Korn Ferry (KFY) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We face significant competition. Competition in our industries could result in lost market share, reduced demand for our services, and/or require us to charge lower prices for our services, which could adversely affect our operating results and future growth
2. 02We are limited in our ability to recruit candidates from certain of our clients due to off-limit agreements with those clients and for client relation and marketing purposes. Such limitations could harm our business
3. 03Failure to attract and retain qualified and experienced consultants could result in a loss of clients which in turn could cause a decline in our revenue and harm to our business
4. 04Failing to maintain our professional reputation and the goodwill associated with our brand name could seriously harm our business
5. 05As we develop new services, obtain clients, enter new practices and lines of business, and focus more of our business on providing a full range of client solutions, the demands on our business and our operating and legal risks may increase
6. 06We are subject to potential legal liability from clients, employees, candidates for employment, stockholders and others. Insurance coverage may not be available to cover all of our potential liability and available coverage may not be sufficient to cover all claims that we may incur
7. 07We are subject to numerous and varied government regulations across the jurisdictions in which we operate
8. 08Our business and operations are impacted by developing laws and regulations, as well as evolving investor and customer expectations with regard to, corporate responsibility matters and reporting, which expose us to numerous risks
9. 09Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability

Risks Related to Our Profitability

1. 10We may not be able to align our cost structure with our revenue level, which in turn may require additional financing in the future that may not be available at all or may be available only on unfavorable terms
2. 11Our financial results could suffer if we are unable to achieve or maintain adequate utilization and suitable billing rates for our consultants
3. 12The profitability of our fixed-fee engagements with clients may not meet our expectations if we underestimate the cost of these engagements when pricing them
4. 13Inflationary pressure has and may continue to adversely impact our profitability

Risks Related to Accounting and Taxation

1. 14Foreign currency exchange rate risks affect our results of operations
2. 15We have deferred tax assets that we may not be able to use under certain circumstances

Risks Related to Our Financing/Indebtedness

1. 16Our level of indebtedness could adversely affect our financial condition, our ability to operate our business, react to changes in the economy or our industry, prevent us from fulfilling our obligations under our indebtedness and could divert our cash flow from operations for debt payments
2. 17Despite our indebtedness levels, we and our subsidiaries may still incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage
3. 18Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly
4. 19We may be unable to service our indebtedness
5. 20The agreements governing our debt impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities
6. 21We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver, including financial covenants as defined in the Amended Credit Agreement. See “Note 11 –Long-Term Debt” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K
7. 22A decline in our operating results or available cash could cause us to experience difficulties in complying with covenants contained in more than one agreement, which could result in our bankruptcy or liquidation

Risks Related to Technology, Cybersecurity and Intellectual Property

1. 23Use of AI may result in operational challenges, legal liability, reputational concerns and privacy concerns and competitive risks
2. 24Technological advances may significantly disrupt the labor market and weaken demand for human capital at a rapid rate
3. 25Reliance on third party technology to provide technology and other support for both our internal operations and delivering services to our clients could adversely affect our ability to execute our strategic initiative if these third parties fail to perform their obligations
4. 26We have invested in specialized technology and other IP for which we may fail to fully recover our investment, or which may become obsolete
5. 27We rely heavily on our information systems, and if we lose that technology, or fail to further develop our technology, our business could be harmed
6. 28We are subject to risk as it relates to software that we license from third parties
7. 29We are dependent on third parties for the execution of certain critical functions
8. 30Cybersecurity vulnerabilities and incidents have and may again lead to the improper disclosure of information obtained from our clients, candidates and employees, which could result in liability and harm to our reputation
9. 31Data security, data privacy and data protection laws, such as the European Union General Data Protection Regulation (“GDPR”), and other evolving regulations and cross-border data transfer restrictions, may limit the use of our services, increase our costs and adversely affect our business
10. 32Social media platforms present risks and challenges that can cause damage to our brand and reputation

Risks Related to Acquisitions

1. 33Acquisitions, or our inability to effect acquisitions, may have an adverse effect on our business
2. 34We may not be able to successfully integrate or realize the expected benefits from our acquisitions
3. 35If our acquisitions are not successfully integrated, our business, financial condition and results of operations, as well as our professional reputation, could be materially adversely affected
4. 36Businesses we acquire may have liabilities or adverse operating issues that could harm our operating results
5. 37As a result of our acquisitions, we have substantial amounts of goodwill and intangible assets, and changes in business conditions could cause these assets to become impaired, requiring write-downs that would adversely affect our operating results

Risks Related to Global Operations

1. 38We are a company whose performance is tied to local and global economic conditions that can be cyclical
2. 39We face risks associated with social and political instability, legal requirements and economic conditions in our international operations

Risks Related to Our Dividend Policy

1. 40You may not receive the level of dividends provided for in the dividend policy our Board of Directors has adopted or any dividends at all
2. 41Our ability to pay dividends is restricted by agreements governing our debt, including our Amended Credit Agreement and indenture governing our Notes, and by Delaware law
3. 42Our dividend policy may limit our ability to pursue growth opportunities

Risks Related to Our Stockholders

1. 43We have provisions that make an acquisition of us more difficult and expensive
2. 44Failing to retain our executive officers and key personnel or integrate new members of our senior management who are critical to our business may prevent us from successfully managing our business in the future
3. 45Changes in our accounting estimates and assumptions and other financial reporting standards could negatively affect our financial position and results of operations
4. 46Unfavorable tax laws, tax law changes and tax authority rulings may adversely affect results
5. 47Limited protection of our IP could harm our business, and we face the risk that our services or products may infringe upon the IP rights of others
6. 48We may be subject to the actions of activist stockholders, which could disrupt our business
7. 49Bank failures or other events affecting financial institutions could have a material adverse effect on our business, results of operations or financial condition, or have other adverse consequences