Goldman Sachs Group (GS) risk factors, FY2024 10-K

Other

1. 01We face a variety of risks that are substantial and inherent in our businesses
2. 02Market Developments and General Business Environment
3. 03Our businesses have been and may in the future be adversely affected by conditions in the global financial markets and broader economic conditions
4. 04Our businesses have been and may in the future be adversely affected by declining asset values, particularly where we have net “long” positions, receive fees based on the value of assets managed, or receive or post collateral
5. 05In our exchange-based market-making activities, we are obligated by stock exchange rules to maintain an orderly market, including by purchasing securities in a declining market. In markets where asset values are declining and in volatile markets, this results in losses and an increased need for liquidity
6. 06Our market-making activities have been and may in the future be affected by changes in the levels of market volatility
7. 07In certain circumstances, market uncertainty or general declines in market or economic activity may adversely affect our client intermediation businesses by decreasing levels of overall activity or by decreasing volatility
8. 08Our asset management and wealth management businesses have been and may in the future be adversely affected by the poor investment performance of our investment products or a client preference for products other than those which we offer or for products that generate lower fees
9. 09Inflation has had, and could continue to have, a negative effect on our business, results of operations and financial condition
10. 10Our liquidity, profitability and businesses may be adversely affected by an inability to access the debt capital markets or to sell assets
11. 11Our businesses have been and may in the future be adversely affected by disruptions or lack of liquidity in the credit markets, including reduced access to credit and higher costs of obtaining credit
12. 12Reductions in our credit ratings or an increase in our credit spreads may adversely affect our liquidity and cost of funding
13. 13Group Inc. is a holding company and its liquidity depends on payments and loans from its subsidiaries, many of which are subject to legal, regulatory and other restrictions on providing funds or assets to Group Inc
14. 14Our businesses, profitability and liquidity may be adversely affected by deterioration in the credit quality of or defaults by third parties
15. 15Concentration of risk increases the potential for significant losses in our market-making, underwriting, investing and financing activities
16. 16Derivative transactions and delayed documentation or settlements expose us to credit risk, unexpected risks and potential losses
17. 17A failure in our or third-party operational systems or human error, malfeasance or other misconduct, could impair our liquidity, disrupt our businesses, result in the disclosure of confidential information, damage our reputation and cause losses
18. 18A failure or disruption in our infrastructure, or in the operational systems or infrastructure of third parties, could impair our liquidity, disrupt our businesses, damage our reputation and cause losses
19. 19The development and use of AI present risks and challenges that may adversely impact our business
20. 20A failure to protect our computer systems, networks and information, and our clients’ information, against cyber attacks and similar threats could impair our ability to conduct our businesses, result in the disclosure, theft or destruction of confidential information, damage our reputation and cause losses
21. 21We have in the past incurred and may in the future incur losses as a result of ineffective risk management processes and strategies
22. 22Prudent risk management, as well as regulatory restrictions, may cause us to limit our exposure to counterparties, geographic areas or markets, which may limit our business opportunities and increase the cost of our funding or hedging activities
23. 23Our businesses and those of our clients are subject to extensive and pervasive regulation around the world
24. 24GS Bank USA is assessed pursuant to a strategic plan for CRA compliance purposes. Any failure to comply with CRA requirements could negatively impact GS Bank USA’s CRA ratings, cause reputational harm and result in limits on our ability to make future acquisitions or engage in certain new activities
25. 25A failure to appropriately identify and address potential conflicts of interest has in the past and may in the future adversely affect our businesses
26. 26In addition, our status as a BHC subjects us to heightened regulation and increased regulatory scrutiny by the FRB with respect to transactions between GS Bank USA and its subsidiaries and entities that are or could be viewed as affiliates of ours and, under the Volcker Rule, transactions between us and covered funds
27. 27We may be adversely affected by increased governmental and regulatory scrutiny or negative publicity
28. 28Substantial civil or criminal liability or significant regulatory action against us has in the past had and may in the future have material adverse financial effects and significant reputational consequences, which in turn could seriously harm our business prospects
29. 29In conducting our businesses around the world, we are subject to political, legal, regulatory, tax and other risks that are inherent in operating in many countries
30. 30The application of regulatory strategies and requirements in the U.S. and in non-U.S. jurisdictions to facilitate the orderly resolution of large financial institutions could create greater risk of loss for Group Inc.’s security holders
31. 31The application of Group Inc.’s proposed resolution strategy could result in greater losses for Group Inc.’s security holders
32. 32Our commodities activities, particularly our physical commodities activities, subject us to extensive regulation and involve certain potential risks, including environmental, reputational and other risks that may expose us to significant liabilities and costs
33. 33We make investments in and finance entities that engage in the production, storage and transportation of numerous commodities, including many of the commodities referenced above
34. 34The occurrence of any of such events may prevent us from performing under our agreements with clients, may impair our operations or financial results and may result in litigation, regulatory action, negative publicity or other reputational harm
35. 35Our results have been and may in the future be adversely affected by the composition of our client base
36. 36The financial services industry is highly competitive
37. 37The growth of electronic trading and the introduction of new products and technologies, including trading and distributed ledger technologies, such as cryptocurrencies, and AI technologies, has increased competition
38. 38We have invested significant resources into the development of electronic trading systems and expect to continue to do so, but there is no assurance that the revenues generated by these systems will yield an adequate return, particularly given the generally lower commissions arising from electronic trades
39. 39Our businesses would be adversely affected if we are unable to hire and retain qualified employees
40. 40Our businesses, financial condition, liquidity and results of operations have been and may in the future be adversely affected by unforeseen or catastrophic events, including pandemics, terrorist attacks, wars, extreme weather events or other natural disasters
41. 41Climate change could disrupt our businesses and adversely affect client activity levels and the creditworthiness of our clients and counterparties, and our actual or perceived action or inaction relating to climate change could result in damage to our reputation
42. 42Our business, financial condition, liquidity and results of operations have been adversely affected by disruptions in the global economy caused by conflicts, and related sanctions and other developments
43. 43The conflicts in the Middle East could also affect and harm our business and increase market uncertainty. The impact of these conflicts on our business and operations is uncertain and therefore cannot be predicted
44. 44Certain of our businesses and our funding instruments may be adversely affected by changes in reference rates, currencies, indexes, baskets or ETFs to which products we offer or funding that we raise are linked
45. 45Our business, financial condition, liquidity and results of operations may be adversely affected by disruptions in the global economy caused by escalating tensions between the U.S. and China
46. 46We face enhanced risks as we operate in new locations and transact with a broader array of clients and counterparties
47. 47We may not be able to fully realize the expected benefits or synergies from acquisitions or other business initiatives in the time frames we expect, or at all