Aetna 2015 Annual Report Download - page 84

Annual Report- Page 78
• We may enter into merger or purchase agreements but, due to reasons within or outside our control, fail to
complete the related transactions, which could result in termination fees or other penalties that could be
material, material disruptions to our business and operations and negatively affect our reputation;
• In order to complete a proposed acquisition, we may be required to divest certain portions of our business;
and
• We may be involved in litigation related to mergers or acquisitions, including for matters which occurred
prior to the applicable closing, which may be costly to defend and may result in adverse rulings against us
that could be material.
We expect joint ventures to be a critical part of our business model transformation and inorganic growth strategies.
Joint ventures present risks that are different from acquisitions, including selection of appropriate joint venture
parties, initial and ongoing governance of the joint venture, growing the joint venture’s business in a manner
acceptable to all the parties, maintaining positive relationships among the joint venture parties and the customer,
and member and business disruption that may occur upon joint venture termination.
As we expand our international operations, we will increasingly face political, legal and compliance,
operational, regulatory, economic and other risks that we do not face or are more significant than in our
domestic operations. Our exposure to these risks is expected to increase.
As we expand our international operations, including through our 2014 acquisition of InterGlobal, we will
increasingly face political, legal and compliance, operational, regulatory, economic and other risks that we do not
face or that are more significant than in our domestic operations. These risks vary widely by country and include
varying regional and geopolitical business conditions and demands, government intervention and censorship,
discriminatory regulation, nationalization or expropriation of assets and pricing constraints. Our international
products need to meet country-specific customer and member preferences as well as country-specific legal
requirements, including those related to licensing, privacy, data storage, location, protection and security.
Our international operations increase our exposure to, and require us to devote significant management resources to
implement controls and systems to comply with, the privacy laws of non-U.S. jurisdictions and the anti-bribery,
anti-corruption and anti-money laundering laws of the United States (including the FCPA) and the United Kingdom
(including the Bribery Act 2010) and similar laws in other jurisdictions. Implementing our compliance policies,
internal controls and other systems upon our expansion into new countries and geographies may require the
investment of considerable management time and management, financial and other resources over a number of
years before any significant revenues or profits are generated. Violations of these laws and regulations could result
in fines, criminal sanctions against us, our officers or employees, restrictions or outright prohibitions on the conduct
of our business, and significant reputational harm. We must regularly reassess the size, capability and location of
our global infrastructure and make appropriate changes, and must have effective change management processes and
internal controls in place to address changes in our business and operations. Our success depends, in part, on our
ability to anticipate these risks and manage these difficulties, and the failure to do so could have a material adverse
effect on our business, operating results, financial position, reputation and/or long-term growth.
Our international operations require us to overcome logistical and other challenges based on differing languages,
cultures, legal and regulatory schemes and time zones. Our international operations encounter labor laws, customs
and employee relationships that can be difficult, less flexible than in our domestic operations and expensive to
modify or terminate. In some countries we are required to, or choose to, operate with local business partners, which
requires us to manage our partner relationships and may reduce our operational flexibility and ability to quickly
respond to business challenges.
In some countries we may be exposed to currency exchange controls or other restrictions that prevent us from
transferring funds internationally or converting local currencies into U.S. dollars or other currencies. Fluctuations in
foreign currency exchange rates may have an impact on our revenues, operating results and cash flows from our
international operations. Some of our operations are, and are increasingly likely to be, in emerging markets where
these risks are heightened. Any measures we may implement to reduce the effect of volatile currencies and other
risks on our international operations may not be effective.