Ameriprise 2013 Annual Report Download - page 52

The operation of our business in foreign markets and our investments in non-U.S. denominated securities and
investment products subjects us to exchange rate and other risks in connection with earnings and income
generated overseas.
While we are a U.S.-based company, a significant portion of our business operations occurs outside of the U.S. and some
of our investments are not denominated in U.S. dollars. As a result, we are exposed to certain foreign currency exchange
risks that could reduce U.S. dollar equivalent earnings as well as negatively impact our general account and other
proprietary investment portfolios. Appreciation of the U.S. dollar could unfavorably affect net income from foreign
operations, the value of non-U.S. dollar denominated investments and investments in foreign subsidiaries. In comparison,
depreciation of the U.S. dollar could positively affect our net income from foreign operations and the value of non-U.S.
dollar denominated investments, though such depreciation could also diminish investor, creditor and rating organizations’
perceptions of our company compared to peer companies that have a relatively greater proportion of foreign operations or
investments.
We may seek to mitigate these risks by employing various hedging strategies including entering into derivative contracts.
Currency fluctuations, including the effect of changes in the value of U.S. dollar denominated investments that vary from
the amounts ultimately needed to hedge our exposure to changes in the U.S. dollar equivalent of earnings and equity of
these operations, may adversely affect our results of operations, cash flows or financial condition.
The occurrence of natural or man-made disasters and catastrophes could adversely affect our results of
operations and financial condition.
The occurrence of natural disasters and catastrophes, including earthquakes, hurricanes, floods, tornadoes, fires, blackout,
severe winter weather, explosions, pandemic disease and man-made disasters, including acts of terrorism, insurrections
and military actions, could adversely affect our results of operations or financial condition. Such disasters and catastrophes
may damage our facilities, preventing our employees and financial advisors from performing their roles or otherwise
disturbing our ordinary business operations and by impacting insurance claims, as described below. These impacts could
be particularly severe to the extent they affect our computer-based data processing, transmission, storage and retrieval
systems and destroy or release valuable data. Such disasters and catastrophes may also impact us indirectly by changing
the condition and behaviors of our customers, business counterparties and regulators, as well as by causing declines or
volatility in the economic and financial markets.
The potential effects of natural and man-made disasters and catastrophes on certain of our businesses include but are not
limited to the following: a catastrophic loss of life may materially increase the amount of or accelerate the timing in which
benefits are paid under our insurance policies; significant widespread property damage may materially increase the amount
of claims submitted under our property casualty insurance policies; an increase in claims and any resulting increase in
claims reserves caused by a disaster may harm the financial condition of our reinsurers, thereby impacting the cost and
availability of reinsurance and the probability of default on reinsurance recoveries; and declines and volatility in the
financial markets may decrease the value of our assets under management and administration, which could harm our
financial condition and reduce our management fees.
We cannot predict the timing and frequency with which natural and man-made disasters and catastrophes may occur, nor
can we predict the impact that changing climate conditions may have on the frequency and severity of natural disasters or
on overall economic stability and sustainability. As such, we cannot be sure that our actions to identify and mitigate the
risks associated with such disasters and catastrophes, including predictive modeling, establishing liabilities for expected
claims, acquiring insurance and reinsurance and developing business continuity plans, will be effective.
Legal, Regulatory and Tax Risks
Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm our
businesses.
We are, and in the future may be, subject to legal and regulatory actions in the ordinary course of our operations, both
domestically and internationally. Actions brought against us may result in awards, settlements, penalties, injunctions or
other adverse results, including reputational damage. In addition, we may incur significant expenses in connection with our
defense against such actions regardless of their outcome. Various regulatory and governmental bodies have the authority
to review our products and business practices and those of our employees and independent financial advisors and to bring
regulatory or other legal actions against us if, in their view, our practices, or those of our employees or advisors, are
improper. Pending legal and regulatory actions include proceedings relating to aspects of our businesses and operations
that are specific to us and proceedings that are typical of the industries and businesses in which we operate. Some of
these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. See Item 3 of this
Annual Report on Form 10-K — ’’Legal Proceedings.’’ In or as a result of turbulent times such as those experienced in
35