PNC Bank 2010 Annual Report Download - page 26
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Please find page 26 of the 2010 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.materially impact the valuation of assets as reported within
our consolidated financial statements, and the period-to-period
changes in value could vary significantly.
We are subject to operational risk.
Like all businesses, we are subject to operational risk, which
represents the risk of loss resulting from human error,
inadequate or failed internal processes and systems, and
external events. Operational risk also encompasses
compliance and legal risk, which is the risk of loss from
violations of, or noncompliance with, laws, rules, regulations,
prescribed practices or ethical standards, as well as the risk of
our noncompliance with contractual and other obligations. We
are also exposed to operational risk through our outsourcing
arrangements, and the effect that changes in circumstances or
capabilities of our outsourcing vendors can have on our ability
to continue to perform operational functions necessary to our
business. Although we seek to mitigate operational risk
through a system of internal controls which we review and
update, no system of controls, however well designed and
maintained, is infallible. Control weaknesses or failures or
other operational risks could result in charges, increased
operational costs, harm to our reputation or foregone business
opportunities.
We continually encounter technological change and we
could falter in our ability to remain competitive in this
arena.
The financial services industry is continually undergoing rapid
technological change with frequent introductions of new
technology-driven products and services. The effective use of
technology increases efficiency and enables financial
institutions to better serve customers and to reduce costs. Our
continued success depends, in part, upon our ability to address
the needs of our customers by using technology to provide
products and services that satisfy customer demands and
create efficiencies in our operations. We may not be able to
effectively implement new technology-driven products and
services that allow us to remain competitive or be successful
in marketing these products and services to our customers.
Our information systems may experience interruptions or
breaches in security.
We also rely heavily on communications and information
systems to conduct our business. Any failure, interruption or
breach in security of these systems could result in disruptions
to our accounting, deposit, loan and other systems, and
adversely affect our customer relationships. While we have
policies and procedures designed to prevent or limit the effect
of these possible events, there can be no assurance that any
such failure, interruption or security breach will not occur or,
if any does occur, that it can be sufficiently remediated. The
occurrence of any such failure, interruption or security breach
of our systems could damage our reputation, result in a loss of
customer business, subject us to additional regulatory scrutiny,
or expose us to civil litigation and financial liability.
Our business and financial results could be impacted
materially by adverse results in legal proceedings and
governmental investigations and inquiries.
Many aspects of our business involve substantial risk of legal
liability. We have been named or threatened to be named as
defendants in various legal proceedings arising from our
business activities (and in some cases from the activities of
companies we have acquired). In addition, we are regularly
the subject of governmental investigations and other forms of
regulatory inquiry. We also are at risk when we have agreed to
indemnify others for legal proceedings and governmental
investigations and inquiries they face, such as in connection
with the sale of a business or assets by us. The results of these
legal proceedings and governmental investigations and
inquiries could lead to significant monetary damages or
penalties, restrictions on the way in which we conduct our
business, or reputational harm.
Although we establish accruals for legal proceedings when
information related to the loss contingencies represented by
those matters indicates both that a loss is probable and that the
amount of loss can be reasonably estimated, we do not have
accruals for all legal proceedings where we face a risk of loss.
In addition, amounts accrued may not represent the ultimate
loss to us from the legal proceedings in question. Thus, our
ultimate losses may be higher or lower, and possibly
significantly so, than the amounts accrued for legal loss
contingencies.
Our business and financial performance could be
adversely affected, directly or indirectly, by disasters, by
terrorist activities or by international hostilities.
Neither the occurrence nor the potential impact of disasters,
terrorist activities and international hostilities can be
predicted. However, these occurrences could impact us
directly (for example, by causing significant damage to our
facilities or preventing us from conducting our business in the
ordinary course), or indirectly as a result of their impact on
our borrowers, depositors, other customers, suppliers or other
counterparties. We could also suffer adverse consequences to
the extent that disasters, terrorist activities or international
hostilities affect the financial markets or the economy in
general or in any particular region. These types of impacts
could lead, for example, to an increase in delinquencies,
bankruptcies or defaults that could result in our experiencing
higher levels of nonperforming assets, net charge-offs and
provisions for credit losses.
Our ability to mitigate the adverse consequences of such
occurrences is in part dependent on the quality of our
resiliency planning, and our ability, if any, to anticipate the
nature of any such event that occurs. The adverse impact of
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