Ameriprise 2015 Annual Report Download - page 56

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, attacks by third parties, failures of internal or vendor personnel, software, equipment or
systems and other events beyond our control. Although we have developed and maintain a comprehensive business
continuity plan and require our key technology vendors and service providers to do the same, there are inherent limitations
in such plans and they might not, despite testing and monitoring, operate as designed. Further, we cannot control the
execution of any business continuity plans implemented by our service providers.
We rely on third-party service providers and vendors for certain communications, technology and business functions, and
we face the risk of operational failure (including, without limitation, failure caused by an inaccuracy, untimeliness or other
deficiency in data reporting), termination or capacity constraints of any of the clearing agents, exchanges, clearing houses
or other third-party service providers that we use to facilitate or are component providers to our securities transactions and
other product manufacturing and distribution activities. For example, most of our applications run on a technology
infrastructure managed on an outsourced basis by IBM since 2002. Under this arrangement, IBM is responsible for all
mainframe, mid-range, computing network and storage operations, which includes a portion of our web hosting operations,
and we are subject to the risks of any operational failure, termination or other restraints in this arrangement. 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 or
investment or financial management strategies. Any such failure, termination or constraint could adversely impact our
ability to effect transactions, service our clients, manage our exposure to risk, or otherwise achieve desired outcomes.
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
market volatility or due to unforeseen events, the historically-derived correlations upon which these methods are based
may not be valid. As a result, these methods may not predict future exposures accurately, which could be significantly
greater than what our models indicate. This could cause us to incur investment losses or cause our hedging and other risk
management strategies to be ineffective. Other risk management methods depend upon the evaluation of information
regarding markets, clients, catastrophe occurrence or other matters that are publicly available or otherwise accessible to
us, which may not always be accurate, complete, up-to-date or properly evaluated.
Moreover, we are subject to the risks of errors and misconduct by our employees and advisors, such as fraud,
non-compliance with policies, recommending transactions that are not suitable, and improperly using or disclosing
confidential information. These risks are difficult to detect in advance and deter, and could harm our business, results of
operations or financial condition. We are further subject to the risk of nonperformance or inadequate performance of
contractual obligations by third-party vendors of products and services that are used in our businesses. Management of
operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a
large number of transactions and events, and these policies and procedures may not be fully effective in mitigating our risk
exposure in all market environments or against all types of risk. Insurance and other traditional risk-shifting tools may be
held by or available to us in order to manage certain exposures, but they are subject to terms such as deductibles,
coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency.
As a holding company, we depend on the ability of our subsidiaries to transfer funds to us to pay dividends and
to meet our obligations.
We act as a holding company for our subsidiaries, through which substantially all of our operations are conducted.
Dividends from our subsidiaries and permitted payments to us under our intercompany arrangements with our subsidiaries
are our principal sources of cash to pay shareholder dividends and to meet our other financial obligations. These
obligations include our operating expenses and interest and principal on our borrowings. If the cash we receive from our
subsidiaries pursuant to dividend payment and intercompany arrangements is insufficient for us to fund any of these
obligations, we may be required to raise cash through the incurrence of additional debt, the issuance of additional equity
or the sale of assets. If any of this happens, it could adversely impact our financial condition and results of operations.
Insurance and securities laws and regulations regulate the ability of many of our subsidiaries (such as our insurance and
brokerage subsidiaries and our face-amount certificate company) to pay dividends or make other permitted payments. See
Item 1 of this Annual Report on Form 10-K — ‘‘Regulation’’ as well as the information contained in Part II, Item 7 under
the heading ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resources.’’ In addition to the various regulatory restrictions that constrain our subsidiaries’ ability to pay dividends
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