GE 2014 Annual Report Download - page 132

112 GE 2014 FORM 10-K
RISK FACTORS
RISK FACTORS
The following discussion of risk factors contains “forward-looking statements,” as discussed in the Forward-Looking
Statements section of this Form 10-K Report. These risk factors may be important to understanding any statement in this
Annual Report on Form 10-K or elsewhere. The following information should be read in conjunction with the Management’s
Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section and the consolidated financial
statements and related notes of this Form 10-K Report.
GE's Corporate Risk Function leverages the risk framework in each of our businesses, which have adopted an approach that
corresponds to the Company’s overall risk policies, guidelines and review mechanisms. Our risk framework operates at the
business and functional levels and is designed to identify, evaluate and mitigate risks within each of the risk categories below.
Our businesses routinely encounter and address risks, some of which will cause our future results to be different – sometimes
materially different – than we presently anticipate. Below, we describe certain important strategic, operational, financial, and
legal and compliance risks. Our reactions to material future developments as well as our competitors’ reactions to those
developments will affect our future results.
STRATEGIC RISKS
Strategic risk relates to the Company’s future business plans and strategies, including the risks associated with: the global
macro-environment in which we operate; mergers and acquisitions and restructuring activity; intellectual property; and other
risks, including the demand for our products and services, competitive threats, technology and product innovation, and public
policy.
Global macro-environment - Our growth is subject to global economic and political risks.
We operate in virtually every part of the world and serve customers in approximately 175 countries. In 2014, approximately
50% of our revenue was attributable to activities outside the United States. Our operations are subject to the effects of global
competition and geopolitical risks. They are also affected by local economic environments, including inflation, recession,
currency volatility, currency controls and actual or anticipated default on sovereign debt. Political changes, some of which may
be disruptive, can interfere with our supply chain, our customers and all of our activities in a particular location. While some of
these global economic and political risks can be hedged using derivatives or other financial instruments and some are
insurable, such attempts to mitigate these risks are costly and not always successful, and our ability to engage in such
mitigation may decrease or become even more costly as a result of more volatile market conditions.
M&A/restructuring - The success of our business depends on achieving our strategic objectives, including through
acquisitions, joint ventures, dispositions and restructurings.
With respect to acquisitions, joint ventures and restructuring actions, we may not achieve expected returns and other benefits
as a result of various factors, including integration and collaboration challenges, such as personnel and technology. In
addition, we may not achieve anticipated cost savings from restructuring actions, which could result in lower margin rates. We
also participate in a number of joint ventures with other companies or government enterprises in various markets around the
world, including joint ventures where we may have a lesser degree of control over the business operations, which may expose
us to additional operational, financial, legal or compliance risks. We also continue to evaluate the potential disposition of
assets and businesses that may no longer help us meet our objectives. When we decide to sell assets or a business, we may
encounter difficulty in finding buyers or executing alternative exit strategies on acceptable terms in a timely manner, which
could delay the accomplishment of our strategic objectives. For example, delays in obtaining tax rulings and regulatory
approvals or clearances, and disruptions or volatility in the capital markets may impact our ability to complete the staged exit
from our North American Retail Finance business, Synchrony Financial, as planned. Alternatively, we may dispose of a
business at a price or on terms that are less than we had anticipated. After reaching an agreement with a buyer or seller for