365 added · 368 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
For example, some competitors are beginning to deploy artificial intelligence-driven pricing and portfolio management, which could enable them to optimize service pricing or investment performance in ways that attract clients.
Any significant interruption in our India center’s operations, for example, a prolonged network blackout, political unrest, or a security breach, could impair our ability to serve clients in a timely and reliable manner.
For example, much of our technology development effort is devoted to our core platforms, such as the SEI Wealth Platform ℠ and TRUST 3000 ® , and our other proprietary processing systems, and their ongoing evolution is critical to our value proposition.
For example, while we have explored and in some cases engage in direct-to-consumer (B2C) offerings, serving individual investors directly can increase operational and regulatory complexity: it entails handling a much larger number of client accounts and transactions, which raises the possibility of processing errors or fraud and generally drives higher servicing costs.
We have also pursued innovation in other newer areas of asset management, for example, developing tax optimization and tax‐harvesting programs, which likewise need time to prove their effectiveness and appeal to investors.
There is also the possibility of entirely new competitors arising from consolidation or realignment in adjacent industries (for example, a large technology or consulting firm acquiring capabilities to enter our markets).
Finally, investor and client perception of the risks attendant to the business models of our various market 9 units and our ability to successfully manage these risks, including those related to the potential disruptions from automation, artificial intelligence and machine learning, may significantly affect our value.
While investment performance relative to benchmarks and competitors remains a critical factor for retaining assets under management, clients may also leave due to pricing pressure, service disruptions, technology platform issues, or competitive innovations such as AI-driven solutions and tokenized products.
In addition, our ability to retain and grow client relationships depends on our capacity to innovate and deliver new products and services that meet evolving client needs, including ESG solutions, AI-driven strategies, and tokenized investment products.
Direct consumer engagement also heightens exposure to cybersecurity threats and data privacy concerns, since a breach or service disruption could impact a broad retail client base and attract greater scrutiny from regulators and the public.
The financial services industry is highly competitive and is being reshaped by consolidation and technological disruption, including the changes in the technology development and the delivery of services related to automation, artificial intelligence and machine learning.
Moreover, general economic or political conditions in the new territory can impact the success of the acquisition – for instance, if a country’s economy weakens or its regulatory climate shifts, the business we bought there might underperform expectations.
No longer disclosed
For example, in recent years, there has been significant consolidation among clearing agents, exchanges and clearing houses and increased interconnectivity of multiple financial institutions with central agents, exchanges and clearing houses.
For example, regulations like the EU's Digital Operational Resilience Act (DORA) are intended to implement a global regulatory standard, may introduce additional or more restrictive requirements for non-EU affiliates, which can create competitive disadvantages for multi-jurisdictional operations.
For example, potential conflicts can occur when there is a divergence of interests between us and a client, among clients, between an employee on the one hand and us or a client on the other, or situations in which we may be a creditor of a client.
These risks include, for example: • managing geographically separated organizations, systems and facilities; • integrating personnel with diverse business backgrounds and organizational cultures; • complying with non-U.S. regulatory requirements; • fluctuations in currency exchange rates; • enforcement of intellectual property rights in some non-U.S. countries; 17 • difficulty entering new non-U.S. markets due to, among other things, consumer acceptance and business knowledge of these new markets; and • general economic and political conditions.
For example, the European Securities and Markets Authority (ESMA) introduced stringent guidelines on ESG-related fund names, aiming to eliminate ambiguity in the use of sustainability-related terminology in financial products.
Cyber security and information risks for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and mobile telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state actors, in some circumstances as a means to promote political ends.
In addition to the growing sophistication of certain parties, the commoditization of AI and cyber tools which are able to be weaponized by less sophisticated actors has led to an increase in the exploitation of technological vulnerabilities.
Cyber security and information security risks may also derive from: • human error, • fraud, or malfeasance on the part of our employees or third parties, • accidental technological failure, or • our failure to introduce security patches provided by vendors in a timely manner.
In addition, third parties with whom we do business, their service providers, as well as other third parties with whom our customers do business, are sources of cyber security risk to us, particularly when their activities and systems are beyond our own security and control systems.
A cyber-attack, information breach or loss, or technology failure of a third party could adversely affect our ability to effect transactions, service our clients, manage our exposure to risk, expand our businesses, or significantly harm our reputation.
There is no guarantee that the strategies we have deployed that are designed to protect against threats and vulnerabilities will be effective or provide recoverability of our systems or our data or that of our clients given the techniques used in cyber-attacks are complex and frequently change.
A successful penetration or circumvention of the security of our systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including: • significant disruption of our operations and those of our clients, customers and counterparties, including losing access to operational systems; • misappropriation of our confidential information or that of our clients, counterparties, vendors, employees or regulators; • damage to our technology infrastructure or systems and those of our clients, vendors and counterparties; • inability to fully recover and restore data that has been stolen, manipulated or destroyed, or to prevent systems from processing fraudulent transactions; • violations by us of applicable privacy and other laws; • financial loss to us or to our clients, vendors, counterparties or employees; 11 • loss of confidence in our cyber security measures; • dissatisfaction among our clients or counterparties; • significant exposure to litigation and regulatory fines, penalties or other sanctions; and • harm to our reputation.