Price T Rowe Group (TROW) risk factors, FY2024 10-K

RISKS RELATING TO OUR BUSINESS AND THE FINANCIAL SERVICES INDUSTRY

1. 01Our revenues are based on the market value and composition of the assets under our management, all of which are subject to fluctuation caused by factors outside of our control
2. 02taking profits from their investments; portfolio risk characteristics, which could cause investors to move assets to other investment managers; and investor and market sentiments
3. 03A majority of our revenues are based on contracts with collective investment funds that are subject to termination without cause and on short notice
4. 04We operate in an intensely competitive industry. Competitive pressures may result in a loss of clients and their assets or compel us to reduce the fees we charge to clients, thereby reducing our revenues and net income
5. 05As part of our continued efforts to attract and retain clients, we develop and launch new products and services, which may require expenditure of resources and may expose us to new regulatory or compliance requirements as well as increased risk of operational or client service errors
6. 06The failure or negative performance of products offered by competitors may cause our products, which are similar, to be impacted irrespective of our performance
7. 07Our operations are complex and a failure to properly execute operational processes could have an adverse effect on our reputation and decrease our revenues
8. 08The quantitative models we use may contain errors, which could result in financial losses or adversely impact product performance and client relationships
9. 09Any damage to our reputation could harm our business and lead to a loss of revenues and net income or access to capital
10. 10Failure to comply with client contractual requirements and/or investment guidelines could result in costs of correction, damage awards or regulatory fines and penalties against us and loss of revenues due to client terminations
11. 11Our alternatives products include investments in private credit, real estate, and equity investments in private companies, which may expose us to new or increased risks and liabilities and to reputational harm
12. 12Our expenses are subject to significant fluctuations that could materially decrease net income
13. 13Our hedging strategies utilized to mitigate risk may not be effective, which could impact our earnings
14. 14Changes in tax laws or exposure to additional tax liabilities may impact our financial position or the marketability of the products and services we offer our clients
15. 15Examinations and audits by tax authorities could result in additional tax payments for prior periods, which could impact our financial results
16. 16We have contracted with third-party financial intermediaries that distribute our investment products and such relationships may not be available or profitable to us in the future
17. 17Natural disasters and other unpredictable events could adversely affect our operations and financial results
18. 18Our business, financial condition, and results of operation may be adversely affected by pandemics, epidemics or disease outbreaks
19. 19events on global financial markets and our clients’ investment decisions could adversely affect our revenue and operating results
20. 20Separately from the investments we manage for our clients, we currently have a substantial investment portfolio
21. 21The soundness of other financial services institutions could adversely affect us or the client portfolios we manage
22. 22We may review and pursue strategic transactions in order to maintain or enhance our competitive position and these could pose risks
23. 23Climate change-related risks could adversely affect our business, products, operations and clients, which may cause our AUM, revenues and earnings to decline
24. 24We are exposed to risks arising from our international operations
25. 25Our financial condition and liquidity would be adversely affected by losses on our seed capital and co-investments
26. 26Our success depends on our key personnel and our investment performance and financial results could be negatively affected by the loss of their services
27. 27We require significant quantities and types of technology to operate our business and would be adversely affected if we or our third party providers fail to maintain adequate and secure technology to conduct or expand our operations or if our technology became inoperative or obsolete
28. 28A cyberattack or a failure to implement effective information and cybersecurity policies, procedures and capabilities could disrupt operations and cause financial losses
29. 29We could be subject to losses if we fail to properly safeguard and maintain confidential data or our intellectual property
30. 30The recent advancements in and increased use of artificial intelligence (AI) present risks and challenges that may adversely impact our business
31. 31Compliance within a complex regulatory and legal environment which continues to evolve imposes significant financial and strategic costs on our business, and non-compliance could result in fines and penalties
32. 32Legal and regulatory developments in the mutual fund, retirement and investment advisory industry could increase our regulatory burden, impose significant financial and strategic costs on our business, and cause a loss of, or impact the servicing of, our clients and fund shareholders
33. 33could impose significant limitations on our operations, require changes to our business, or restrict our collection, use or storage of data or related technologies, which may increase our compliance expenses and make our business more costly or less efficient to conduct
34. 34We may become involved in legal and regulatory proceedings that may not be covered by insurance
35. 35Net capital requirements may impede the business operations of our subsidiaries
36. 36We may be impacted adversely by claims or litigation, including claims or litigation relating to our fiduciary responsibilities
37. 37We may be adversely affected by increased governmental and regulatory scrutiny or negative publicity