Bank of Montreal 2007 Annual Report Download - page 33

MD&A
BMO Financial Group 190th Annual Report 2007 29
The unfavourable resolution of any litigation could have a material
adverse effect on our financial results. Damage to our reputation could
also result, harming our future business prospects. Information about
legal and regulatory matters we currently face is provided in Note 28
on page 132 of the financial statements.
Accuracy and Completeness of Customer
and Counterparty Information
When deciding to extend credit or enter into other transactions with
customers and counterparties, we may rely on information provided
by or on behalf of those customers and counterparties, including
audited financial statements and other financial information. We also
may rely on representations made by customers and counterparties
that the information they provide is accurate and complete. Our finan-
cial results could be adversely affected if the financial statements or
other financial information provided by customers and counterparties
is materially misleading.
Execution of Strategic Plans
Our financial performance is influenced by our ability to execute
strategic plans developed by management. If these strategic plans do
not meet with success or if there is a change in these strategic plans,
our earnings could grow at a slower pace or decline.
Acquisitions
We perform thorough due diligence before completing an acquisition.
However, it is possible that we might make an acquisition that does not
subsequently perform in line with our financial or strategic objectives.
Higher than anticipated integration costs and failure to realize expected
cost savings could adversely affect our earnings after an acquisition.
Our post-acquisition performance is also contingent on retaining the
clients and key employees of acquired companies, and there can
be no assurance that we will always succeed in doing so.
Critical Accounting Estimates
We prepare our financial statements in accordance with Canadian
generally accepted accounting principles (GAAP). The application of
GAAP requires that management make significant judgments and
estimates that can affect when certain assets, liabilities, revenues and
expenses are recorded in our financial statements and their recorded
values. In making these judgments and estimates, we rely on the
best information available at the time. However, it is possible that cir-
cumstances may change or new information may become available.
Our financial results would be affected in the period in which any new
circumstances or information became apparent, and the amount of
the impact could be significant. More information is included in the
discussion of Critical Accounting Estimates on page 61.
Operational and Infrastructure Risks
We are exposed to many types of operational risk that affect all large
corporations. Such risks include the risk of fraud by employees or others,
unauthorized transactions by employees, and operational or human
error. We also face the risk that computer or telecommunications sys-
tems could fail, despite our efforts to maintain these systems in good
working order. Given the high volume of transactions we process on
a daily basis, certain errors may be repeated or compounded before
they are discovered and successfully rectified. Shortcomings or failures
of our internal processes, employees or systems, including any of
our financial, accounting or other data processing systems, could lead
to financial loss and damage to our reputation. In addition, despite
the contingency plans we have in place, our ability to conduct business
may be adversely affected by a disruption in the infrastructure that
supports our operations and the communities in which we do business.
Other Factors
Other factors beyond our control that may affect our future results are
noted in the Caution Regarding Forward-Looking Statements on page 28.
Additional factors, including credit and counterparty, market, liquidity
and funding, operational, business reputation, environmental and other
risks, are discussed in the Enterprise-Wide Risk Management section
starting on page 65.
We caution that the preceding discussion of factors that may
affect future results is not exhaustive. When relying on forward-looking
statements to make decisions with respect to BMO, investors and
others should carefully consider these factors, as well as other uncer-
tainties, potential events and industry and company-specific factors
that may adversely affect future results. We do not undertake to update
any forward-looking statements, whether written or oral, that may
be made from time to time by us or on our behalf.