State Street Corporation

Corporate governance · Internal controls and risk management

The quantitative models we use to manage our business may contain errors that result in inadequate risk assessments, inaccurate valuations or poor business and risk management decisions.

Reputation and brand · Esg environmental social governance performance

Our businesses may be adversely affected by increased and conflicting political and regulatory scrutiny of asset management, stewardship and corporate sustainability or ESG practices in the jurisdictions in which we operate.

Reputation and brand · Brand damage and negative publicity

Our businesses may be negatively affected by adverse publicity or other reputational harm. Our relationship with many of our clients is predicated on our reputation as a fiduciary and a service provider that adheres to the highest standards of ethics, service quality and regulatory compliance.

Market position and competition · Competitive pressure and market share loss

We are subject to intense competition in all aspects of our business, which could negatively affect our ability to maintain or increase our profitability. The markets in which we operate across all facets of our business are both highly competitive and global.

Strategic execution · Merger acquisition and divestiture risks

Acquisitions, strategic alliances, joint ventures and divestitures pose risks for our business. We may not complete these transactions following announcement or we may not achieve the expected benefits of these transactions, which could result in increased costs, lowered revenues, ineffective deployment of capital, regulatory concerns, exit costs or diminished competitive position or reputation.

Market position and competition · Pricing pressure and margin compression

We have also experienced, and anticipate that we will continue to experience, significant pricing pressure in many of our core businesses, particularly our custodial and investment management services. This pricing pressure has and may continue to impact our revenue growth and operational margins.

Innovation and product development · Intellectual property protection and infringement

We may not be able to protect our intellectual property, and we are subject to claims of third-party intellectual property rights. Our potential inability to protect our intellectual property and proprietary technology effectively may allow competitors to duplicate our technology and products.

Natural and catastrophic events · Climate change and environmental impact

Climate change may increase the frequency and severity of major weather events and the ongoing transition to a low carbon economy may drive regulatory and business model change that could adversely affect our business operations and resiliency.

Social and demographic · Public perception and reputation

Our reputation and business prospects may be damaged if investors in the collective investment pools we sponsor or manage incur substantial losses in these investment pools or are restricted in redeeming their interests in these investment pools.

Market and investment · Investment portfolio performance

We may incur losses arising from our investments in sponsored investment funds, which could be material to our consolidated results of operations in the periods incurred.

Credit and liquidity · Liquidity and cash flow constraints

If we are unable to effectively manage our capital and liquidity, including by continuously attracting deposits and other short-term funding, our consolidated financial condition, including our regulatory capital ratios, our consolidated results of operations and our business prospects, could be adversely affected.

Capital structure and performance · Credit rating and cost of capital

Any downgrades in our credit ratings, or an actual or perceived reduction in our financial strength, could adversely affect our borrowing costs, capital costs and liquidity position and cause reputational harm.

International and currency · International operations and emerging markets

Outsourcing of work to global hub locations may expose us to increased operational risk and reputational harm and may not result in expected cost savings. We manage our operations and expenses across a global model, which may include migrating certain business processes to emerging market-based geographic hub locations.

Market and investment · Interest rate and yield curve risk

Our business activities expose us to interest rate risk. In our business activities, we assume interest rate risk by investing short-term deposits received from our clients in our investment portfolio of longer- and intermediate-term assets.

Tax and financial reporting · Financial reporting and accounting standards

Changes in accounting standards may adversely affect our consolidated financial statements. New accounting standards, or changes to existing accounting standards, resulting both from initiatives of the FASB as well as changes in the interpretation of existing accounting standards potentially could affect our consolidated results of operations.

Industry regulation · Capital and liquidity requirements

Our business and capital-related activities, including our ability to return capital to shareholders and repurchase our capital stock, may be adversely affected by our implementation of regulatory capital and liquidity standards that we must meet or as a result of regulatory capital stress testing.

Industry regulation · Regulatory compliance and changes

We face extensive and changing government regulation and supervision in the U.S. and non-U.S. jurisdictions in which we operate, which may increase our costs and expose us to risks related to compliance.

Project and contract management · Service level and performance guarantees

Long-term contracts expose us to increased operational risk, pricing and performance risk. We frequently enter into long-term client servicing contracts in our Investment Servicing business, including with respect to our State Street Alpha services.

Human capital and workforce · Talent acquisition and retention

Competition for qualified members of our workforce is intense, and we may not be able to attract and retain the personnel we need to support our business. We may not be able to hire people or retain them, particularly in light of challenges associated with compensation restrictions applicable to banks.

Cybersecurity and data protection · Data breaches and cyber attacks

Any failures of or damage to, attack on or unauthorized access to our information technology systems or facilities or disruptions to our continuous operations, including the systems, facilities or operations of third parties with which we do business, such as resulting from cyber-attacks, could result in significant costs and reputational damage.