Archer Daniels Midland CompanyADM

Supply chain and procurement · Transportation and logistics disruption

The Company's operations rely on dependable and efficient transportation services, the disruption of which could result in difficulties supplying materials to the Company's facilities and impair the Company's ability to deliver products to its customers in a timely manner. The Company relies on access to navigable rivers and waterways in order to fulfill its transportation obligations more effectively.

Human capital and workforce · Talent acquisition and retention

ADM's global operations function with skilled individuals necessary for the processing, warehousing, and shipping of raw materials for products used in other areas of manufacturing or sold as inputs or products to third-party customers. The availability of skilled trade and production workers has been a specific focus for the manufacturing industry. The inability to properly staff manufacturing facilities with skilled trades and hourly labor due to a limited number of qualified resources could negatively impact operations.

Core operations · Facility damage and equipment failure

The Company may not be able to resolve disruptions timely or effectively, and the associated liability which could result from these risks may not always be covered by or could exceed liability insurance. The impact of these events and factors has and could in the future require significant investments and expenditures to repair damaged facilities or equipment and require management attention and other resources, which has and could adversely impact the Company's results of operations.

Core operations · Operational disruption and business continuity

The Company is exposed to potential business disruption risks which could adversely affect the Company's operating results and could result in increased expenses and liabilities. The Company engages in manufacturing and distribution activities across numerous markets and geographies. As a result, the Company is subject to risks inherent in such activities and from time to time has experienced unplanned downtime or extensive property damage and business disruption from various events and external factors, some of which are beyond the Company's control. These events and factors include, but are not limited to, equipment failure, raw material shortages, natural disasters, adverse weather conditions, accidents, explosions, fires, environmental events, strikes or other labor or industrial disputes, war or acts of terrorism, cybersecurity attacks, or other unexpected outages.

Supply chain and procurement · Raw material availability and cost volatility

If certain non-agricultural commodity raw materials, such as water or certain chemicals used in the Company's processing operations, are not available, the Company's business could be disrupted. Any major lack of available water for use in certain of the Company's processing operations could have a material adverse impact on operating results. Certain factors which may impact the availability of non-agricultural commodity raw materials are out of the Company's control including, but are not limited to, disruptions resulting from weather, high or low river water conditions, economic conditions, border closures, manufacturing delays or disruptions at suppliers, shortage of materials, interruption of energy supply, and unavailable or poor supplier credit conditions.

Human capital and workforce · Labor relations and union negotiations

The Company is subject to risks inherent in such activities and from time to time has experienced unplanned downtime or extensive property damage and business disruption from various events and external factors. These events and factors include, but are not limited to, equipment failure, raw material shortages, natural disasters, adverse weather conditions, accidents, explosions, fires, environmental events, strikes or other labor or industrial disputes, war or acts of terrorism, cybersecurity attacks, or other unexpected outages.

Human capital and workforce · Skills shortage and training requirements

The availability of skilled trade and production workers has been a specific focus for the United States manufacturing industry. The pandemic has put further strain on manufacturing labor amid fears of the pandemic, childcare challenges, along with the re-allocation friction resulting in some of the workforce shifts from manufacturing positions. The inability to properly staff manufacturing facilities with skilled trades and hourly labor due to a limited number of qualified resources could negatively impact operations.

Supply chain and procurement · Transportation and logistics disruption

The Company's operations rely on dependable and efficient transportation services, the disruption of which could result in difficulties supplying materials to the Company's facilities and impair the Company's ability to deliver products to its customers in a timely manner. The Company relies on access to navigable rivers and waterways in order to fulfill its transportation obligations more effectively.

Core operations · Quality control and product defects

The Company is continuing to further diversity throughout the organization and deploy additional food safety and security procedures and controls to appropriately mitigate the risks of any adulteration of the Company's products in the supply chain and finished products in production and distribution networks.

Natural and catastrophic events · Natural disasters and extreme weather

The Company is subject to risks inherent in such activities and from time to time has experienced unplanned downtime or extensive property damage and business disruption from various events and external factors, some of which are beyond the Company's control. These events and factors include, but are not limited to, equipment failure, raw material shortages, natural disasters, adverse weather conditions, accidents, explosions, fires, environmental events, strikes or other labor or industrial disputes, war or acts of terrorism, cybersecurity attacks, or other unexpected outages.

Economic and market conditions · Inflation and deflation pressures

The Company's operating costs and the selling prices of certain finished products are sensitive to changes in energy prices, inflationary pressures, and certain logistic constraints. Significant increases in the cost or access of these items, including any consequences of inflationary impacts, regulation or taxation of greenhouse gases, has and could in the future adversely affect the Company's production costs and operating results.

Natural and catastrophic events · Terrorism and security threats

The Company is subject to risks inherent in such activities and from time to time has experienced unplanned downtime or extensive property damage and business disruption from various events and external factors. These events and factors include, but are not limited to, equipment failure, raw material shortages, natural disasters, adverse weather conditions, accidents, explosions, fires, environmental events, strikes or other labor or industrial disputes, war or acts of terrorism, cybersecurity attacks, or other unexpected outages.

Geopolitical and trade · International conflicts and tensions

ADM's assets and operations could be subject to extensive property damage and business disruption from geopolitical conflicts, acts of terrorism (e.g. purposeful adulteration of the Company's products), and war. The assets and operations located in the region affected by the conflict in Ukraine are at an increased risk to property damage, inventory loss, business disruption, and expropriation.

Strategic execution · Geographic expansion and market entry

As the Company executes its growth strategy, through both organic and inorganic growth, it may encounter risks which could result in increased costs, decreased revenues, and delayed synergies. Growth in new geographies outside the U.S. can expose the Company to volatile economic, political, and regulatory risks that may negatively impact its operations and ability to achieve its growth strategy.

Customer and revenue · Changing customer preferences and behavior

ADM's increased investment in the flavors and ingredients businesses exposes the Company to increased risks related to rapidly changing consumer preferences and the impacts these changes could have on the success of certain of the Company's customers.

Market position and competition · Pricing pressure and margin compression

The Company has certain finished products, such as ethanol and biodiesel, which are closely related to, or may be substituted for, petroleum products, or in the case of ethanol, blended into gasoline to increase octane content. Therefore, the selling prices of ethanol and biodiesel can be impacted by the selling prices of gasoline, diesel fuel, and other octane enhancers. A significant decrease in the price of gasoline, diesel fuel, or other octane enhancers could result in a significant decrease in the selling price of the Company's ethanol and biodiesel.

Reputation and brand · Corporate social responsibility

The Company has programs and policies in place (e.g., Corporate Sustainability Program; Commitment to Protecting Forests, Biodiversity and Communities; Environmental Policy; Strive 35 environmental goals; etc.) to expand responsible practices while reducing its environmental footprint and to help ensure compliance with laws and regulations. Implementation of these programs and policies sometimes requires the acquisition of technology or capital investments at a cost to the Company. Failure to comply with laws and regulations can have serious consequences, including civil, administrative, and criminal penalties as well as a negative impact on the Company's reputation, business, cash flows, and results of operations.

Cybersecurity and data protection · Third party data security and vendors

The Company's operations rely on certain key IT systems, some of which are dependent on services provided by third parties, to provide critical data connectivity, information, and services for internal and external users. If the Company's IT systems are breached, damaged, or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, or cyber-based attacks, and the Company's disaster recovery plans do not effectively mitigate the risks on a timely basis, the Company may suffer significant interruptions in its ability to manage its operations.

International and currency · Transfer pricing and taxation

The Company frequently faces challenges from U.S. and foreign tax authorities regarding the amount of taxes due including questions regarding the timing, amount of deductions, the allocation of income among various tax jurisdictions, and further risks related to changing tax laws domestically and globally.

Capital structure and performance · Credit rating and cost of capital

Access to credit markets and pricing of the Company's capital is dependent upon maintaining sufficient credit ratings from credit rating agencies. Strong credit ratings allow the Company to access cost competitive tier one commercial paper markets. If the Company is unable to maintain sufficiently high credit ratings, access to these commercial paper and other debt markets and costs of borrowings could be adversely affected.