Citibank 2010 Annual Report Download - page 82

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takeovers, unavailability of service, computer viruses or other malicious code,
cyberattacks and other events that could have an adverse security impact.
Despite the defensive measures Citigroup has taken, these threats may come
from external actors such as governments, organized crime and hackers,
third parties such as outsource or infrastructure-support providers and
application developers, or may originate internally from within Citigroup.
Given the high volume of transactions at Citigroup, certain errors may be
repeated or compounded before they are discovered and rectified.
Citigroup also faces the risk of operational disruption, failure, termination
or capacity constraints of any of the third parties that facilitate Citigroup’s
business activities, including exchanges, clearing agents, clearing houses or
other financial intermediaries. Such parties could also be the source of an
attack on or breach of Citigroup’s operational systems, data or infrastructure. In
addition, as Citigroup’s interconnectivity with its clients grows, it increasingly
faces the risk of operational failure with respect to its clients’ systems.
If one or more of these events occurs, it could potentially jeopardize
the confidential, proprietary and other information processed and stored
in, and transmitted through, Citigroup’s computer systems and networks,
or otherwise cause interruptions or malfunctions in Citi’s, as well as its
clients’ or other third parties’, operations, which could result in reputational
damage, financial losses, regulatory penalties and/or client dissatisfaction
or loss.
Failure to maintain the value of the Citigroup brand could
harm Citi’s global competitive advantage and its strategy.
Citi’s ability to continue to leverage its extensive global footprint, and thus
maintain one of its key competitive advantages, depends on the continued
strength and recognition of the Citigroup brand on a global basis, including
the emerging markets as other financial institutions grow their operations
in these markets and competition intensifies. The Citi name is integral to
its businesses as well as to the implementation of its strategy to be a global
bank for its clients and customers. Maintaining, promoting and positioning
the Citigroup brand will depend largely on the success of its ability to provide
consistent, high-quality financial services and products to these clients and
customers around the world. Citigroup’s brand could be harmed if its public
image or reputation were to be tarnished by negative publicity, whether or
not true, about Citigroup or the financial services industry in general, or
by a negative perception of Citigroup’s short-term or long-term financial
prospects. Failure to maintain its brand could hurt Citi’s competitive
advantage and its strategy.