Ameriprise 2011 Annual Report Download - page 50

offer certain product features. Any party that holds such a patent could make a claim of infringement against us. We may
also be subject to claims by third parties for breach of copyright, trademark, license usage rights, or misappropriation of
trade secret rights. Any such claims and any resulting litigation could result in significant liability for damages. If we were
found to have infringed or misappropriated a third party patent or other intellectual property rights, we could incur
substantial liability, and in some circumstances could be enjoined from providing certain products or services to our
customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or
alternatively could be required to enter into costly licensing arrangements with third parties, all of which could have a
material adverse effect on our business, results of operations and financial condition.
Breaches of security or interference with our technology infrastructure could harm our business.
Our business is reliant upon technology systems and networks, including systems and networks managed by third parties,
to process, transmit and store information and to conduct many of our business activities and transactions with clients,
affiliated advisors, vendors and other third parties. We are also subject to certain federal and state regulations that require
us to establish and maintain policies and procedures designed to protect sensitive client information. Maintaining the
integrity of our systems and networks is critical to the success of our business operations, including the retention of
affiliated advisors and clients, and to the protection of our proprietary information and our clients’ personal information.
Accordingly, any breaches or interference with such systems and networks by third parties or by our advisors or employees
may have a material adverse impact on our business, financial condition or results of operations.
We have implemented security measures designed to protect against breaches of security and other interference with our
systems and networks resulting from attacks by third parties, including hackers, and from employee or advisor error or
malfeasance. We also require third party vendors, who in the provision of services to us are provided with or process
information pertaining to our business or our clients, to meet certain information security standards. Despite these
measures, we cannot assure that our systems and networks will not be subject to breaches or interference. Any such
event may result in operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary
information or our clients’ personal information, which in turn may result in legal claims, regulatory scrutiny and liability,
reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of clients or affiliated
advisors or other damage to our business. In addition, the trend toward broad consumer and general public notification of
such incidents could exacerbate the harm to our business, financial condition or results of operations. Even if we
successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our
business and reputation if attempted security breaches are publicized. We cannot be certain that advances in criminal
capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system
or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other
security measures protecting the networks and systems used in connection with our business.
Protection from system interruptions and operating errors is important to our business. If we experience a
sustained interruption to our telecommunications or data processing systems, or other failure in operational
execution, it could harm our business.
System or network interruptions could delay and disrupt our ability to develop, deliver or maintain our products and
services, causing harm to our business and reputation and resulting in loss of affiliated advisors, clients or revenue.
Interruptions could be caused by operational failures arising from employee or advisor error or malfeasance, interference by
third parties, including hackers, our implementation of new technology, as well from our maintenance of existing
technology. Our financial, accounting, data processing or other operating systems and facilities may fail to operate properly
or become disabled as a result of events that are wholly or partially beyond our control, adversely affecting our ability to
process transactions or provide products and services to our clients. These interruptions can include fires, floods,
earthquakes and other natural disasters, power losses, equipment failures, failures of internal or vendor software or
systems and other events beyond our control. Further, we face the risk of operational failure, termination or capacity
constraints of any of the clearing agents, exchanges, clearing houses or other financial intermediaries that we use to
facilitate or are component providers to our securities transactions and other product manufacturing and distribution
activities. These risks are heightened by our deployment in response to both investor interest and evolution in the financial
markets of increasingly sophisticated products, such as those which incorporate automatic asset re-allocation, long/short
trading strategies or multiple portfolios or funds, and business-driven hedging, compliance and other risk management
strategies. Any such failure, termination or constraint could adversely impact our ability to effect transactions, service our
clients and manage our exposure to risk.
Risk management policies and procedures may not be fully effective in identifying or mitigating risk exposure in
all market environments or against all types of risk, including employee and financial advisor misconduct.
We have devoted significant resources to develop our risk management policies and procedures and will continue to do so.
Nonetheless, our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our
risk exposure in all market environments or against all types of risk. Many of our methods of managing risk and exposures
are based upon our use of observed historical market behavior or statistics based on historical models. During periods of
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