MoneyGram 2015 Annual Report Download - page 23

Table of Contents
Moreover, we have made, and may make in the future, secured or unsecured loans to retail agents under limited circumstances or allow agents to retain our funds
for a period of time before remitting them to us. As of December 31, 2015 , we had credit exposure to our agents of $652.1 million in the aggregate spread across
15,888 agents.
Our official check outsourcing business is conducted through banks and credit unions. Their customers issue official checks and money orders and remit to us the
face amounts of those instruments the day after they are issued. We may be liable for payment on all of those instruments. As of December 31, 2015 , we had credit
exposure to our official check financial institution customers of $265.0 million in the aggregate spread across 904 financial institutions.
We monitor the creditworthiness of our agents and financial institution customers on an ongoing basis. There can be no assurance that the models and approaches
we use to assess and monitor the creditworthiness of our agents and financial institution customers will be sufficiently predictive, and we may be unable to detect
and take steps to timely mitigate an increased credit risk.
In the event of an agent bankruptcy, we would generally be in the position of creditor, possibly with limited security or financial guarantees of performance, and
we would therefore be at risk of a reduced recovery. We are not insured against credit losses, except in circumstances of agent theft or fraud. Significant credit
losses could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to adequately protect our brand and the intellectual property rights related to our existing and any new or enhanced products and services, or
if we infringe on the rights of others, our business, prospects, financial condition and results of operations could be adversely affected.
The MoneyGram brand is important to our business. We utilize trademark registrations in various countries and other tools to protect our brand. Our business
would be harmed if we were unable to adequately protect our brand and the value of our brand was to decrease as a result.
We rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to protect the intellectual
property rights related to our products and services. We also investigate the intellectual property rights of third parties to prevent our infringement of those rights.
We may be subject to third-party claims alleging that we infringe their intellectual property rights or have misappropriated other proprietary rights. We may be
required to spend resources to defend such claims or to protect and police our own rights. Some of our intellectual property rights may not be protected by
intellectual property laws, particularly in foreign jurisdictions. The loss of our intellectual property protection, the inability to secure or enforce intellectual
property protection or to successfully defend against claims of intellectual property infringement could harm our business, prospects, financial condition and
results of operation.
Failure to attract and retain key employees could have a material adverse impact on our business.
Our success depends to a large extent upon our ability to attract and retain key employees. Qualified individuals with experience in our industry are in high
demand. In addition, legal or enforcement actions against compliance and other personnel in the money transfer industry may affect our ability to attract and retain
key employees. The lack of management continuity or the loss of one or more members of our executive management team could harm our business and future
development. A failure to attract and retain key personnel could also have a material adverse impact on our business.
The operation of retail locations and acquisition or start-up of businesses create risks and may adversely affect our business, financial condition and results of
operations.
We have Company-operated retail locations for the sale of our products and services. We may be subject to additional laws and regulations that are triggered by
our ownership of retail locations and our employment of individuals who staff our retail locations. There are also certain risks inherent in operating any retail
location, including theft, personal injury and property damage and long-term lease obligations.
We may, from time to time, acquire or start-up businesses both inside and outside of the U.S. The acquisition and integration of businesses involve a number of
risks. Such risks include, among others:
• risks in connection with acquisitions and start-ups and potential expenses that could be incurred in connection therewith;
•risks related to the integration of new businesses, including integrating facilities, personnel, financial systems, accounting systems, distribution, operations and
general operating procedures;
• the diversion of capital and management’s attention from our core business;
• the impact on our financial condition and results of operations due to the timing of the new business or the failure of the new business to meet operating
expectations; and
• the assumption of unknown liabilities relating to the new business.
Risks associated with acquiring or starting new businesses could result in increased costs and other operating inefficiencies, which could have an adverse effect on
our business, financial condition and results of operations.
22