Huntington National Bank 2014 Annual Report Download - page 26

20
Despite efforts to ensure the integrity of our systems, we will not be able to anticipate all security breaches of these types, nor will
we be able to implement guaranteed preventive measures against such security breaches. Persistent attackers may succeed in
penetrating defenses given enough resources, time and motive. The techniques used by cyber criminals change frequently, may not
be recognized until launched and can originate from a wide variety of sources, including outside groups such as external service
providers, organized crime affiliates, terrorist organizations or hostile foreign governments. These risks may increase in the future as
we continue to increase our mobile-payment and other internet-based product offerings and expand our internal usage of web-based
products and applications.
Even the most advanced internal control environment may be vulnerable to compromise. Targeted social engineering attacks are
becoming more sophisticated and are extremely difficult to prevent. The successful social engineer will attempt to fraudulently induce
employees, customers or other users of our systems to disclose sensitive information in order to gain access to its data or that of its
clients.
A successful penetration or circumvention of system security could cause us serious negative consequences, including significant
disruption of operations, misappropriation of confidential information, or damage to our computers or systems or those of our
customers and counterparties. A successful security breach could result in violations of applicable privacy and other laws, financial
loss to us or to our customers, loss of confidence in our security measures, significant litigation exposure, and harm to our reputation,
all of which could have a material adverse effect on the Company.
2. The resolution of significant pending litigation, if unfavorable, could have a material adverse effect on our results of
operations for a particular period.
We face legal risks in our businesses, and the volume of claims and amount of damages and penalties claimed in litigation and
regulatory proceedings against financial institutions remain high. Substantial legal liability against us could have material adverse
financial effects or cause significant reputational harm to us, which in turn could seriously harm our business prospects. It is possible
that the ultimate resolution of these matters, if unfavorable, may be material to the results of operations for a particular reporting
period.
Note 20 of the Notes to Consolidated Financial Statements updates the status of litigation concerning Cyberco Holdings, Inc.
Although the bank maintains litigation reserves related to this case, the ultimate resolution of the matter, if unfavorable, may be
material to our results of operations for a particular reporting period.
3. We face significant operational risks which could lead to financial loss, expensive litigation, and loss of confidence by
our customers, regulators, and capital markets.
We are exposed to many types of operational risks, including the risk of fraud or theft by employees or outsiders, unauthorized
transactions by employees or outsiders, or operational errors by employees. Huntington executes against a significant number of
controls, a large percent of which are manual and dependent on adequate execution by colleagues and third party service providers.
There is inherent risk that unknown single points of failure through the execution chain could give rise to material loss through
inadvertent errors or malicious attack. These operational risks could lead to financial loss, expensive litigation, and loss of confidence
by our customers, regulators, and the capital markets.
Moreover, negative public opinion can result from our actual or alleged conduct in any number of activities, including lending
practices, corporate governance, and acquisitions and from actions taken by government regulators and community organizations in
response to those activities. Negative public opinion can adversely affect our ability to attract and retain customers and can also
expose us to litigation and regulatory action.
Relative to acquisitions, we cannot predict if, or when, we will be able to identify and attract acquisition candidates or make
acquisitions on favorable terms. We incur risks and challenges associated with the integration of acquired institutions in a timely and
efficient manner, and we cannot guarantee that we will be successful in retaining existing customer relationships or achieving
anticipated operating efficiencies.
4. Failure to maintain effective internal controls over financial reporting in the future could impair our ability to
accurately and timely report our financial results or prevent fraud, resulting in loss of investor confidence and adversely
affecting our business and stock price.