Aetna 2006 Annual Report Download - page 39

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We face a wide range of risks, and our success depends on our ability to identify, prioritize and appropriately
manage our enterprise risk exposures.
As a large company operating in a complex industry, we encounter a variety of risks. The risks we face include,
among other matters, the range of industry, competitive, regulatory, financial, operational or external risks identified
in this Risk Factors discussion. In recent periods, we have devoted additional resources to developing and
integrating enterprise-wide risk management processes. Failure to identify, prioritize and appropriately manage or
mitigate these risks, including risk concentrations across different industries, segments and geographies, can affect
our profitability, our ability to retain or grow business, or, in the event of extreme circumstances, our financial
condition or viability.
Sales of our products and services are dependent on our ability to attract, retain and provide support to a
network of internal sales personnel and third party brokers and consultants.
Our products are sold primarily through our sales personnel, who frequently work with independent brokers and
consultants who assist in the production and servicing of business. Our sales would be adversely affected if we are
unable to attract or retain sales personnel or if we do not adequately provide support, training and education to this
sales network regarding our product portfolio, which is complex.
We expect that management will need to focus simultaneously on multiple strategic and operational
initiatives as we seek to further improve our financial performance, profitably grow our business and
differentiate our products and services; if we do not successfully implement these initiatives, or if these
initiatives do not achieve their objectives, our results could be materially adversely affected.
Our management will need to continue to focus on simultaneously executing multiple strategic and operational
projects and initiatives, including, among other things, addressing rising medical costs, achieving profitable
membership growth, further improving the efficiency of our operations, managing certain significant technology
projects, further improving relations with health care providers, negotiating customer or provider contracting
changes, and implementing other business process improvements. The future performance of our business will
depend in large part on our ability to design and implement these initiatives, some of which will occur over several
years. If these initiatives do not achieve their objectives or result in increased medical costs, our operating results
could be adversely affected.
Our profitability may be adversely affected if we are unable to contract with providers on favorable terms
and otherwise maintain favorable provider relationships.
Our profitability is dependent in part upon our ability to contract competitively while maintaining favorable
relationships with hospitals, physicians and other health benefits providers. That ability is affected by the rates we
pay providers for services rendered to our members, our business practices and processes, provider payment and
other provider relations practices, as well as factors not associated with us that impact these providers. The
sufficiency and quality of our networks of available providers is also an important factor when customers consider
our products and services. The failure to maintain or to secure new cost-effective health care provider contracts
may result in a loss in membership and/or higher medical costs, which could adversely affect our operating results.
Negative public perception of the health benefits industry, or of the industry’s or our practices, can
adversely affect our profitability.
The health benefits industry is subject to negative publicity, which can arise either from actual or perceived
shortfalls regarding the industry’ s or our business practices and/or products. The risk of negative publicity is
particularly high in an election year. This risk may be increased as we offer new products, such as products with
limited benefits, targeted at market segments, such as the uninsured, beyond those in which we traditionally have
operated. Negative publicity may further increase our costs of doing business and adversely affect our profitability
by:
• Adversely affecting the Aetna brand particularly,
• Adversely affecting our ability to market our products and/or services,
• Requiring us to change our products and/or services, or
• Increasing the regulatory and legislative requirements with which we must comply.