AmazonScience/document-haystack

1In our asset management business, investment performance is an important factor influencing the level of assets that we manage. Poor 2investment advice or performance could hurt revenue and growth as existing clients might withdraw funds in favor of better 3performing products. Additionally, the ability to attract funds from existing and new clients might diminish. Overall economic 4conditions may limit the amount that customers are able or willing to invest as well as the value of the assets they do invest. The 5failure or negative performance of products of other financial institutions could lead to a loss of confidence in similar products offered 6by us without regard to the performance of our products. Such a negative contagion could lead to withdrawals, redemptions and 7liquidity issues in such products and have an adverse impact on our assets under management and asset management revenues and 8earnings.9We are at risk for an adverse impact on our business due to damage to our reputation.10Our ability to compete effectively, to attract and retain customers and employees, and to grow our business is dependent on 11maintaining our reputation and having the trust of our customers, employees, the communities that we serve and other stakeholders. 12Many types of developments, if publicized, can negatively impact a company’s reputation with adverse consequences to its business.13Financial services companies are highly vulnerable to reputational damage when they are found to have harmed customers, 14particularly retail customers, through conduct that is seen as illegal, unfair, deceptive, abusive, manipulative or otherwise wrongful. 15There also may be reputational damage from human error or systems failures viewed as having harmed customers without involving 16misconduct, including service disruptions or negative perceptions regarding our ability to maintain the security of our technology 17systems and protect client data. For example, we may suffer reputational harm to the extent that we are unable to successfully detect, 18prevent and remedy fraud that harms our clients. Our reputation may also be harmed by failing to deliver products and services of the 19quality expected by our customers and support the communities that we serve. In addition, our reputation may be harmed as a result of 20our participation in certain programs, such as those supporting diversity and inclusion, that may expose us to increased scrutiny and 21criticism. Significant acquisitions by large banks also often attract public scrutiny, which may result in negative publicity that 22adversely affects our reputation if we engage in such a transaction. We are also subject to the risk of reputational harm resulting from 23conduct of persons identified as our employees but acting outside of the scope of their employment, including through their 24misconduct, unethical behavior, or activities on personal social media. The reputational impact is likely greater to the extent that the 25bad conduct, errors or failures are pervasive, long-standing or affect a significant number of customers, particularly retail consumers. 26The negative impact of such reputational damage on our business may be disproportionate to the actual harm caused to customers. It 27may be severe even if we fully remediate any harm suffered by our customers. Furthermore, because we conduct most of our 28businesses under the “PNC” brand, negative public opinion about one business could also affect our other businesses. In addition, we 29could suffer reputational harm and a loss of customer trust as a result of the conduct of others in our industry even if we have not 30engaged in such conduct. We use third parties to help in many aspects of our business, with the risk that their conduct can affect our 31reputation regardless of the degree to which we are responsible for it.32To an increasing extent, financial services companies, including PNC, are facing criticism with accompanying reputational risk from 33activists, investors and stakeholders who believe companies should be focusing more or less on environmental, social and governance 34matters. Companies in our industry, including PNC, are targeted for engaging in business with specific customers or with customers in 35particular industries, where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as the 36environment, consumer health and safety, or society at large. In addition, some activists, investors and other stakeholders are seeking 37increased transparency and action from financial services companies with respect to environmental, social and governance activities, 38political activities and activities that are or may be perceived to be politically partisan in nature. Criticism has come in many forms, 39including protests at PNC facilities and social media campaigns. In some circumstances, our stakeholders have held and continue to 40hold conflicting views on the role PNC and other financial services companies should play in continuing to or refraining from 41financing certain sectors. In some cases, we are subject to potentially conflicting proposed and enacted state and local laws affecting 42our industry that regulate the manner in which or whether we may finance or service certain clients, industries or sectors. Many of 43these issues are divisive without broad agreement as to the appropriate steps a company such as PNC should take. As a result, however 44we respond to such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or 45current or potential employees refuse to work for us. This can be true regardless of whether we are perceived by some as not having 46done enough to address these concerns or by others as having inappropriately yielded to these pressures. These pressures can also be a 47factor in decisions as to which business opportunities and customers we pursue, potentially resulting in foregone profit opportunities.48The speed with which information moves through social media and other news sources on the internet means that negative information 49about PNC can rapidly have a broadly adverse impact on our reputation. This is true whether or not the information is accurate. False 50information can also be spread from unaffiliated or parody social media accounts pretending to be official company communications 51channels. Once information has gone viral, it can be difficult to counter it effectively, either by correcting inaccuracies or 52communicating remedial steps taken for actual issues. The potential impact of negative information going viral means that material 53reputational harm can result from a single discrete or isolated incident.54 5528    The PNC Financial Services Group, Inc. – 2023 Form 10-K