Bank of America 2005 Annual Report Download - page 44

or suppliers. We have an active acquisition program and there is a risk that integration difficulties may cause us not to
realize expected benefits from the transactions We will be subject to similar risks and difficulties in connection with
future acquisitions, as well as decisions to downsize, sell or close units or otherwise change the business mix of the
Corporation.
Non-U.S. operations; trading in non-U.S. securities. We do business throughout the world, including in
developing regions of the world commonly known as emerging markets. Our businesses and revenues derived from non-
U.S. operations are subject to risk of loss from currency fluctuations, social instability, changes in governmental policies
or policies of central banks, expropriation, nationalization, confiscation of assets, unfavorable political and diplomatic
developments and changes in legislation relating to non-U.S. ownership. We also invest in the securities of corporations
located in non-U.S. jurisdictions, including emerging markets. Revenues from the trading of non-U.S. securities also may
be subject to negative fluctuations as a result of the above factors. The impact of these fluctuations could be accentuated,
because generally, non-U.S. trading markets, particularly in emerging market countries, are smaller, less liquid and
more volatile than U.S. trading markets.
Operational risks. The potential for operational risk exposure exists throughout our organization. Integral to our
performance is the continued efficacy of our technical systems, operational infrastructure, relationships with third
parties and the vast array of associates and key executives in our day-to-day and ongoing operations. Failure by any or
all of these resources subjects us to risks that may vary in size, scale and scope. This includes but is not limited to
operational or technical failures, ineffectiveness or exposure due to interruption in third party support as expected, as
well as, the loss of key individuals or failure on the part of the key individuals to perform properly.
For further discussion of operating risks, see “Operational Risk Management” in the MD&A.
Our reputation is important. Our ability to attract and retain customers and employees could be adversely
affected to the extent our reputation is damaged. Our failure to address, or to appear to fail to address various issues
that could give rise to reputational risk could cause harm to the Corporation and its business prospects. These issues
include, but are not limited to, appropriately addressing potential conflicts of interest; legal and regulatory
requirements; ethical issues; money-laundering; privacy; properly maintaining customer and associate personal
information; record keeping; sales and trading practices; and the proper identification of the legal, reputational, credit,
liquidity and market risks inherent in our products. Failure to address appropriately these issues could also give rise to
additional legal risks, which, in turn, could increase the size and number of litigation claims and damages asserted or
subject us to enforcement actions, fines and penalties and cause us to incur related costs and expenses.
Products and services. Our business model is based on a diversified mix of businesses that provide a broad range
of financial products and services, delivered through multiple distribution channels. Our success depends, in part, on our
ability to adapt our products and services to evolving industry standards. There is increasing pressure to provide
products and services at lower prices. This can reduce our net interest margin and revenues from our fee-based products
and services. In addition, the widespread adoption of new technologies, including internet services, could require us to
make substantial expenditures to modify or adapt our existing products and services. We might not be successful in
introducing new products and services, responding or adapting to changes in consumer spending and saving habits,
achieving market acceptance of our products and services, or developing and maintaining loyal customers.
Risk management processes and strategies. We seek to monitor and control our risk exposure through a variety
of separate but complementary financial, credit, operational, compliance and legal reporting systems. While we employ a
broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the judgments that
accompany their application cannot anticipate every economic and financial outcome or the specifics and timing of such
outcomes. Accordingly, our ability to successfully identify and manage risks facing us is an important factor that can
significantly impact our results. For a further discussion of our risk management policies and procedures, see “Managing
Risk” in the MD&A.
We operate many different businesses. We are a diversified financial services company. In addition to banking,
we provide investment, mortgage, investment banking, credit card and consumer finance services. Although we believe
our diversity helps lessen the effect when downturns affect any one segment of our industry, it also means our earnings
could be subject to different risks and uncertainties than the ones discussed in herein. If any of the risks that we face
actually occur, irrespective of whether those risks are described in this section or elsewhere in this report, our business,
financial condition and operating results could be materially adversely affected.
Item 1B. UNRESOLVED STAFF COMMENTS
There are no material unresolved written comments that were received from the Securities and Exchange
Commission’s staff 180 days or more before the end of the Corporation’s fiscal year relating to the Corporation’s periodic
or current reports filed under the Securities Exchange Act of 1934.
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