US Bank 2015 Annual Report Download - page 165

damage and financial loss. This mishandling or misuse could
include, for example, situations in which the information is
erroneously provided to parties who are not permitted to have
the information, either by fault of the Company’s systems,
employees, or third party service providers, or where the
information is intercepted or otherwise inappropriately taken by
third parties. In the event of a breakdown in the internal control
system, improper operation of systems or improper employee
or third party actions, the Company could suffer financial loss,
face legal or regulatory action and suffer damage to its
reputation.
The Company could lose market share and experience
increased costs if it does not effectively develop and
implement new technology The financial services industry is
continually undergoing rapid technological change with
frequent introductions of new technology-driven products and
services, including innovative ways that customers can make
payments or manage their accounts, such as through the use
of digital wallets or digital currencies. The Company’s
continued success depends, in part, upon its ability to address
customer needs by using technology to provide products and
services that customers want to adopt, and create additional
efficiencies in the Company’s operations. Developing and
deploying new technology-driven products and services can
also involve costs that the Company may not recover and
divert resources away from other product development efforts.
The Company may not be able to effectively develop and
implement profitable new technology-driven products and
services or be successful in marketing these products and
services to its customers. Failure to successfully keep pace
with technological change affecting the financial services
industry could harm the Company’s competitive position and
negatively affect its revenue and profit.
Negative publicity could damage the Company’s
reputation and adversely impact its business and
financial results Reputational risk, or the risk to the
Company’s business, earnings and capital from negative
public opinion, is inherent in the Company’s business and
increased substantially because of the financial crisis
beginning in 2008. The reputation of the financial services
industry in general has been damaged as a result of the
financial crisis and other matters affecting the financial
services industry, including mortgage foreclosure issues.
Negative public opinion about the financial services industry
generally or the Company specifically could adversely affect
the Company’s ability to keep and attract customers, and
expose the Company to litigation and regulatory action.
Negative public opinion can result from the Company’s actual
or alleged conduct in any number of activities, including
lending practices, mortgage servicing and foreclosure
practices, corporate governance, executive compensation,
regulatory compliance, mergers and acquisitions, and related
disclosure, sharing or inadequate protection of customer
information, and actions taken by government regulators and
community organizations in response to that conduct.
Because most of the Company’s businesses operate under
the “U.S. Bank” brand, actual or alleged conduct by one
business can result in negative public opinion about other
businesses the Company operates. Although the Company
takes steps to minimize reputation risk in dealing with
customers and other constituencies, the Company, as a large
diversified financial services company with a high industry
profile, is inherently exposed to this risk.
The Company’s 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 or international hostilities can be
predicted. However, these occurrences could impact the
Company directly (for example, by interrupting the Company’s
systems, which could prevent the Company from obtaining
deposits, originating loans and processing and controlling its
flow of business; causing significant damage to the Company’s
facilities; or otherwise preventing the Company from conducting
business in the ordinary course), or indirectly as a result of their
impact on the Company’s borrowers, depositors, other
customers, suppliers or other counterparties (for example, by
damaging properties pledged as collateral for the Company’s
loans or impairing the ability of certain borrowers to repay their
loans). The Company 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 the Company experiencing higher
levels of nonperforming assets, net charge-offs and provisions
for credit losses.
The Company’s ability to mitigate the adverse
consequences of these occurrences is in part dependent on
the quality of the Company’s resiliency planning, and the
Company’s ability, if any, to anticipate the nature of any such
event that occurs. The adverse impact of disasters, terrorist
activities or international hostilities also could be increased to
the extent that there is a lack of preparedness on the part of
national or regional emergency responders or on the part of
other organizations and businesses that the Company
transacts with, particularly those that it depends upon, but
has no control over. Additionally, the nature and level of
natural disasters may be exacerbated by global climate
change.
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