Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Imperial Brands disclosed 12 risk factors in its most recent earnings report. Imperial Brands reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2021

Risk Distribution

33% Finance & Corporate

25% Legal & Regulatory

17% Tech & Innovation

8% Production

8% Ability to Sell

8% Macro & Political

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

2020

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Imperial Brands Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2021

Main Risk Category

Finance & Corporate

With 4 Risks

Finance & Corporate

With 4 Risks

Number of Disclosed Risks

No changes from last report

S&P 500 Average: 31

No changes from last report

S&P 500 Average: 31

Recent Changes

11Risks added

11Risks removed

0Risks changed

Since May 2021

11Risks added

11Risks removed

0Risks changed

Since May 2021

Number of Risk Changed

No changes from last report

S&P 500 Average: 3

No changes from last report

S&P 500 Average: 3

See the risk highlights of Imperial Brands in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 12

Finance & Corporate

Total Risks: 4/12 (33%)Above Sector Average

Debt & Financing1 | 8.3%

Debt & Financing - Risk 1

Added

Management of liquidity and financing requirements

Failure to manage liquidity and financing requirements resulting in going concern or viability concerns. • Successful long-term funding initiatives completed in-year • Increased focus of funders on ESG-related matters, and disclosures, notably in relation to sector • Further deleveraging of the business has occurred during the year, and continues to be a key area of focus Failure to maintain cash flows could impact the Group’s ability to pay down debt, impacting covenants, credit ratings, bank bonds and investor confidence • Reduced ability to invest in strategic and commercial business initiatives • A fall in certain of our credit ratings would raise the cost of our existing committed funding and would be likely to raise the cost of future funding, and affect our ability to raise debt • Failure of a financial counterparty (e.g., when holding cash deposits and/ or derivatives) is likely to result in a financial and cash impact • Funding requirements and near-term debt maturities formally evaluated at least semi-annually and signed-off by the Audit Committee as part of Going Concern and Viability process • Full review of funding requirements, current maturities and options available to the Group • Revolver funding implemented, providing the Group with innovative means of managing cash requirements • Strong focus on cash generation supported by Group guidance and governance processes • Appropriate authority and accountability in place for investments and capital expenditure, including achievement of required return criteria • Cash flows, financing requirements and key rating agency metrics are regularly forecast and updated in line with performance and expectations to manage future financing needs and optimise cost and availability • The Treasury function operates in accordance with the terms of reference and delegated authorities set out by the Board, with independent oversight from the Treasury Committee • Maintaining an efficient capital structure allows the Group to maintain an efficient cost of capital to support and generate additional returns on investments and capital outlays/expenditure • The high cash conversion that the Group has delivered/ delivers, provides the Board/ management with cash flexibility and optionality • Effective communication of ESG strategy and initiatives highlights the Group’s sustainability agenda and meets stakeholder expectations • The Group has investment grade credit ratings from the main credit rating agencies, which supports it in accessing financing in the global debt capital markets

Corporate Activity and Growth3 | 25.0%

Corporate Activity and Growth - Risk 1

Added

Failure to ensure expected benefits of strategic transformation programme

Failure to deliver effective organisational change which ensures a sustainable operating model, aligned to delivery of the Group strategy. Failure to realise expected benefits of change initiatives or unexpected outcomes, resulting in short-term inefficiencies and pressure to achieve objectives. • Group-wide organisational change initiatives have commenced. The scale of this change has inherent risks associated with programmes of this nature • Change management structures and governance implemented at both Group and local level to best support change initiatives • Failure to meet project timelines or key milestones can result in increased implementation cost and opportunity costs • Budgeted savings/returns may not be achieved in key strategic projects • Non-achievement of strategic objectives could result in loss of investor and market confidence • Reporting of incorrect or unsubstantiated benefits realisation • Failure to consider and effectively manage localised impacts of strategic change could impact short-term operational performance • Robust business case approval process in place with wide stakeholder input • Appropriate steering committee structure and reporting in place, with cross-functional involvement • Project benefits realisation verified at key project milestones • Resource requirements constantly reviewed, with specialist project management resource employed • Local project management teams in place to support change programme • Successful delivery of key organisational change projects improves the efficiency and effectiveness of the Group, better enabling it to achieve its strategic goals • Identification of opportunities in development of strategy and execution of “must win battles” in priority markets

Corporate Activity and Growth - Risk 2

People and organisation

Inability to attract, retain and develop required capabilities to achieve strategic objectives and/or provide a safe, healthy working environment. • Development of new purpose, vision, and behaviour framework to drive cultural change • Recruitment and development of a renewed executive and senior leadership in the year, to ensure achievement of strategy • The development of an equality, diversity and inclusion strategy, senior leadership training and the development of employee resource groups • The business continues to focus on the welfare of its people across the globe as COVID-19 continues to impact; activities include actions to track in-market changes and the development of specific communication and support tools tailored to the needs of each country Organisational culture and mindset fail to facilitate consumer focus and the requirements of a business operating in new and fast changing categories • The Group fails to achieve operational or strategic objectives because of a misalignment of skills and capabilities • Failure to ensure safe working practices, appropriate environment and culture, and the required personal support to ensure the safety and wellbeing of our people and others working with the Group • Loss of life or serious injury/illness to employees or other individuals working with/for Imperial Brands • Financial penalty, censure or prosecution for breach of regulations • Interruption of Group operations (notably manufacturing) resulting from significant incident or failure to comply with regulations • Group-wide Diversity and Inclusion focus including survey and resultant action plans to ensure that society is fairly represented within our business • Diversity and Inclusion working groups formed to manage cultural and corporate change to support all our people • Capability requirements and gaps evaluated with actions taken both locally and at Group level to address short and medium-term requirements • Health and safety policies, procedures, training and monitoring in place • Employee wellbeing support in place across the business • COVID-19 related safety measures, including employees working from home, social distancing in Group locations, provision of quality PPE protection, employee testing, safe employee transportation, on-site vaccination, and welfare support measures have been put in place • Increased attractiveness of Imperial as an employer of choice for both current and potential employees through the promotion of a diverse and inclusive culture, opportunities for personal development, and support for individual and team wellbeing • Achievement of Group strategy, and development of multi-category business enhanced by the attraction and retention of requisite capabilities and mindset • Continued promotion of our safety culture facilitates the associated benefits of reduced lost working time and operational effectiveness, and supports Imperial as an employer of choice

Corporate Activity and Growth - Risk 3

Added

Inability to develop, execute and communicate an effective esg strategy in line with expectations of relevant stakeholders

Failure to align the development, execution and communication of the Group’s ESG strategy to external expectations. The pace of change in external requirements and expectations is significant, with greater focus on integrity of reporting, and comparison cross-industry and between sector peers. • Increased focus on ESG related matters from investors and external stakeholders • Increased reporting requirements exist, notably for climate and environmental-related risks, with the Group committed to actions to reduce its impact on the environment (e.g., TCFD) • As with all multinationals the Group manages increasing climatic impacts across its global footprint • Strategy to support investment in the NGP business to offer adult smokers potentially reduced risk products has been communicated and included within the Group’s ESG agenda • Recruitment of additional specialist capabilities including experienced global ESG lead mpact Mitigation Opportunity INABILITY TO DEVELOP, EXECUTE AND COMMUNICATE AN EFFECTIVE ESG STRATEGY IN LINE WITH EXPECTATIONS OF RELEVANT STAKEHOLDERS Failure to align the development, execution and communication of the Group’s ESG strategy to external expectations. The pace of change in external requirements and expectations is significant, with greater focus on integrity of reporting, and comparison cross-industry and between sector peers. • Increased focus on ESG related matters from investors and external stakeholders • Increased reporting requirements exist, notably for climate and environmental-related risks, with the Group committed to actions to reduce its impact on the environment (e.g., TCFD) • As with all multinationals the Group manages increasing climatic impacts across its global footprint • Strategy to support investment in the NGP business to offer adult smokers potentially reduced risk products has been communicated and included within the Group’s ESG agenda • Recruitment of additional specialist capabilities including experienced global ESG lead • Should the Group fail to meet expectations, or to ensure at least parity with industry peers, this may impact its reputation as a sustainable business and adversely affect stakeholder sentiment • Failure to comply with key ESG-related regulation, including environmental and human rights legislation would result in a material impact to the Group, including, but not limited to, financial penalties • Reputational damage may result from allegations, even where no wrongdoing has occurred • Employee engagement may be adversely affected as a result of any perception that the Group is acting in an inappropriate manner • ESG strategy, agenda and communications, including ongoing development and materiality assessment, aligned to strategic goals and targets • ESG Committee with executive representation in place to provide oversight • Investor and stakeholder presentations ensure alignment with expectations and transparency on progress of Group actions • TCFD disclosures and related actions facilitate robust reporting and control frameworks (TCFD overview page 63) • Responsibility and accountability for identification of ESG-related risks understood by the Company and continue to be embedded across the business • Policy, training, guidance and effective governance provided by both internal and external subject matter experts • Positive ESG strategies and communications can increase the attractiveness of the organisation to new joiners, and increase the engagement of existing employees • Sustainability is an increasing factor in customer and consumer choices across FMCG sectors • Sustainability initiatives can reduce long-term financial costs through greater efficiency and reduced waste • Investor and wider stakeholder sentiment increase toward companies with successful and proven ESG strategies and initiatives

Legal & Regulatory

Total Risks: 3/12 (25%)Above Sector Average

Regulation1 | 8.3%

Regulation - Risk 1

Added

Failure to manage the impacts of product regulatory change

The risk that regulatory change aimed at further denormalising the consumption of tobacco and nicotine products adversely impacts the Group’s products, markets, manufacturing processes, customers, and/or consumers. • Compliance with the implementation of an EU menthol ban impacted European markets • Proposed regulatory change in US and Australia impacting the use of menthol and other characterising flavours. US Federal ban is most likely to take longer than the Group’s three-year risk horizon. However, State/ County/City legislation could be implemented in advance of this • Roll-out of Track and Trace requirements in product supply chain has commenced across Africa and the Middle East Impact Mitigation Opportunity FAILURE TO MANAGE THE IMPACTS OF PRODUCT REGULATORY CHANGE The risk that regulatory change aimed at further denormalising the consumption of tobacco and nicotine products adversely impacts the Group’s products, markets, manufacturing processes, customers, and/or consumers. • Compliance with the implementation of an EU menthol ban impacted European markets • Proposed regulatory change in US and Australia impacting the use of menthol and other characterising flavours. US Federal ban is most likely to take longer than the Group’s three-year risk horizon. However, State/ County/City legislation could be implemented in advance of this • Roll-out of Track and Trace requirements in product supply chain has commenced across Africa and the Middle East • Product regulatory change can restrict product specification (e.g., menthol ban), consumer interaction, and product supply, and place restrictions on consumers’ ability to enjoy the product, potentially impacting sales volumes and market size • Compliance with increasingly complex regulatory requirements increases the risk of both additional cost to the Group and the risk of non-compliance, which could result in investigation, regulatory censure, financial penalty and reputational damage • Where interpretation of regulation is required, judgements taken can lead to dispute or investigation by regulators and result in possible related financial costs or reputational damage even where no fault is proven • We engage with authorities to provide informed input and evidence of the unintended consequences of disproportionate changes in product regulation, supported by our Regulatory and Scientific affairs teams • Project teams are in place to manage the impacts of regulatory change, ensuring required compliance is achieved and strategic opportunities identified • Group policies, guidance and processes are aligned to changes in legislation and requirements • Legal action can be taken to defend against or prevent regulatory change where this impacts the Group’s brands or local legal freedoms • While stringent regulation provides a burden on all firms, it provides the least burden on businesses that operate from an existing high baseline of compliance and responsibility • Regulation can be of benefit to consumers and to responsible market players through the removal of less responsible companies’ ability to operate freely within the market place • Global regulators are increasingly moving towards a policy of tobacco harm reduction. Such policies accept the reduced risk that non-combustible nicotine products offer adult smokers in comparison to cigarettes and other traditional, combustible products

Litigation & Legal Liabilities1 | 8.3%

Litigation & Legal Liabilities - Risk 1

Added

Failure to appropriately manage litigation and investigations results in adverse judgments and/or related costs

Similar to other corporates, litigation and other claims are pending against the Group. The interpretation of law (including taxation) and the related judgements taken in relation to these laws can lead to dispute or investigation and possible financial costs or reputational damage. • Increase in litigation activity related to the aggressive marketing previously employed by competitors in the US EVP market could result in precedents which increase claims made against responsible manufacturers. Even where these claims do not result in prosecution there may be costs associated with defending such matters • Failure to comply with regulations could result in investigation and the enforcement of financial penalties or regulatory censure • Investigation or allegations of wrongdoing can result in significant management time being required, potentially reducing focus on other operational matters • If any claim against the Group was to be successful, it might result in a significant liability for damages and could lead to further claims against us • Regardless of the outcome, the costs of defending such claims can be substantial and may not be fully recoverable • A successful claim against a competitor could result in an increased likelihood of similar claims against the Group • The reputational damage arising from investigations or allegations of non-compliance could have a greater impact with external stakeholders than the penalties or actions related to the matter itself • We employ internal and external lawyers specialising in the defence of product liability claims and other litigation. To date, no tobacco litigation claim brought against the Group has been successful and/or resulted in the recovery of damages or settlement monies • Advice is provided to prevent causes of litigation, along with guidance on defence strategies to direct and manage litigation risk and monitor potential claims around the Group • The Group’s Code of Conduct and core behaviours articulate the way we expect our people to act, with compliance certified by management across the business • The Group’s policies and standards mandate that employees must comply with legislation relevant to both a UK listed company and local law • In the event of an investigation (which may or may not result in actions against us), we co-operate fully with the relevant authority and will continue to do so

Taxation & Government Incentives1 | 8.3%

Taxation & Government Incentives - Risk 1

Added

Pricing, excise or other product tax outcomes not in line with business plan assumptions or expectations

Failure to identify or manage increases, or proposed increases, in excise or other product-related taxes, or changes in tax structures, could impact achievement of objectives. • Potential for Federal excise increase in the US • Development of EU excise directive • Tracking of consumer preferences identified downtrading across priority markets as consumers exhibit increased price consciousness • Pricing pressures may result from increased taxation as consumer affordability may be impacted. This could result in downtrading to lower price products/categories, reduced consumption, cessation of smoking, or increase the attractiveness of illicit product, impacting sales volumes, revenues, profitability and market size • In markets where consumers are increasingly price conscious the ability to achieve planned price increases may be impacted, resulting in reduced profitability as the Group protects market share • Counterfeit and illicit trade thrive in high-excise environments, reducing the size of the legitimate tobacco market, increasing risks to consumers from non-compliant product, and financing organised crime • Inferior, unregulated counterfeit product could result in damage to our brands • Subject matter experts assess global excise risks, and model price elasticity to best ensure the business plan and strategy are developed and aligned to consumer insights • We engage with authorities to provide informed input and evidence about the unintended consequences of disproportionate changes in product taxation, supported by our Regulatory and Anti-Illicit Trade teams • Robust internal policy and procedures exist to best ensure compliance within our own supply chain and maintain strong standards and controls for our business and our first-line customers to prevent diversion of our products • We work alongside and partner with governments and law enforcement agencies around the world to prevent the illicit supply of tobacco products • Our Revenue Growth Management function is responsible for the identification and management of strategic commercial opportunities arising from excise change • The development of the Group strategy includes analysis of planned and potential changes in product taxation to best identify and ensure investment opportunities across its range of products • The Group product portfolio is aligned to potential impacts of change in consumer behaviour, with products at various price points • Tailored product portfolio offerings at a local level, within and across categories, allow for any relative commercial advantage from excise mechanisms to be realised

Tech & Innovation

Total Risks: 2/12 (17%)Above Sector Average

Innovation / R&D1 | 8.3%

Innovation / R&D - Risk 1

Added

Failure to develop commercially sustainable ngp categories

Failure to develop a portfolio of commercially sustainable, science based, reduced risk products, that meet consumer needs, could impact the Group’s ability to seize market opportunities and deliver its ESG agenda. • Strategy development identified further opportunity within heated tobacco, increasing focus on development of portfolio and product offering • Recruitment of a Chief Consumer Officer and setting up of the Global Consumer Office • US PMTA submission for EVP products subject to ongoing approval process • Specific NGP excise structures starting to be implemented across markets, impacting the excise differential between combustible and NGP products • Improved customer engagement strategy implemented, providing higher quality insights • Continued competitor activity in the NGP market with increasing share of wider nicotine market through product development and marketing initiatives • Failure to accurately predict or identify current and emerging consumer trends could result in lost opportunities, and lower volumes should our products have reduced relevance to consumers • Failure to align NGP portfolio to consumer needs and expectations results in failure to achieve our NGP ambition • Failure to develop NGP categories could impact achievement of key ESG priorities • Dynamic consumer and market analysis to feed product development and go-to market model • Development of consumer-centric products bringing alive the Group’s agile “fast-follower” strategy • Pilot launches of Pulze heated tobacco product commenced • Creation of consolidated NGP category management approach enabling holistic view of opportunities and informed investment strategy • Our improved ability to meet consumer needs and robust consumer validation are key drivers of commercial success • The Group’s experience in combustible and NGP provides it with a strong base to meet the needs of the wider changing nicotine market dynamic

Cyber Security1 | 8.3%

Cyber Security - Risk 1

Added

Major incident resulting from cyber or similar technology risk

Risk of cyber-attack or other technology incident results in a major system outage or denial of service. The criticality of Group systems, notably Track and Trace related, has significantly increased with key reliance on system availability both internally and through the supply chain. • External environment highlights increasing risk of corporate cyber-attacks including use of “insider” resource to carry out cyber-attacks, notably ransomware • Increasing risk to all businesses of attack through extended supply chain where one company is breached and others to which it has connections are then also impacted Loss of critical systems could impact product supply to markets or retailers • Failure to protect personal private data could result in regulatory breach and related censure, financial penalty and reputational damage • Cyber breach could result in loss of sensitive corporate data, impacting achievement of strategy, reputational damage, significant cost to the Group or lost competitive advantage • Cyber risk assessment completed and actions implemented to further protect business • Vulnerability scanning in place to ensure ongoing threat protection • External penetration testing completed on an ongoing basis • Workstation security and cloud services implemented • Crisis management scenario planning and response activities in place and tested • Additional specialist capabilities recruited internally to continually improve approach

Production

Total Risks: 1/12 (8%)Below Sector Average

Supply Chain1 | 8.3%

Supply Chain - Risk 1

Added

Product supply fails to meet market demands (stock issues in market)

Failure to ensure timely supply of products demanded by markets which meet quality, regulatory and cost requirements. Availability issues could result in loss of sales and could result from production, planning or logistical issues, or failure to be able to produce/develop formats aligned to consumer needs. • In common with other multi-nationals the COVID-19 pandemic has placed significant pressures on the Group’s logistics supply chain. These impacts will continue going forward but are anticipated to be of lower potential impact than in the previous 18 months • Additionally, the pandemic has placed pressure on raw material suppliers which may result in some future cost increases • Track and Trace regulation continues to roll out across markets, increasing compliance requirements • Continuing frequency of adverse weather globally due to climate change potentially impacting supply chains Inability to attract, retain and develop required capabilities to achieve strategic objectives and/or provide a safe, healthy working environment. • Development of new purpose, vision, and behaviour framework to drive cultural change • Recruitment and development of a renewed executive and senior leadership in the year, to ensure achievement of strategy • The development of an equality, diversity and inclusion strategy, senior leadership training and the development of employee resource groups • The business continues to focus on the welfare of its people across the globe as COVID-19 continues to impact; activities include actions to track in-market changes and the development of specific communication and support tools tailored to the needs of each country

Ability to Sell

Total Risks: 1/12 (8%)Below Sector Average

Sales & Marketing1 | 8.3%

Sales & Marketing - Risk 1

Added

Product portfolio and/or interaction approach not aligned to consumer preferences

Product portfolio not aligned to consumer needs or demands, and/or product development not sufficiently agile to respond to changes in preferences or market structure and competitor offerings. Brand strength is not strong enough to attract or retain customers. • Emergence of new low-price tiers across many markets • Continuation of downtrading trend continues as consumers become increasingly value driven • Creation of Global Consumer Office in line with consumer focus strategy • If the Group’s product portfolio fails to meet consumer preferences, then reduced demand will result in lower sales volumes and reduced brand equity • Failure to ensure effective implementation of market or retail initiatives could result in lost opportunities and wasted investments • Failure to act upon consumer insights prevents opportunities from being seized and impacts growth • Failure to identify IP constraints in the innovation of new products could impact development and/or launch limiting the ability to respond to competitor offerings • Chief Consumer Officer and Global Consumer Office leadership roles recruited in year to strengthen consumer focus • Brand initiatives and opportunities identified and developments completed • Consumer panel approach updated to provide more effective feedback processes • Brand monitoring, including equity tracking updated • Innovation processes are designed to develop consumer products based upon robust analysis, testing and scientific support • IP risks are managed by subject matter experts within the Group • The alignment of innovation and development plans with the Group’s current NGP ambition • The development of products and/or relevant route to market and pricing strategies that meet and drive consumer demand • Speed and quality of innovation enables the drumbeat of consumer activations that ensure both brand relevance and continued brand loyalty • Management of “local hero” brands in market offers ability to realise local opportunities

Macro & Political

Total Risks: 1/12 (8%)Below Sector Average

Natural and Human Disruptions1 | 8.3%

Natural and Human Disruptions - Risk 1

Added

Climate change

We recognise the importance of disclosing climate-related risks and opportunities. We have reported on our approach to managing and mitigating climate related risks for a number of years, both within our Sustainability Reporting and CDP disclosures. Whilst we have assessed both the physical (climatic) and transitional (technological) risks that may impact our business, we do not focus on climate change as a principal risk in itself. Instead we find greater value in ensuring that the risks and opportunities are assessed by each risk owner. With the support of subject matter experts, risk owners review the potential cause and likelihood of the risk materialising. For example, how extreme weather events or increased prices may impact on the supply of raw materials. By ensuring the assessment of the risks and opportunities on an enterprise-wide basis we have created a framework which operationalises the mitigation of climate risk and creates accountability across the organisation. Further information on our ESG approach can be found on page 54

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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