operate, and violations of, unfavorable changes in or an inability to meet such requirements or expectations could harm our business22% rewritten
17Changes in tax laws or in their interpretation or enforcement, failure by us to adapt our corporate structure and intercompany arrangements or adverse outcomes of tax audits, investigations or proceedings could have a material adverse effect on our effective tax rate, results of operations and financial condition
18Our business subjects us to considerable potential exposure to litigation and legal claims and we could be materially adversely affected if we incur legal liability82% rewritten
19While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as deductibles and caps on amounts recoverableNew
20If we infringe upon the IP rights of others or our IP rights are infringed upon, our business may be adversely affected

Cognizant Technology Solutions (CTSH) risk factors, FY2025 10-K

What the changes say

What changed since the prior 10-K

All 20 risk factors

Other Cognizant Technology Solutions 10-Ks