Keycorp (KEY) risk factors, FY2024 10-K

Other

1. 01We have concentrated credit exposure in commercial and industrial loans, commercial real estate loans, and commercial leases
2. 02Should the fundamentals of the commercial real estate market deteriorate, our financial condition and results of operations could be adversely affected
3. 03We are subject to the risk of defaults by our loan clients and counterparties
4. 04Declining asset prices could adversely affect us
5. 05The most recent recession in the U.S., resulting from the impact of the COVID-19 pandemic, did not have significant lasting impact on collateral value. However, there are still risks to economic stability that could reverse recent stable trends in asset prices
6. 06Various factors may cause our allowance for loan and lease losses to increase or to be inadequate
7. 07Geopolitical destabilization could adversely impact our loan portfolios
8. 08We are subject to interest rate risk, which could adversely affect net interest income
9. 09Our profitability depends upon economic conditions in the geographic regions where we have significant operations and in certain market segments in which we conduct significant business
10. 10The soundness of other financial institutions could adversely affect us
11. 11We are subject to liquidity risk, which could negatively affect our funding levels
12. 12Capital and liquidity requirements imposed by banking regulations require banks and BHCs to maintain more and higher quality capital and more and higher quality liquid assets
13. 13Federal agencies’ actions to ensure stability of the U.S. economy and financial system may have costly or disruptive effects on us
14. 14The Federal Home Loan Bank (FHLB) system continues to be a source of funding. Changes in FHLB lending policy could adversely affect our liquidity and profitability
15. 15We rely on dividends by our subsidiaries for most of our funds
16. 16Our credit ratings affect our liquidity position
17. 17We are subject to a variety of operational risks
18. 18We and third parties on which we rely (including their downstream service providers) may experience a cyberattack, technology failure, information system or security breach or interruption
19. 19We rely on third parties to perform significant operational services for us, and their failure to perform to our standards or other issues of concern with them could harm us
20. 20Our framework for managing risks and mitigating losses may not be effective
21. 21We are, and may in the future be, subject to claims, litigation, arbitration, investigations, and governmental proceedings, which could result in significant financial liability and/or reputational harm
22. 22Our controls and procedures may fail or be circumvented, and our methods of reducing risk exposure may not be effective
23. 23Our operations and financial performance could be adversely affected by severe weather and natural disasters exacerbated by climate change
24. 24Societal and governmental responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers
25. 25The increased use of remote work infrastructure has expanded potential attack vectors and resulted in increased operational risks
26. 26We are subject to extensive government regulation, supervision, and tax legislation
27. 27We are subject to complex and evolving laws and regulations regarding privacy and cybersecurity, which could limit our ability to pursue business initiatives, increase the cost of doing business and subject us to compliance risks and potential liability
28. 28We may not realize the expected benefits of our strategic initiatives
29. 29We operate in a highly competitive industry
30. 30Maintaining or increasing our market share depends upon our ability to adapt our products and services to evolving industry standards and consumer preferences, while maintaining competitive products and services
31. 31process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer loans and deposits and related income generated from those products
32. 32We may not be able to attract and retain skilled people
33. 33Acquisitions or strategic partnerships may disrupt our business and dilute shareholder value
34. 34Scotiabank holds a significant equity interest in our business and may exercise influence over us, including through its ability to designate up to two directors to our Board of Directors
35. 35Our ability to attract and retain customers, clients, investors, and highly skilled management and employees is affected by our reputation. Damage to our reputation could also adversely impact our credit ratings and access to capital markets
36. 36Key is subject to corporate responsibility and sustainability efforts risks that could adversely affect our reputation and our business and results of operations
37. 37We rely on quantitative models to manage certain accounting, risk management, capital planning, and treasury functions
38. 38Some models we use employ methodologies based on artificial intelligence (AI) or machine learning (ML). These models bring some unique complexities from those of traditional models, such as the need for large datasets for training, the potential for algorithmic bias, and the difficulty in interpreting model decisions
39. 39The preparation of our consolidated financial statements requires us to make subjective determinations and use estimates that may vary from actual results and materially impact our financial condition and results of operations
40. 40Changes in accounting policies, standards, and interpretations could materially affect how we report our financial condition and results of operations
41. 41Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations