33 added · 43 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
A vulnerability in our service providers’ software or systems, a failure of our service providers’ safeguards, policies or procedures, or a cyber-attack or other information security incident affecting any of these third parties could harm our business. 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 19 In recent years, several financial services firms suffered successful cyber-attacks launched both domestically and from abroad, resulting in the disruption of services to clients, loss or misappropriation of sensitive or private information, and reputational harm.
Our success in the competitive environment in which we operate requires consistent investment of capital and human resources in innovation, particularly in light of the current “FinTech” environment, in which the financial services industry is undergoing rapid technological changes and financial institutions are investing significantly in evaluating new technologies, such as AI, machine learning, blockchain and other distributed ledger technologies, and developing potentially industry-changing new products, services and industry standards.
Liquidity Risks • If we do not manage our liquidity effectively, our business could suffer. • If the Bank is unable to supply the Corporation with funds over time, the Corporation could be unable to meet its various obligations. • We may need to raise additional capital in the future, which may not be available to us or may only be available on unfavorable terms. • Any downgrades in our credit ratings, or an actual or perceived reduction in our financial strength, could affect our borrowing costs, capital costs and liquidity adversely. 14 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION Regulatory and Legal Risks • Failure to comply with regulations and/or supervisory expectations can result in penalties and regulatory constraints that restrict our ability to grow or even conduct our business, or that reduce earnings. • We are subject to extensive and evolving government regulation and supervision that impacts our operations.
Please see “Market Risk” in the “Risk Management” section included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a more detailed discussion of interest rate and market risks we face. 16 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION Changes in the monetary, trade and other policies of various regulatory authorities, central banks, governments and international agencies may reduce our earnings and affect our growth prospects negatively.
Please see “Market Risk” in the “Risk Management” section included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a more detailed discussion of market risks we face. 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 17 In addition, in past periods, reductions in the volatility of currency-trading markets, the level of cross-border investing activity, and the demand for borrowing securities or willingness to lend such securities have affected our earnings from activities such as foreign exchange trading and securities lending negatively.
Additionally, our computer, communications, data processing, networks, backup, business continuity or other operating, information or technology systems, including those that we outsource to providers, may fail to operate properly or become disabled, overloaded or damaged as a result of a number of factors, including events that are wholly or partially beyond our control, which could have a negative effect on our ability to conduct our business activities. 18 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION The third parties with which we do business also are susceptible to the foregoing risks (including regarding the third parties with which they are similarly interconnected or on which they otherwise rely), and our or their business operations and activities may therefore be affected adversely, perhaps materially, by failures, disruptions, terminations, software bugs or errors, natural disasters or malfeasance by, or attacks or constraints on, one or more financial, technology, infrastructure or government institutions or intermediaries with whom we or they are interconnected or conduct business.
Given the high volume of transactions we process, errors that affect earnings may be repeated or compounded before they are discovered and corrected. 20 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION Our dependence on technology, and the need to update frequently our technology infrastructure, exposes us to risks that also can result in losses.
Increased expenses have affected—and a failure to control our costs and expenses in the future, whether as a result of inflation or otherwise, could affect—our earnings negatively. 22 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION Pandemics, natural disasters, global climate change, acts of terrorism, geopolitical tensions, and global conflicts may have a negative impact on our business and operations.
Similarly, changes in laws or failure to comply with new requirements or with future changes in laws or regulations could impact our results of operations and financial condition negatively. 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 25 We are subject to extensive and evolving government regulation and supervision that impacts our operations.
The failure of other banks and financial institutions and the measures taken by governments and regulators in response to these events could adversely impact our business, financial condition and results of operations. 26 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which could increase the cost of doing business, compliance risks and potential liability.
Stablecoins Act of 2025 (GENIUS ACT) and potential enactment of the Digital Asst Market Clarity Act of 2025 (CLARITY Act) or similar market structure legislation, may affect our clients’ needs and expectations for products and services.
Further, our competitors or other third parties may incorporate AI into their products more quickly or more successfully than u
No longer disclosed
Moreover, the turnover of the U.S. presidential administration is expected to result in certain changes in the leadership and senior staffs of the federal banking agencies which are likely to impact the rulemaking, supervision, examination and enforcement priorities and policies of such agencies, the potential impacts of which, if any, we cannot predict at this time. 24 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION Further, the regulatory framework for AI and similar technologies, and automated decision making, is changing rapidly.
For example, proposed changes to applicable capital and liquidity requirements, such as the Basel III Endgame Proposal and the long-term debt proposal, could result in increased expenses or cost of funding, which could negatively affect our financial results or our ability to pay dividends and engage in share repurchases.
A vulnerability in our service providers’ software or systems, a failure of our service providers’ safeguards, policies or procedures, or a cyber-attack or other information security incident affecting any of these third parties could harm our business.
In recent years, several financial services firms suffered successful cyber-attacks launched both domestically and from abroad, resulting in the disruption of services to clients, loss or misappropriation of sensitive or private information, and reputational harm.
For example, given the current rapid pace of change, we are unable to predict what, if any, changes to the laws and regulations applicable to the financial services industry may be enacted by the new U.S.
A competitive labor market may also have the effect of heightening many of these risks. 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION 27 If we do not develop and execute strategic plans successfully, our growth may be impacted negatively.
Instead, in March 2021, the UK and the EU agreed upon a framework for voluntary regulatory cooperation and dialogue on financial services issues between the parties in a memorandum of understanding, which was signed on June 27, 2023.
Moreover, laws in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach.
For example, in recent years, we realized notable losses on the sale of available for sale securities and we may realize additional losses in the future.
Liquidity Risks • If we do not manage our liquidity effectively, our business could suffer. • If the Bank is unable to supply the Corporation with funds over time, the Corporation could be unable to meet its various obligations. • We may need to raise additional capital in the future, which may not be available to us or may only be available on unfavorable terms. • Any downgrades in our credit ratings, or an actual or perceived reduction in our financial strength, could affect our borrowing costs, capital costs and liquidity adversely.
Regulatory and Legal Risks • Failure to comply with regulations and/or supervisory expectations can result in penalties and regulatory constraints that restrict our ability to grow or even conduct our business, or that reduce earnings. • We are subject to extensive and evolving government regulation and supervision that impacts our operations.
Please see “Market Risk” in the “Risk Management” section included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a more detailed discussion of interest rate and market risks we face.