Morgan Stanley 2009 Annual Report Download - page 28

services industries are uncertain and evolving, and it may be difficult for us to determine the exact requirements
of local laws in every market. Our inability to remain in compliance with local laws in a particular market could
have a significant and negative effect not only on our business in that market but also on our reputation generally.
We are also subject to the enhanced risk that transactions we structure might not be legally enforceable in all
cases.
Various emerging market countries have experienced severe political, economic and financial disruptions,
including significant devaluations of their currencies, capital and currency exchange controls, high rates of
inflation and low or negative growth rates in their economies. Crime and corruption, as well as issues of security
and personal safety, also exist in certain of these countries. These conditions could adversely impact our
businesses and increase volatility in financial markets generally.
The emergence of a pandemic or other widespread health emergency, or concerns over the possibility of such an
emergency, could create economic and financial disruptions in emerging markets and other areas throughout the
world, and could lead to operational difficulties (including travel limitations) that could impair our ability to
manage our businesses around the world.
As a U.S. company, we are required to comply with the economic sanctions and embargo programs administered
by OFAC and similar multi-national bodies and governmental agencies worldwide and the FCPA. A violation of
a sanction or embargo program or of the FCPA could subject us, and individual employees, to a regulatory
enforcement action as well as significant civil and criminal penalties.
Acquisition Risk.
We may be unable to fully capture the expected value from acquisitions, joint ventures, minority stakes and
strategic alliances.
In connection with past or future acquisitions, combinations, joint ventures or strategic alliances, we face
numerous risks and uncertainties combining or integrating the relevant businesses and systems, including the
need to combine accounting and data processing systems and management controls and to integrate relationships
with clients and business partners. In the case of joint ventures and minority stakes, we are subject to additional
risks and uncertainties because we may be dependent upon, and subject to liability, losses or reputational damage
relating to, systems, controls and personnel that are not under our control. In addition, conflicts or disagreements
between us and our joint venture partners may negatively impact the benefits to be achieved by the joint venture.
There is no assurance that any of our acquisitions will be successfully integrated or yield all of the positive
benefits anticipated. If we are not able to integrate successfully our past and future acquisitions, there is a risk
that our results of operations, financial condition and cash flows may be materially and adversely affected.
Certain of our recent and planned business initiatives, including expansions of existing businesses, may bring us
into contact, directly or indirectly, with individuals and entities that are not within our traditional client and
counterparty base and may expose us to new asset classes and new markets. These business activities expose us
to new and enhanced risks, greater regulatory scrutiny of these activities, increased credit-related, sovereign and
operational risks, and reputational concerns regarding the manner in which these assets are being operated or
held.
Risk Management.
Our hedging strategies and other risk management techniques may not be fully effective in mitigating our risk
exposure in all market environments or against all types of risk.
We have devoted significant resources to develop our risk management policies and procedures and expect to
continue to do so in the future. Nonetheless, our hedging strategies and other risk management techniques may
not be fully effective in mitigating our risk exposure in all market environments or against all types of risk,
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