GE 2015 Annual Report Download - page 144

RISK FACTORS
116 GE 2015 FORM 10-K
RISK FACTORS
The following discussion of risk factors contains ³IRUZDUG-looking statHPHQWV´ as discussed in the Forward-Looking Statements section.
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¶V Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) section and the consolidated financial statements and related notes.
GE's Corporate Risk Function leverages the risk framework in each of our businesses, which have adopted an approach that
corresponds to the &RPSDQ\¶V 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 FRPSHWLWRUV¶ reactions to those developments will affect
our future results.
STRATEGIC RISKS
Strategic risk relates to the &RPSDQ\¶V 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 180 countries. In 2015, approximately 55% of our
revenue was attributable to activities outside the United States. Our operations and the execution of our business plans and strategies
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. For example, our anticipated
returns from the Alstom acquisition include cost and growth synergy benefits over a multi-year period that we may not fully realize. 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 are selling financial assets and businesses in numerous transactions in connection
with the GE Capital Exit Plan, and we also continue to evaluate the potential disposition of other 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. Alternatively, we may dispose of a business at a price or on terms that are less than we had anticipated, or with the
exclusion of assets that must be divested or run off separately. After reaching an agreement with a buyer or seller for the acquisition or
disposition of a business, such as the proposed sale of Appliances to Haier, the transaction remains subject to necessary regulatory
and governmental approvals on acceptable terms as well as the satisfaction of pre-closing conditions, which may prevent us from
completing the transaction. Dispositions may also involve continued financial involvement in the divested business, such as through
continuing equity ownership, transition service agreements, guarantees, indemnities or other current or contingent financial obligations.
Under these arrangements, performance by the divested businesses or other conditions outside our control could affect our future
financial results.
116 GE 2015 FORM 10-K