BB&T 2015 Annual Report Download - page 72

TableofContents
PCI
The PCI balance includes $539 million of loans that are covered by loss sharing agreements and $273 million of loans that were formerly covered by loss
sharing agreements. Refer to Note 4 “Loans and ACL” in the “Notes to Consolidated Financial Statements” and to “Acquired from FDIC and FDIC Loss Share
Receivable/Payable” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report for additional
disclosures related to loans acquired from the FDIC.
Liquidity risk
Liquidity risk is the risk to current or anticipated earnings or capital that BB&T will be unable to meet its obligations as they come due because of an
inability to liquidate assets or obtain adequate funding (funding liquidity risk) or that it cannot easily unwind or offset specific exposures without
significantly lowering market prices because of inadequate market depth or market disruptions (market liquidity risk).
Market risk
Market risk is the risk to current or anticipated earnings or capital arising from changes in the market value of portfolios, securities, or other financial
instruments. Market risk results from changes in the level, volatility or correlations among financial market rates or prices, including interest rates, foreign
exchange rates, equity prices, commodity prices or other relevant rates or prices.
Interest rate risk results from differences between the timing of rate changes and the timing of cash flows (re-pricing risk); from changing rate relationships
among different yield curves affecting bank activities (basis risk); from changing rate relationships across the spectrum of maturities (yield curve risk); and
from interest-related options embedded in bank products (options risk).
For additional information concerning BB&T’s management of market risk, see the “Market Risk Management” section of “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” herein.
Operational risk
Operational risk is the risk to current or anticipated earnings or capital arising from inadequate or failed internal processes, people and systems or from
external events. This definition includes legal risk, which is the risk of loss arising from defective transactions, litigation or claims made, or the failure to
adequately protect company-owned assets.
Cybersecurity
In recent years, cybersecurity has gained prominence within the financial services industry due to increases in the quantity and sophistication of cyber
attacks, which include significant distributed denial-of-service attacks, malicious code and viruses and attempts to breach the security of systems, which, in
certain instances, have resulted in unauthorized access to customer account data.
BB&T has a number of complex information systems used for a variety of functions by customers, employees and vendors. In addition, third parties with
which BB&T does business or that facilitate business activities (e.g., vendors, exchanges, clearing houses, central depositories and financial intermediaries)
could also be sources of cybersecurity risk to BB&T, including with respect to breakdowns or failures of their systems, misconduct by the employees of such
parties, or cyber attacks which could affect their ability to deliver a product or service to BB&T.
As a FHC, BB&T must adhere to the security requirements and expectations of the applicable regulatory agencies, which include requirements related to data
privacy, systems availability and business continuity planning, among others. The regulatory agencies have established guidelines for the responsibilities of
the board of directors and senior management, which include establishing policy, appointing and training personnel, implementing review and testing
functions and ensuring an appropriate frequency of updates.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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