Goldman Sachs 2015 Annual Report Download - page 18

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Incentive Fees. In certain circumstances, we are also
entitled to receive incentive fees based on a percentage of a
fund’s or a separately managed account’s return, or when
the return exceeds a specified benchmark or other
performance targets. Such fees include overrides, which
consist of the increased share of the income and gains
derived primarily from our private equity funds when the
return on a fund’s investments over the life of the fund
exceeds certain threshold returns. Incentive fees are
recognized only when all material contingencies are
resolved.
Transaction Revenues. We receive commissions and net
spreads for facilitating transactional activity in high-net-
worth client accounts. In addition, we earn net interest
income primarily associated with client deposits and
margin lending activity undertaken by such clients.
Business Continuity and Information
Security
Business continuity and information security, including
cyber security, are high priorities for Goldman Sachs. Their
importance has been highlighted by numerous highly
publicized cyber attacks against financial institutions and
large consumer-based companies in recent years that
resulted in the unauthorized disclosure of personal
information of clients and customers and the theft and
destruction of corporate information, as well as extreme
weather events, such as Hurricane Sandy.
Our Business Continuity Program has been developed to
provide reasonable assurance of business continuity in the
event of disruptions at the firm’s critical facilities and to
comply with regulatory requirements, including those of
FINRA. Because we are a bank holding company, our
Business Continuity Program is also subject to review by
the Federal Reserve Board. The key elements of the
program are crisis planning and management, people
recovery, business recovery, systems and data recovery, and
process improvement. In the area of information security,
we have developed and implemented a framework of
principles, policies and technology to protect the
information provided to us by our clients and that of the
firm from cyber attacks and other misappropriation,
corruption or loss. Safeguards are applied to maintain the
confidentiality, integrity and availability of information.
Employees
Management believes that a major strength and principal
reason for the success of Goldman Sachs is the quality and
dedication of our people and the shared sense of being part
of a team. We strive to maintain a work environment that
fosters professionalism, excellence, diversity, cooperation
among our employees worldwide and high standards of
business ethics.
Instilling the Goldman Sachs culture in all employees is a
continuous process, in which training plays an important
part. All employees are offered the opportunity to
participate in education and periodic seminars that we
sponsor at various locations throughout the world. Another
important part of instilling the Goldman Sachs culture is
our employee review process. Employees are reviewed by
supervisors, co-workers and employees they supervise in a
360-degree review process that is integral to our team
approach, and includes an evaluation of an employee’s
performance with respect to risk management, compliance
and diversity. As of December 2015, we had 36,800 total
staff.
Competition
The financial services industry — and all of our
businesses — are intensely competitive, and we expect them
to remain so. Our competitors are other entities that
provide investment banking, securities and investment
management services, as well as those entities that make
investments in securities, commodities, derivatives, real
estate, loans and other financial assets. These entities
include brokers and dealers, investment banking firms,
commercial banks, insurance companies, investment
advisers, mutual funds, hedge funds, private equity funds
and merchant banks. We compete with some entities
globally and with others on a regional, product or niche
basis. Our competition is based on a number of factors,
including transaction execution, products and services,
innovation, reputation and price.
6Goldman Sachs 2015 Form 10-K