ING Direct 2008 Annual Report Download - page 250

Risk factors (continued)
Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to operate our business.
Such market conditions may limit our ability to raise additional capital to support business growth, or to counter-balance the
consequences of losses or increased regulatory capital requirements. This could force us to delay raising capital, issue capital of different
types or under different terms than we would otherwise, or incur a higher cost of capital than in a more stable market environment.
This would have the potential to decrease both our profitability and our financial flexibility. Our results of operations, financial condition,
cash flows and regulatory capital position could be materially adversely affected by disruptions in the financial markets.
In the course of 2008 governments around the world, including the Dutch government, have implemented measures providing
assistance to financial institutions, in certain cases requiring (indirect) influence on or changes to governance and remuneration practices.
In certain cases governments have even nationalised companies or parts thereof. The measures adopted in the Netherlands consist in
both liquidity provision and capital reinforcement, and a Dutch Capital Guarantee Scheme. The liquidity and capital reinforcement
measures apply for a period of one year as of 10 October 2008, while the Dutch Credit Guarantee Scheme is scheduled to run through
31 December 2009. So far we have been able to benefit from these measures. Going forward, the Dutch authorities will look at each
application individually. Potential future transactions with the Dutch government or any other government or actions by such government
regarding ING could adversely impact the position or rights of shareholders.
Because our life and non-life insurance and reinsurance businesses are subject to losses from unforeseeable and/or
catastrophic events, which are inherently unpredictable, our actual claims amount may exceed our established reserves
or we may experience an abrupt interruption of activities, each of which could result in lower net results and have an
adverse effect on our results of operations.
In our life and non-life insurance and reinsurance businesses, we are subject to losses from natural and man-made catastrophic events.
Such events include, without limitation, weather and other natural catastrophes such as hurricanes, floods, earthquakes and epidemics,
as well as events such as terrorist attacks. The frequency and severity of such events, and the losses associated with them, are inherently
unpredictable and can not always be adequately reserved for. Furthermore, we are subject to actuarial and underwriting risks such as,
for instance, mortality, morbidity, and adverse home claims development which result from the pricing and acceptance of insurance
contracts. In accordance with industry practices, modelling of natural catastrophes are performed and risk mitigation measures are made.
In case claims occur, reserves are established based on estimates using actuarial projection techniques. The process of estimating is based
on information available at the time the reserves are originally established and includes updates when more information becomes
available. Although we continually review the adequacy of the established claim reserves, and based on current information, we believe
our claim reserves are sufficient, there can be no assurances that our actual claims experience will not exceed our estimated claim
reserves. If actual claim amounts exceed the estimated claim reserves, our earnings may be reduced and our net results may be adversely
affected. In addition, because unforeseeable and/or catastrophic events can lead to an abrupt interruption of activities, our banking and
insurance operations may be subject to losses resulting from such disruptions. Losses can relate to property, financial assets, trading
positions, insurance and pension benefits to employees and also to key personnel. If our business continuity plans are not able to be put
into action or do not take such events into account, losses may further increase.
Because we operate in highly regulated industries, laws, regulations and regulatory policies or the enforcement thereof
that govern activities in our various business lines could have an effect on our reputation, operations and net results.
We are subject to detailed banking, insurance, asset management and other financial services laws and government regulation in each of
the jurisdictions in which we conduct business. Regulatory agencies have broad administrative power over many aspects of the financial
services business, which may include liquidity, capital adequacy and permitted investments, ethical issues, money laundering, privacy,
record keeping, and marketing and selling practices. Banking, insurance and other financial services laws, regulations and policies
currently governing us and our subsidiaries may also change at any time in ways which have an adverse effect on our business, and it is
difficult to predict the timing or form of any future regulatory or enforcement initiatives in respect thereof. Also, bank regulators and
other supervisory authorities in the EU, the US and elsewhere continue to scrutinise payment processing and other transactions under
regulations governing such matters as money-laundering, prohibited transactions with countries subject to sanctions, and bribery or
other anti-corruption measures. Regulation is becoming increasingly more extensive and complex and regulators are focusing increased
scrutiny on the industries in which we operate, often requiring additional Company resources. These regulations can serve to limit our
activities, including through our net capital, customer protection and market conduct requirements, and restrictions on businesses in
which we can operate or invest. If we fail to address, or appear to fail to address, appropriately any of these matters, our reputation could
be harmed and we could be subject to additional legal risk, which could, in turn, increase the size and number of claims and damages
asserted against us or subject us to enforcement actions, fines and penalties.
In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the
regulation of the financial services industry. Most of the principal markets where we conduct our business have adopted, or are currently
considering, major legislative and/or regulatory initiatives in response to the financial crisis. In particular, governmental and regulatory
authorities in the Netherlands, the United Kingdom, the United States and elsewhere are implementing measures to increase regulatory
control in their respective financial markets and financial services sectors, including in the areas of prudential rules, capital requirements,
executive compensation and financial reporting, among others. Most recently, governments in the Netherlands and abroad have
intervened on an unprecedented scale, responding to stresses experienced in the global financial markets. Some of the measures adopted
subject us and other institutions for which they were designed to additional restrictions, oversight or costs. For restrictions related to the
2.4 Additional information
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