BB&T 2013 Annual Report Download - page 26

26
BB&T relies on its employees, systems and certain counterparties, and certain failures could materially adversely affect
operations.
BB&T’s business is dependent on the ability to process, record and monitor a large number of complex transactions. The
Company could be materially adversely affected if one or more of its employees causes a significant operational breakdown
or failure, either as a result of human error or intentionally. Financial, accounting, or other data processing systems may fail
or have other significant shortcomings that materially adversely affect BB&T’s business. In addition, products, services and
processes are continually changing and BB&T may not fully appreciate or identify new operational risks that may arise from
such changes. Any of these occurrences could diminish the ability to operate one or more LOBs or result in potential liability
to clients, increased operating expenses, higher litigation costs (including fines and sanctions), reputational damage,
regulatory intervention or weaker competitive standing, any of which could be material to the Company.
If personal, confidential or proprietary information of clients were to be mishandled or misused, significant regulatory
consequences, reputational damage and financial loss could occur. Such mishandling or misuse could include circumstances
where, for example, such information was erroneously provided to parties who are not permitted to have the information,
either through the fault of systems, employees, or counterparties, or where such information was intercepted or otherwise
inappropriately taken by third parties.
BB&T may be subject to disruptions of its operating systems arising from events that are wholly or partially beyond its
control, which may include, for example, security breaches; electrical or telecommunications outages; failures of computer
servers or other damage to property or assets; natural disasters; health emergencies or pandemics; or events arising from
political events, including terrorist acts. There can be no assurance that disaster recovery or other plans will fully mitigate all
potential business continuity risks. Any failures or disruptions of systems or operations could impact BB&T’s ability to
service its clients, which could adversely affect BB&T’s results of operations by subjecting BB&T to losses, litigation,
regulatory fines or penalties or by requiring the expenditure of significant resources to correct the failure or disruption.
Significant litigation could have a material adverse effect on BB&T.
BB&T faces legal risks in its business, and the volume of claims and amount of damages and penalties claimed in litigation
and regulatory proceedings against financial institutions remains high. Substantial legal liability or significant regulatory
action against BB&T may have material adverse financial effects or cause significant reputational harm to BB&T, which in
turn could seriously harm BB&T’s business prospects.
BB&T faces significant operational and other risks related to its activities, which could expose it to negative publicity,
litigation and/or regulatory action.
BB&T is exposed to many types of risks, including operational, reputational, legal and compliance risk, the risk of fraud or
theft by employees or outsiders (including identity and information theft), unauthorized transactions by employees or
operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or
telecommunications systems. Negative public opinion can result from BB&T’s actual or alleged conduct in any number of
activities, including lending practices, corporate governance and acquisitions, activities related to asset sales and balance
sheet management and from actions taken by government regulators and community organizations in response to those
activities. Negative public opinion can adversely affect BB&T’s ability to attract and keep customers and can expose it to
litigation and regulatory action.
Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or
compounded before they are discovered and successfully rectified. BB&T’s necessary dependence upon automated systems
to record and process its transaction volume may further increase the risk that technical flaws or employee tampering or
manipulation of those systems will result in losses that are difficult to detect. BB&T also may be subject to disruptions of its
operating systems arising from events that are wholly or partially beyond its control (for example, computer viruses or
electrical or telecommunications outages), which may give rise to disruption of service to customers and to financial loss or
liability. BB&T is further exposed to the risk that its external vendors may be unable to fulfill their contractual obligations (or
will be subject to the same risk of fraud or operational errors by their respective employees as is BB&T) and to the risk that
BB&T’s (or its vendors’) business continuity and data security systems prove to be inadequate.