National Rural Utilities Cooperative Finance (NRUC) risk factors, FY2026 10-K

Credit Risks

1. 01Adverse changes, developments or uncertainties in the rural electric utility industry could adversely impact the operations or financial performance of our member electric cooperatives, which, in turn, could have an adverse impact on our financial results80% rewritten
2. 02Technological advancements may change the way electricity is generated and transmitted or the way broadband is deployed, which could adversely affect the business operations of our members and negatively impact the credit quality of our loan portfolio and financial results
3. 03We may obtain entities or other assets through foreclosure, which would subject us to the same performance and financial risks as any other owner or operator of similar businesses or assets
4. 04The nonperformance of our derivative counterparties could impair our financial results
5. 05A decline in our credit rating could trigger payments under our derivative agreements, which could impair our financial results

Liquidity Risks

1. 06If we are unable to access the capital markets or other external sources for funding, our liquidity position may be negatively affected and we may not have sufficient funds to meet all of our financial obligations as they become due
2. 07A reduction in the credit ratings for our debt could adversely affect our liquidity and/or cost of debt

Market Risks

1. 08Changes in the level and direction of interest rates or our ability to successfully manage interest rate risk could adversely affect our financial results and condition

Operations and Business Risks

1. 09Damage to our reputation could harm our business, including our ability to attract highly skilled employees and our competitive position
2. 10Cybersecurity incidents affecting our information technology systems, or those managed by third parties, may damage relationships with our members or subject us to reputational, financial, legal or operational consequences
3. 11We use, and our competitors and third-party service providers may develop or incorporate, AI technology in certain business processes, services or products. The development and use of AI presents a number of risks and challenges to our business in addition to the cybersecurity concerns addressed aboveNew
4. 12Our elected directors also serve as officers or directors of certain of our individual member cooperatives, which may result in a potential conflict of interest with respect to loans, guarantees and extensions of credit that we may make to or on behalf of such member cooperatives
5. 13Natural or man-made disasters, including widespread health emergencies, or other external events beyond our control such as acts of terrorism or war, could disrupt our business and adversely affect our results of operations and financial condition
6. 14Competition from other lenders could adversely impact our financial results
7. 15The failure to attract, retain or motivate highly skilled and qualified employees could impair our ability to successfully execute our strategic plan and otherwise adversely affect our business

Regulatory and Compliance Risks

1. 16Loss of our tax-exempt status could adversely affect our earnings
2. 17If CFC were to lose its status as a 501(c)(4) organization, it would become a taxable cooperative and would be required to pay income tax based on its taxable income. If this event occurred, we would evaluate all options available to modify CFC’s structure and/or operations to minimize any potential tax liability
3. 18Changes in accounting standards or assumptions in applying accounting policies could materially impact our financial statements24% rewritten