BB&T 2014 Annual Report Download - page 27

Table of Contents
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.
BB&T relies on other companies to provide certain key components of its business infrastructure.
Third party vendors provide certain key components of BB&T’s business infrastructure such as internet connections, network access and mutual fund
distribution. While BB&T has selected these third party vendors carefully, it does not control their operations. Any failure by these third parties to perform or
provide agreed upon goods and services for any reason, or their poor performance of services, could adversely affect BB&T’s ability to deliver products and
services to its customers and otherwise conduct its business. Replacing these third party vendors could also entail significant delay and expense.
BB&T may not be able to successfully integrate bank or nonbank mergers and acquisitions.
Difficulties may arise in the integration of the business and operations of BHCs, banks and other nonbank entities BB&T acquires and, as a result, BB&T may
not be able to achieve the cost savings and synergies that it expects will result from such transactions. Achieving cost savings is dependent on consolidating
certain operational and functional areas, eliminating duplicative positions and terminating certain agreements for outside services. Additional operational
savings are dependent upon the integration of the acquired or merged entity’s businesses with BB&T or one of BB&T’s subsidiaries, the conversion of core
operating systems, data systems and products and the standardization of business practices. Complications or difficulties in the conversion of core operating
systems, data systems and products may result in the loss of customers, damage to BB&T’s reputation within the financial services industry, operational
problems, one-time costs currently not anticipated or reduced cost savings resulting from such mergers or acquisitions. Annual cost savings in each such
transaction may be materially less than anticipated if the holding company, bank merger or nonbank merger or acquisition is delayed unexpectedly, the
integration of operations is delayed beyond what is anticipated or the conversion to a single set of data systems is not accomplished on a timely basis.
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.