Part I Item 1A. Risk Factors.

The following discussion sets forth the material risk factors that
could affect JPMorganChase’s financial condition and operations. Readers should not
consider any descriptions of these factors to be a complete set of all potential risks that
could affect the Firm. Any of the risk factors discussed below could by itself, or combined
with other factors, materially and adversely affect JPMorganChase’s business, results of
operations, financial condition, capital position, liquidity, competitive position or
reputation, including by materially increasing expenses or decreasing revenues, which
could result in material losses or a decrease in earnings. Summary The principal risk
factors that could adversely affect JPMorganChase’s business, results of operations,
financial condition, capital position, liquidity, competitive position or reputation include: •
Regulatory risks, including the impact that applicable laws, rules and regulations in the
highlyregulated and supervised financial services industry, as well as changes to or in the
application, interpretation or enforcement of those laws, rules and regulations, can have
on JPMorganChase’s business and operations, including JPMorganChase incurring
additional costs associated with assessments, levies or other governmental charges; the
ways in which differences in financial services regulation and supervision in different
jurisdictions or with respect to certain competitors can negatively impact
JPMorganChase’s business; the ways in which governmental policies that discourage or
penalize business relationships with clients in certain industries, or require specific
business practices, can negatively affect JPMorganChase's businesses; the penalties and
collateral consequences, and higher compliance and operational costs, that
JPMorganChase may incur when resolving a regulatory investigation; the ways in which less
predictable legal and regulatory frameworks in certain jurisdictions can negatively impact
JPMorganChase’s operations and financial results; and the losses that security holders and
other unsecured creditors will absorb if JPMorganChase were to enter into a resolution. •
Political risks, including the potential negative effects on JPMorganChase’s businesses due
to economic uncertainty or instability caused by political developments. • Market risks,
including the effects that economic and market events and conditions, political
developments, changes in interest rates and credit spreads, and market fluctuations can
have on JPMorganChase’s consumer and wholesale businesses and its investment and
market-making positions and on JPMorganChase’s earnings and its liquidity and capital
levels. • Credit risks, including potential negative effects from adverse changes in the
financial condition of clients, customers, counterparties, custodians and central
counterparties; the potential for losses due to declines in the value of collateral in stressed
market conditions; and potential negative impacts from concentrations of credit risk with
respect to clients, customers, counterparties and other market participants. • Liquidity
risks, including the risk that JPMorganChase’s liquidity could be impaired by market-wide
illiquidity or disruption, unforeseen liquidity or capital requirements, the inability to sell
assets, default by a significant market participant, unanticipated outflows of cash or
collateral, or lack of market or customer confidence in JPMorganChase; the dependence of
JPMorgan Chase & Co. on the cash flows of its subsidiaries; and the potential adverse
effects that any downgrade in any of JPMorganChase’s credit ratings may have on its
liquidity and cost of funding. • Capital risks, including the risk that any failure by or inability
of JPMorganChase to maintain the required level and composition of capital, or
unfavorable changes in applicable capital requirements, could limit JPMorganChase’s
ability to distribute capital to shareholders or to support its business activities. •
Operational risks, including risks associated with JPMorganChase’s dependence on its
operational systems and its employees, as well as the systems and employees of third
parties, market participants and service providers; the potential negative effects of failing
to identify and address operational risks related to the failure of internal or external
operational systems, the introduction of or changes to products, services and delivery
platforms or the adoption of new technologies; risks related to safeguarding personal
information; the harm that could be caused by a successful cyber attack affecting
JPMorganChase or by other extraordinary events; risks associated with JPMorganChase’s
risk management framework and control environment, its models and estimations and
associated judgments used in its stress testing and financial statements, and controls over
disclosure and financial reporting; and potential adverse effects of failing to comply with
applicable standards for the oversight of vendors and other service providers. • Strategic
risks, including the damage to JPMorganChase’s competitive standing and results that
could occur if management fails to develop and execute effective business strategies; risks
associated with the significant and increasing competition that JPMorganChase faces; and
the potential adverse impacts of climate change on the 10effectiveness of
JPMorganChase’s existing business strategies with respect to its operations, clients and
customers. • Conduct risks, including the negative impact that can result from the actions
or misconduct of employees, including any failure of employees to conduct themselves in
accordance with JPMorganChase’s expectations, policies and practices. • Reputation
risks, including the potential adverse effects on JPMorganChase’s relationships with its
clients, customers, shareholders, regulators and other stakeholders that could arise from
employee misconduct, security breaches, inadequate risk management, compliance or
operational failures, litigation and regulatory investigations, failure to satisfy expectations
concerning environmental, social and governance concerns, failure to effectively manage
conflicts of interest or to satisfy fiduciary obligations, or other factors that could damage
JPMorganChase’s reputation. • Country risks, including potential impacts on
JPMorganChase’s businesses from an outbreak or escalation of hostilities between
countries or within a country or region; and the potential adverse effects of local economic,
political, regulatory and social factors on JPMorganChase’s business and revenues in
certain countries in which it operates. • People risks, including the criticality of attracting
and retaining qualified employees; and the potential adverse effects of unfavorable
changes in immigration or travel policies on JPMorganChase’s workforce. • Legal risks,
including those relating to litigation and regulatory and government investigations. The
above summary is subject in its entirety to the discussion of the risk factors set forth below.
Regulatory JPMorganChase’s businesses are highly regulated, and the laws, rules and
regulations that apply to JPMorganChase have a significant impact on its business and
operations. JPMorganChase is a financial services firm with operations worldwide.
JPMorganChase must comply with the laws, rules and regulations that apply to its
operations in all of the jurisdictions around the world in which it does business, and
financial services firms such as JPMorganChase are subject to extensive and constantly-
evolving regulation and supervision. The regulation and supervision of JPMorganChase
significantly affects the way that it conducts its business and structures its operations, and
JPMorganChase could be required to make changes to its business and operations in
response to supervisory expectations or decisions or to new or changed laws, rules and
regulations. These types of developments could result in JPMorganChase incurring
additional costs or experiencing a reduction in revenues to comply with applicable laws,
rules and regulations, which could reduce its profitability. Furthermore, JPMorganChase’s
entry into or acquisition of a new business or an increase in its principal investments may
require JPMorganChase to comply with additional laws, rules, and regulations. Additionally,
JPMorganChase’s ability to execute certain business initiatives could become more
challenging due to increased regulation in the financial services industry, such as
limitations on late payment, overdraft and interchange fees. This could adversely affect
JPMorganChase’s earnings from its consumer businesses, prompting the reevaluation or
adjustment of certain businesses or product offerings, as well as the reallocation of
resources and incurrence of restructuring costs, which could impact revenue and
profitability in the affected lines of business. In response to new and existing laws, rules
and regulations and expanded supervision, JPMorganChase has in the past been and could
in the future be, required to: • limit the products and services that it offers • reduce the
liquidity that it can provide through its market-making activities • refrain from engaging in
business opportunities that it might otherwise pursue • pay higher taxes (including as part
of any minimum global tax regime), assessments, levies or other governmental charges,
including in connection with the resolution of tax examinations • incur losses, including
with respect to fraudulent transactions perpetrated against its customers • dispose of
certain assets, and do so at times or prices that are disadvantageous • impose restrictions
on certain business activities, or • increase the prices that it charges for products and
services, which could reduce the demand for them. Any failure by JPMorganChase to
comply with the laws, rules and regulations to which it is subject could result in: •
increased regulatory and supervisory scrutiny • regulatory and governmental enforcement
actions • the imposition of fines, penalties or other sanctions • increased exposure to
litigation, or • harm to its reputation. 11Part I Differences and inconsistencies in financial
services regulation and supervision can negatively impact JPMorganChase’s businesses,
operations and financial results. The content and application of laws, rules and regulations
affecting financial services firms can vary according to factors such as the size of the firm,
the jurisdiction in which it is organized or operates, and other criteria. For example: • larger
firms such as JPMorganChase are often subject to more stringent supervision, regulation
and regulatory scrutiny • financial technology companies and other nontraditional
competitors may not be subject to banking regulation, or may be supervised by a national
or state regulatory agency that does not have the same resources or regulatory priorities as
the regulatory agencies that supervise more diversified financial services firms, or • the
financial services regulatory and supervisory framework in a particular jurisdiction may
favor financial institutions that are based in that jurisdiction. These types of differences in
the regulatory and supervisory framework can result in JPMorganChase losing market share
to competitors that are less regulated or not subject to regulation, especially with respect
to unregulated financial products. There can also be significant differences in the ways that
similar regulatory initiatives affecting the financial services industry are implemented in the
U.S. and in other countries and regions in which JPMorganChase does business. For
example, when adopting rules that are intended to implement a global regulatory or
supervisory standard, a national regulator may introduce additional or more restrictive
requirements, which can create competitive disadvantages for financial services firms,
such as JPMorganChase, that may be subject to those enhanced regulations. In addition,
certain national and multi-national bodies and governmental agencies outside the U.S.
have adopted laws, rules or regulations that may conflict with or prohibit JPMorganChase
from complying with laws, rules and regulations to which it is otherwise subject, creating
conflict of law issues that also increase its risk of non-compliance in those jurisdictions.
Legislative and regulatory initiatives outside the U.S. have required and could in the future
require JPMorganChase to make significant modifications to its operations and legal entity
structure in the relevant countries or regions in order to comply with those requirements.
These include laws, rules and regulations that have been adopted or proposed, as well as
regulatory expectations, relating to: • the establishment of locally-based intermediate
holding companies or operating subsidiaries • requirements to maintain minimum
amounts of capital or liquidity in locally-based subsidiaries • the implementation of
processes within locallybased subsidiaries to comply with local regulatory requirements or
expectations • the separation (or “ring fencing”) of core banking products and services
from markets activities • requirements for the orderly resolution of financial institutions •
requirements for executing or settling transactions on exchanges or through central
counterparties (“CCPs”), or for depositing funds with other financial institutions or clearing
and settlement systems • position limits and reporting rules for derivatives • governance
and accountability regimes • conduct of business and control requirements, and •
restrictions on compensation. These types of differences, inconsistencies and conflicts in
financial services regulation have required and could in the future require JPMorganChase
to: • divest assets or restructure its operations • maintain higher levels of capital and
liquidity, or absorb increased capital and liquidity costs • incur higher operational and
compliance costs • change the prices that it charges for its products and services • curtail
the products and services that it offers to its customers and clients • curtail other business
opportunities, including acquisitions or principal investments, that it otherwise would have
pursued • become subject to regulatory fines, penalties or other sanctions, or • incur
higher costs for complying with different legal and regulatory frameworks. Any or all of
these factors could harm JPMorganChase’s ability to compete against other firms that are
not subject to the same laws, rules and regulations or supervisory oversight, or harm
JPMorganChase’s businesses, results of operations and profitability. Resolving regulatory
investigations can subject JPMorganChase to significant penalties and collateral
consequences, and could result in higher compliance costs or restrictions on its
operations. JPMorganChase is subject to heightened oversight and scrutiny from regulatory
authorities in many jurisdictions. JPMorganChase has paid significant fines, provided other
monetary relief, incurred other 12penalties and experienced other repercussions in
connection with resolving investigations and enforcement actions by governmental
agencies. JPMorganChase could become subject to similar regulatory or governmental
resolutions or other actions in the future, and addressing the requirements of any such
resolutions or actions could result in JPMorganChase incurring higher operational and
compliance costs, including devoting substantial resources to the required remediation or
needing to comply with other restrictions. In connection with resolving specific regulatory
investigations or enforcement actions, certain regulators have required JPMorganChase
and other financial institutions to admit wrongdoing with respect to the activities that gave
rise to the resolution. These types of admissions can lead to: • greater exposure in litigation
• damage to JPMorganChase’s reputation • disqualification from doing business with
certain clients or customers, or in specific jurisdictions, or • other direct and indirect
adverse effects. Furthermore, government officials in the U.S. and other countries have
demonstrated a willingness to bring criminal actions against financial institutions and have
required that institutions plead guilty to criminal offenses or admit other wrongdoing in
connection with resolving regulatory investigations or enforcement actions. Resolutions of
this type can have significant collateral consequences for the subject financial institution,
including: • loss of clients, customers and business • restrictions on offering certain
products or services, and • losing permission to operate certain businesses, either
temporarily or permanently. JPMorganChase expects that: • it and other financial services
firms will continue to be subject to heightened regulatory scrutiny and governmental
investigations and enforcement actions • governmental authorities will continue to require
that financial institutions be penalized for actual or deemed violations of law with formal
and punitive enforcement actions, including the imposition of significant monetary and
other sanctions, rather than resolving these matters through informal supervisory actions,
and • governmental authorities will be more likely to pursue formal enforcement actions
and resolutions against JPMorganChase to the extent that it has previously been subject to
other governmental investigations or enforcement actions. If JPMorganChase fails to meet
the requirements of any resolution of a governmental investigation or enforcement action,
or to maintain risk and control processes that meet the heightened standards and
expectations of its regulators, it could be required to, among other things: • enter into
further resolutions of investigations or enforcement actions • pay additional regulatory
penalties or enter into judgments, or • accept material regulatory restrictions on, or
changes in the management of, its businesses. In these circumstances, JPMorganChase
could also become subject to other sanctions, or to prosecution or civil litigation with
respect to the conduct that gave rise to an investigation or enforcement action. In addition,
JPMorganChase can be subject to higher costs or requests for additional capital in
connection with the resolution of governmental investigations and enforcement actions
involving newly-acquired businesses, companies in which JPMorganChase has made
principal investments, parties to joint ventures with JPMorganChase, and vendors with
which JPMorganChase does business. JPMorganChase’s operations and financial results
can be negatively impacted in jurisdictions with less predictable legal and regulatory
frameworks. JPMorganChase conducts existing and new business in certain countries,
states, municipalities, territories and other jurisdictions in which the application of the rule
of law is inconsistent, extralegal or less predictable, including with respect to: • the
absence of a statutory or regulatory basis or guidance for engaging in specific types of
business or transactions • conflicting or ambiguous laws, rules, regulations and judicial
orders, or the inconsistent application or interpretation of existing laws, rules, regulations
and judicial precedents • actions by or at the direction of government officials or agencies
• uncertainty concerning the enforceability of intellectual property rights or contractual or
other obligations • difficulty in competing in economies in which the government controls
or protects all or a portion of the local economy or specific businesses, or where graft or
corruption may be pervasive • the threat of regulatory investigations, civil litigations or
criminal prosecutions that are arbitrary or otherwise contrary to established legal
principles in other parts of the world, and 13Part I • the termination of licenses required to
operate in the local market or the suspension of business relationships with governmental
bodies. If the application of the laws, rules, regulations and judicial precedents in any
jurisdiction is susceptible to producing outcomes that are inconsistent, unexpected or
contrary to established legal principles, this can create a more difficult environment in
which JPMorganChase conducts its business and could negatively affect JPMorganChase’s
operations and reduce its earnings with respect to that jurisdiction. For example,
JPMorganChase has faced actual and threatened litigation in Russia with respect to
payments that JPMorganChase cannot make under, and is contractually excused from
paying as a result of, relevant economic sanctions laws. That litigation has also resulted in
the seizure of assets. In addition, conducting business in jurisdictions with less predictable
legal and regulatory frameworks could require JPMorganChase to devote significant
additional resources to understanding local laws, rules and regulations, as well as
structuring its operations to comply with local laws, rules and regulations and
implementing and administering related internal policies and procedures. There can be no
assurance that JPMorganChase will always be successful in its efforts to fully understand
and to conduct its business in compliance with the laws, rules and regulations of all of the
jurisdictions in which it operates, and the risk of non-compliance, or of interference with
JPMorganChase's businesses, can be greater in jurisdictions that have less predictable
legal and regulatory frameworks. JPMorganChase's businesses may be negatively
impacted by governmental policies that either discourage or penalize business with certain
industries or require specific business practices. JPMorganChase's businesses and results
of operations may be adversely affected by actions or initiatives by national, state or local
governmental authorities that: • seek to discourage financial institutions from doing
business with companies engaged in certain industries, or conversely, to penalize financial
institutions that elect not to do business with such companies, or • mandate specific
business practices that companies operating in the relevant jurisdiction must adopt.
Because governmental policies in one jurisdiction may differ or conflict with those in other
jurisdictions, JPMorganChase may face negative consequences regardless of the course of
action it takes or elects not to take, including: • restrictions or prohibitions on doing
business within a particular jurisdiction, or with governmental entities in a jurisdiction • the
threat of enforcement actions, including under antitrust or other anti-competition laws,
rules and regulations, and • harm to its reputation arising from public criticism, including
from politicians, activists and other stakeholders. JPMorganChase has been prohibited
from engaging in certain business activities in specific jurisdictions as a result of these
types of governmental actions, and there is no assurance that it will not face similar
restrictions on its business and operations in the future. Requirements for the orderly
resolution of JPMorganChase could result in JPMorganChase having to restructure or
reorganize its businesses and could increase its funding or operational costs or curtail its
businesses. JPMorganChase is required under Federal Reserve and FDIC rules to prepare
and submit periodically to those agencies a detailed plan for rapid and orderly resolution in
bankruptcy, without extraordinary government support, in the event of material financial
distress or failure. The evaluation of JPMorganChase’s resolution plan by these agencies
may change, and the requirements for resolution plans may be modified from time to time.
Any such determinations or modifications could result in JPMorganChase needing to make
changes to its legal entity structure or to certain internal or external activities, which could
increase its funding or operational costs, or hamper its ability to serve clients and
customers. If the Federal Reserve and the FDIC were both to determine that a resolution
plan submitted by JPMorganChase has deficiencies, they could jointly impose more
stringent capital, leverage or liquidity requirements or restrictions on JPMorganChase’s
growth, activities or operations. The agencies could also require that JPMorganChase
restructure, reorganize or divest assets or businesses in ways that could materially and
adversely affect JPMorganChase’s operations and strategy. Holders of JPMorgan Chase &
Co.’s debt and equity securities will absorb losses if it were to enter into a resolution.
Federal Reserve rules require that JPMorgan Chase & Co. (the “Parent Company”) maintain
minimum levels of unsecured external long-term debt and other lossabsorbing capacity
with specific terms (“eligible LTD”) for purposes of recapitalizing JPMorganChase’s
operating subsidiaries if the Parent Company were to enter into a resolution either: • in a
bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy Code, or • in a
receivership administered by the FDIC under Title II of the Dodd-Frank Act (“Title II”). 14If
the Parent Company were to enter into a resolution, holders of eligible LTD, other
unsecured creditors and holders of equity securities of the Parent Company will absorb the
losses of the Parent Company and its subsidiaries. The preferred “single point of entry”
strategy under JPMorganChase’s resolution plan contemplates that the Parent Company
would enter bankruptcy proceedings and JPMorganChase’s material subsidiaries would be
recapitalized, as needed, so that they could continue normal operations or subsequently
be divested or wound down in an orderly manner. As a result, the Parent Company’s losses
and any losses incurred by its subsidiaries would be imposed first on holders of the Parent
Company’s equity securities and thereafter on its unsecured creditors, including holders of
eligible LTD. Claims of the Parent Company's shareholders and unsecured creditors would
have a junior position to the claims of creditors of JPMorganChase’s subsidiaries and to the
claims of priority (as determined by statute) and secured creditors of the Parent Company.
Accordingly, in a resolution of the Parent Company in bankruptcy, unsecured creditors of
the Parent Company, including holders of eligible LTD of the Parent Company, would realize
value only to the extent available to the Parent Company as a shareholder of JPMorgan
Chase Bank, N.A. and its other subsidiaries, and only after any claims of priority and
secured creditors of the Parent Company have been fully repaid. The FDIC has similarly
indicated that a single point of entry recapitalization model would be its expected strategy
to resolve a systemically important financial institution, such as the Parent Company,
under Title II. However, the FDIC has not formally adopted or committed to any specific
resolution strategy. If the Parent Company were to approach, or enter into, a resolution,
none of the Parent Company, the Federal Reserve or the FDIC is obligated to follow
JPMorganChase’s preferred resolution strategy, and losses to unsecured creditors of the
Parent Company, including holders of eligible LTD, and to holders of equity securities of the
Parent Company, under whatever strategy is ultimately followed, could be greater than they
might have been under JPMorganChase’s preferred strategy. Political Economic
uncertainty or instability caused by political and geopolitical developments can negatively
impact JPMorganChase’s businesses. Political developments in the U.S. and other
countries can cause uncertainty in the economic environment and market conditions in
which JPMorganChase operates its businesses. Certain governmental policy initiatives, as
well as heightened geopolitical tensions, could significantly affect U.S. and global
economic growth and cause higher volatility in the financial markets, including: • monetary
policies and actions taken by the Federal Reserve and other central banks or governmental
authorities, including changes in interest rate levels and any sustained large-scale asset
purchases or any suspension or reversal of those actions • fiscal policies, including with
respect to taxation and spending • isolationist foreign policies • economic or financial
sanctions • the implementation of tariffs and other protectionist trade policies • changes
to immigration policies, or • actions that the government takes or fails to take in response
to the effects of health emergencies, the spread of infectious diseases, epidemics or
pandemics. These types of political developments, and uncertainty about the possible
outcomes of these developments, could: • erode investor or consumer confidence in the
U.S. economy and financial markets, which could potentially undermine the status of the
U.S. dollar as a safe haven currency • provoke retaliatory countermeasures by other
countries and otherwise heighten tensions in regulatory, enforcement or diplomatic
relations • increase the risk of targeted cyber attacks • increase concerns about whether
the U.S. government will be funded, and its outstanding debt serviced, at any particular
time • result in periodic shutdowns of the U.S. government • influence investor perceptions
concerning government support of certain sectors of the economy or the economy as a
whole • influence monetary policy actions of the Federal Reserve to moderate the
economic impact of political developments, including decisions on interest rate levels and
asset purchases and sales • adversely affect the financial condition or credit ratings of
clients and counterparties with which JPMorganChase does business, or • cause
JPMorganChase to refrain from engaging in business opportunities that it might otherwise
pursue. These factors could lead to: • slower growth rates, rising inflation or recession •
disruptions in labor markets • greater market volatility 15Part I • a contraction of available
credit and the widening of credit spreads • U.S. dollar currency fluctuations • lower
investments in a particular country or sector of the economy • large-scale sales of
government debt and other debt and equity securities • reduced commercial activity
among trading partners or disruptions to supply chains, or • the possible departure of a
country from, or the dissolution or formation of, a political or economic alliance or treaty.
Under certain circumstances, such as geopolitically challenging situations in regions like
Russia, the Middle East and China, these various risks could become highly correlated or
combine in unprecedented ways. Any of these potential outcomes could cause
JPMorganChase to suffer losses on its market-making positions or in its investment
portfolio, reduce its liquidity and capital levels, increase the allowance for credit losses or
lead to higher net charge-offs, hamper its ability to deliver products and services to its
clients and customers, and weaken its results of operations and financial condition or
credit rating. Market Economic and market events and conditions can materially affect
JPMorganChase’s businesses and investment and market-making positions.
JPMorganChase’s results of operations can be negatively affected by adverse changes in
any of the following: • investor, consumer and business sentiment • events that reduce
confidence in the financial markets • inflation, deflation or recession • high unemployment
or, conversely, a tightening labor market • the availability and cost of capital, liquidity and
credit • levels and volatility of interest rates, credit spreads and market prices for
currencies, debt and equity securities and commodities, as well as the duration of any
such changes • the economic effects of an outbreak or escalation of war, hostilities,
terrorism or other geopolitical instabilities, cyber attacks, climate change, natural
disasters, severe weather conditions, health emergencies, the spread of infectious
diseases, epidemics or pandemics or other extraordinary events beyond JPMorganChase’s
control, and • the state of the U.S. and global economies. All of these are affected by global
economic, market and political events and conditions, including monetary policies and
actions taken by central banks or other governmental authorities, as well as by the
regulatory environment. In addition, JPMorganChase’s investment portfolio and market-
making businesses can suffer losses due to unanticipated market events, including: •
severe declines in asset values • unexpected credit events • unforeseen events or
conditions that may cause previously uncorrelated factors to become correlated (and vice
versa) • the inability to effectively hedge risks related to market-making and investment
portfolio positions, or • other market risks that may not have been appropriately taken into
account in the development, structuring or pricing of a financial instrument. If
JPMorganChase experiences significant losses in its investment portfolio or from market-
making activities, this could reduce JPMorganChase’s profitability and its liquidity and
capital levels, and thereby constrain the growth of its businesses. JPMorganChase’s
consumer businesses can be negatively affected by adverse economic conditions and
governmental policies. JPMorganChase’s consumer businesses are particularly affected by
U.S. and global economic conditions, including: • personal and household income
distribution • unemployment or underemployment • prolonged periods of exceptionally
high or low interest rates, or significant changes to interest rates • changes in the value of
collateral such as residential real estate and vehicles • changes in housing prices • the
level of inflation and its effect on prices for goods and services • consumer and small
business confidence levels, and • changes in consumer spending or in the level of
consumer debt. Heightened levels of unemployment or underemployment that result in
reduced personal and household income could negatively affect consumer credit
performance to the extent that consumers are less able to service their debts. In addition,
sustained low growth, low or negative interest rates, inflationary pressures or recessionary
conditions could diminish customer demand for the products and services 16 offered by
JPMorganChase’s consumer businesses. Adverse economic conditions could also lead to
an increase in delinquencies, additions to the allowance for credit losses and higher net
charge-offs, which can reduce JPMorganChase’s earnings. These consequences could be
significantly worse in certain geographies, including where declining industrial or
manufacturing activity has resulted in or could result in higher levels of unemployment, or
where high levels of consumer debt, such as outstanding student loans, could impair the
ability of customers to pay their other consumer loan obligations. JPMorganChase’s
earnings from its consumer businesses could also be adversely affected by governmental
policies and actions that affect consumers, including: • policies and initiatives relating to
medical insurance, education, immigration and housing, or that may impact employment
status • laws, rules and regulations relating specifically to the financial services industry,
such as limitations on late payment, overdraft and interchange fees, and • policies aimed
at the economy more broadly, such as higher taxes and increased regulation, which could
result in reductions in consumer disposable income. Unfavorable market and economic
conditions can have an adverse effect on JPMorganChase’s wholesale businesses. In
JPMorganChase’s wholesale businesses, market and economic factors can affect the
volume of transactions that JPMorganChase executes for its clients or for which it advises
clients, and, therefore, the revenue that JPMorganChase receives from those transactions.
These factors can also influence the willingness of other financial institutions and investors
to participate in capital markets transactions that JPMorganChase manages, such as loan
syndications or securities underwriting. Furthermore, if a significant and sustained
deterioration in market conditions were to occur, the profitability of JPMorganChase’s
businesses engaged in capital markets activities, including loan syndication, securities
underwriting and leveraged lending activities, could be reduced to the extent that those
businesses: • earn less fee revenue due to lower transaction volumes, including when
clients are unwilling or unable to refinance their outstanding debt obligations in
unfavorable market conditions, or • dispose of portions of credit commitments at a loss, or
hold larger residual positions in credit commitments that cannot be sold at favorable
prices. The fees that JPMorganChase earns from managing client assets or holding assets
under custody for clients could be diminished by declining asset values or other adverse
macroeconomic conditions. For example, higher interest rates or a downturn in financial
markets could affect the valuation of client assets that JPMorganChase manages or holds
under custody, which, in turn, could affect JPMorganChase’s revenue from fees that are
based on the amount of assets under management or custody. Similarly, adverse
macroeconomic or market conditions could prompt outflows from JPMorganChase funds
or accounts, or cause clients to invest in products that generate lower revenue. Substantial
and unexpected withdrawals from a JPMorganChase fund can also hamper the investment
performance of the fund, particularly if the outflows create the need for the fund to dispose
of fund assets at disadvantageous times or prices, and could lead to further withdrawals
based on the weaker investment performance. An adverse change in market conditions in
particular segments of the economy, such as a sudden and severe downturn in oil and gas
prices or an increase in commodity prices, severe declines in commercial real estate
values, or sustained changes in consumer behavior that affect specific economic sectors,
could have a material adverse effect on clients of JPMorganChase whose operations or
financial condition are directly or indirectly dependent on the health or stability of those
market segments or economic sectors, as well as clients that are engaged in related
businesses. JPMorganChase could incur credit losses on its loans and other commitments
to clients that operate in, or are dependent on, any sector of the economy that is or comes
under stress. An economic downturn or sustained changes in consumer behavior that
results in shifts in consumer and business spending could also have a negative impact on
certain of JPMorganChase’s wholesale clients, and thereby diminish JPMorganChase’s
earnings from its wholesale operations. For example, the businesses of certain of
JPMorganChase’s wholesale clients are dependent on consistent streams of rental income
from commercial real estate properties, including offices, which are owned or being built
by those clients. Sustained adverse economic conditions or hybrid work models could
result in reductions in the rental cash flows that owners or developers receive from their
tenants which, in turn, could depress the values of the properties, impair the ability of
borrowers to service or refinance their commercial real estate loans and lead to an
increase in foreclosures. These consequences could result in JPMorganChase experiencing
increases in the allowance for credit losses, higher delinquencies, defaults and charge-offs
within its commercial real estate loan portfolio and incurring higher costs for servicing a
larger volume of delinquent loans in that portfolio. An increase in foreclosures could result
in higher operational risk associated with JPMorganChase owning and managing real
property, 17Part I and any inadequacy in governance or control over the foreclosed
properties could result in regulatory scrutiny and reputational harm. Changes in interest
rates and credit spreads can adversely affect JPMorganChase’s earnings, its liquidity or its
capital levels. When interest rates are high or increasing, JPMorganChase can generally be
expected to earn higher net interest income. However, higher interest rates can also lead
to: • fewer originations of commercial and residential real estate loans • losses on
underwriting exposures or incremental client-specific downgrades, or increases in the
allowance for credit losses and net charge-offs due to higher financing costs for clients •
the loss of deposits, particularly if customers withdraw deposits because they believe that
interest rates offered by JPMorganChase are lower than those of competitors or if
JPMorganChase makes incorrect assumptions about depositor behavior • losses on
available-for-sale (“AFS”) securities held in the investment securities portfolio • lower net
interest income if central banks introduce interest rate increases more quickly than
anticipated and this results in a misalignment in the pricing of short-term and long-term
borrowings • less liquidity in the financial markets, and • higher funding costs. All of these
outcomes could adversely affect JPMorganChase’s earnings or its liquidity and capital
levels, and any negative outcomes could be more severe in a prolonged period of high
interest rates. Higher interest rates can also negatively affect the payment performance on
loans within JPMorganChase’s consumer and wholesale loan portfolios that are linked to
variable interest rates. If borrowers of variable rate loans are unable to afford higher interest
payments, those borrowers may reduce or stop making payments, thereby causing
JPMorganChase to incur losses and increased operational costs related to servicing a
higher volume of delinquent loans. On the other hand, a low or negative interest rate
environment may cause: • net interest margins to be compressed, which could reduce the
amounts that JPMorganChase earns on its investment securities portfolio to the extent that
it is unable to reinvest contemporaneously in higheryielding instruments • unanticipated or
adverse changes in depositor behavior, which could negatively affect JPMorganChase’s
broader asset and liability management strategy, and • a reduction in the value of
JPMorganChase’s mortgage servicing rights (“MSRs”) asset, resulting in decreased
revenues. When credit spreads widen, it becomes more expensive for JPMorganChase to
borrow. JPMorganChase’s credit spreads may widen or narrow not only in response to
events and circumstances that are specific to JPMorganChase but also as a result of
general economic and geopolitical events and conditions. Changes in JPMorganChase’s
credit spreads will affect, positively or negatively, JPMorganChase’s earnings on certain
liabilities, such as derivatives, that are recorded at fair value. JPMorganChase’s results may
be materially affected by market fluctuations and significant changes in the valuation of
financial instruments. The value of securities, derivatives and other financial instruments
which JPMorganChase owns or in which it makes markets can be materially affected by
market fluctuations. Market volatility, illiquid market conditions and other disruptions in
the financial markets may make it extremely difficult to value certain financial instruments.
Subsequent valuations of financial instruments in future periods, in light of factors then
prevailing, may result in significant changes in the value of these instruments. In addition,
at the time of any disposition of these financial instruments, the price that JPMorganChase
ultimately realizes will depend on the demand and liquidity in the market at that time and
may be materially lower than their current fair value. Any of these factors could cause a
decline in the value of financial instruments that JPMorganChase owns or in which it makes
markets, which may have an adverse effect on JPMorganChase’s results of operations.
JPMorganChase’s risk management and monitoring processes, including its stress testing
framework, seek to quantify and manage JPMorganChase’s exposure to more extreme
market moves. However, JPMorganChase’s hedging and other risk management strategies
may not be effective, and it could incur significant losses, if extreme market events were to
occur. Credit JPMorganChase can be negatively affected by adverse changes in the
financial condition of clients, counterparties, custodians and CCPs. JPMorganChase
routinely executes transactions with clients and counterparties such as corporations,
financial institutions, asset managers, hedge funds, securities exchanges and government
entities within and outside the U.S. Many of these transactions expose JPMorganChase to
the credit risk of its clients and counterparties, and can involve JPMorganChase in disputes
and litigation if a client or counterparty defaults. JPMorganChase can also be subject to
losses 18or liability where a financial institution that it has appointed to provide custodial
services for client assets or funds becomes insolvent as a result of fraud or the failure to
abide by existing laws and obligations, or where clients are unable to access assets held by
JPMorganChase as custodian due to governmental actions or other factors. A default by, or
the financial or operational failure of, a CCP through which JPMorganChase executes
contracts would require JPMorganChase to replace those contracts, thereby increasing its
operational costs and potentially resulting in losses. In addition, JPMorganChase can be
exposed to losses if a member of a CCP in which JPMorganChase is also a member
defaults on its obligations to the CCP because of requirements that each member of the
CCP absorb a portion of those losses. Furthermore, JPMorganChase can be subject to
bearing its share of non-default losses incurred by a CCP, including losses from custodial,
settlement or investment activities or due to cyber or other security breaches. As part of its
clearing services activities, JPMorganChase is exposed to the risk of nonperformance by its
clients, which it seeks to mitigate by requiring clients to provide adequate collateral.
JPMorganChase is also exposed to intra-day credit risk of its clients in connection with
providing cash management, clearing, custodial and other transaction services to those
clients. If a client for which JPMorganChase provides these services becomes bankrupt or
insolvent, JPMorganChase may incur losses, become involved in disputes and litigation
with one or more CCPs, the client’s bankruptcy estate and other creditors, or be subject to
regulatory investigations. All of the foregoing events can increase JPMorganChase’s
operational and litigation costs, and JPMorganChase may suffer losses to the extent that
any collateral that it has received is insufficient to cover those losses. Transactions with
government entities, including national, state, provincial, municipal and local authorities,
can expose JPMorganChase to enhanced sovereign, credit, operational and reputation
risks. Government entities may, among other things, claim that actions taken by
government officials were beyond the legal authority of those officials or repudiate
transactions authorized by a previous incumbent government. These types of actions have
in the past caused, and could in the future cause, JPMorganChase to suffer losses or
hamper its ability to conduct business in the relevant jurisdiction. In addition, local laws,
rules and regulations could limit JPMorganChase’s ability to resolve disputes and litigation
in the event of a counterparty default or unwillingness to make previously agreed-upon
payments, which could subject JPMorganChase to losses. Disputes may arise with
counterparties to derivatives contracts with regard to the terms, the settlement procedures
or the value of underlying collateral. The disposition of those disputes could cause
JPMorganChase to incur unexpected transaction, operational and legal costs, or result in
credit losses. These consequences can also impair JPMorganChase’s ability to effectively
manage its credit risk exposure from its market activities, or cause harm to
JPMorganChase’s reputation. The financial or operational failure of a significant market
participant, such as a major financial institution or a CCP, or concerns about the
creditworthiness of such a market participant or its ability to fulfill its obligations, can
cause substantial and cascading disruption within the financial markets, including in
circumstances where coordinated action by multiple other market participants is required
to address the failure or disruption. JPMorganChase’s businesses could be significantly
disrupted by such an event, particularly if it leads to other market participants incurring
significant losses, experiencing liquidity issues or defaulting, and JPMorganChase is likely
to have significant interrelationships with, and credit exposure to, such a significant market
participant. JPMorganChase may suffer losses if the value of collateral declines in stressed
market conditions. During periods of market stress or illiquidity, JPMorganChase’s credit
risk may be further increased when: • JPMorganChase fails to realize the estimated value of
the collateral it holds • collateral is liquidated at prices that are not sufficient to recover the
full amount owed to it, or • counterparties are unable to post collateral, whether for
operational or other reasons. Furthermore, disputes with counterparties concerning the
valuation of collateral may increase in times of significant market stress, volatility or
illiquidity, and JPMorganChase could suffer losses during these periods if it is unable to
realize the fair value of collateral or to manage declines in the value of collateral.
JPMorganChase could incur significant losses arising from concentrations of credit and
market risk. JPMorganChase is exposed to greater credit and market risk to the extent that
groupings of its clients or counterparties, or obligors on securities and other financial
instruments: • engage in similar or related businesses, or in businesses in related
industries • do business in the same geographic region, or 19Part I • have business profiles,
models or strategies that could cause their ability to meet their obligations to be similarly
affected by changes in economic conditions. For example, a significant deterioration in the
credit quality of a counterparty, borrower or other obligor could lead to concerns about the
creditworthiness of other counterparties, borrowers or obligors in similar, related or
dependent industries. This type of interrelationship could exacerbate JPMorganChase’s
credit, liquidity and market risk exposure and potentially cause it to incur losses, including
fair value losses in its market-making businesses and investment portfolios. In addition,
JPMorganChase may be required to increase the allowance for credit losses or establish
other reserves with respect to certain clients, industries or country exposures in order to
align with directives or expectations of its banking regulators. Similarly, challenging
economic conditions that affect a particular industry or geographic area could lead to
concerns about the credit quality of counterparties, borrowers or other obligors not only in
that particular industry or geography but in related or dependent industries, wherever
located. These conditions could also heighten concerns about the ability of customers of
JPMorganChase’s consumer businesses who live in those areas or work in those affected
industries or related or dependent industries to meet their obligations to JPMorganChase.
JPMorganChase regularly monitors various segments of its credit and market risk
exposures to assess the potential risks of concentration or contagion, but its ability to
diversify or hedge its exposure against those risks may be limited. JPMorganChase’s
consumer businesses can also be harmed by an excessive expansion of consumer credit
by bank or non-bank competitors. Heightened competition for certain types of consumer
loans could prompt industry-wide reactions such as significant reductions in the pricing or
margins of those loans or the making of loans to less-creditworthy borrowers. If large
numbers of consumers subsequently default on their loans, whether due to weak credit
profiles, an economic downturn or other factors, this could impair their ability to repay
obligations owed to JPMorganChase and result in higher charge-offs and other credit-
related losses. More broadly, widespread defaults on consumer debt could lead to
recessionary conditions in the U.S. economy, and JPMorganChase’s consumer businesses
may earn lower revenues in such an environment. If JPMorganChase is unable to reduce
positions effectively during a market dislocation, this can increase both the market and
credit risks associated with those positions and the level of risk-weightedassets (“RWA”)
that JPMorganChase holds on its balance sheet. These factors could adversely affect
JPMorganChase’s capital position, funding costs and the profitability of its businesses.
Liquidity JPMorganChase’s ability to operate its businesses could be impaired if its liquidity
is constrained. JPMorganChase’s liquidity can be impacted at any given time as a result of
factors such as: • market-wide illiquidity or disruption • changes in liquidity or capital
requirements resulting from changes in laws, rules and regulations, including those in
response to economic effects of systemic events • actions taken by the U.S. government or
by the Federal Reserve to reduce its balance sheet, which may reduce deposits held by
JPMorganChase and other financial institutions • inability to sell assets, or to sell assets at
favorable times or prices • default by a CCP or other significant market participant •
unanticipated outflows of cash or collateral • unexpected loss of deposits or higher than
anticipated draws on lending-related commitments, and • lack of market or customer
confidence in JPMorganChase or financial institutions in general. A reduction in
JPMorganChase’s liquidity may be caused by events over which it has little or no control.
For example, periods of market stress, low investor confidence and significant market
illiquidity could result in higher funding costs for JPMorganChase and could limit its access
to some of its traditional sources of liquidity. JPMorganChase may need to raise funding
from alternative sources if its access to stable and lowercost sources of funding, such as
deposits and borrowings from Federal Home Loan Banks, is reduced. Alternative sources
of funding could be more expensive or limited in availability. JPMorganChase’s funding
costs could also be negatively affected by actions that JPMorganChase may take in order
to: • satisfy applicable liquidity coverage ratio and net stable funding ratio requirements •
address obligations under its resolution plan, or • satisfy regulatory requirements in
jurisdictions outside the U.S. relating to the pre-positioning of liquidity in subsidiaries that
are material legal entities. More generally, if JPMorganChase fails to effectively manage its
liquidity, this could constrain its ability to fund or invest in its businesses and subsidiaries,
and thereby adversely affect its results of operations. 20• risk management practices
JPMorgan Chase & Co. is a holding company and depends on the cash flows of its
subsidiaries to make payments on its outstanding securities. JPMorgan Chase & Co. is a
holding company that holds the stock of JPMorgan Chase Bank, N.A. and an intermediate
holding company, JPMorgan Chase Holdings LLC (the “IHC”). The IHC in turn generally
holds the stock of JPMorganChase’s subsidiaries other than JPMorgan Chase Bank, N.A.
and its subsidiaries. The IHC also owns other assets and provides intercompany lending to
the Parent Company. The Parent Company is obligated to contribute to the IHC
substantially all the net proceeds received from securities issuances (including issuances
of senior and subordinated debt securities and of preferred and common stock). The ability
of JPMorgan Chase Bank, N.A. and the IHC to make payments to the Parent Company is
also limited. JPMorgan Chase Bank, N.A. is subject to regulatory restrictions on its dividend
distributions, as well as capital adequacy requirements, such as the Supplementary
Leverage Ratio (“SLR”), and liquidity requirements and other regulatory restrictions on its
ability to make payments to the Parent Company. The IHC is prohibited from paying
dividends or extending credit to the Parent Company if certain capital or liquidity
thresholds are breached, or if limits are otherwise imposed by the Parent Company’s
management or Board of Directors. As a result of these arrangements, the ability of the
Parent Company to make various payments is dependent on its receiving dividends from
JPMorgan Chase Bank, N.A. and dividends and borrowings from the IHC. These limitations
could affect the Parent Company’s ability to: • pay interest on its debt securities • pay
dividends on its equity securities • redeem or repurchase outstanding securities, and •
fulfill its other payment obligations. These arrangements could also result in the Parent
Company seeking protection under bankruptcy laws or otherwise entering into resolution
proceedings at a time earlier than would have been the case absent the existence of the
capital and liquidity thresholds to which JPMorgan Chase Bank, N.A. and the IHC are
subject. Reductions in JPMorganChase’s credit ratings may adversely affect its liquidity and
cost of funding. JPMorgan Chase & Co. and certain of its principal subsidiaries are rated by
credit rating agencies. Rating agencies evaluate general, firm-specific and industryspecific
factors when determining credit ratings for a particular financial institution, including: •
expected future profitability • legal expenses • ratings differentials between bank holding
companies and their bank and non-bank subsidiaries • regulatory developments •
assumptions about government support, and • economic and geopolitical developments.
JPMorganChase closely monitors and manages, to the extent that it is able, factors that
could influence its credit ratings. However, there is no assurance that JPMorganChase’s
credit ratings will not be downgraded in the future. Furthermore, any such downgrade could
occur at times of broader market instability when JPMorganChase’s options for responding
to events may be more limited and general investor confidence is low. A reduction in
JPMorganChase’s credit ratings could curtail JPMorganChase’s business activities and
reduce its profitability in a number of ways, including: • reducing its access to capital
markets • materially increasing its cost of issuing and servicing securities • triggering
additional collateral or funding requirements, and • decreasing the number of investors
and counterparties that are willing or permitted to do business with or lend to
JPMorganChase. Any rating reduction could also increase the credit spreads charged by
the market for taking credit risk on JPMorgan Chase & Co. and its subsidiaries. This could,
in turn, adversely affect the value of debt and other obligations of JPMorgan Chase & Co.
and its subsidiaries. Capital Maintaining the required level and composition of capital may
impact JPMorganChase’s ability to support business activities, meet evolving regulatory
requirements and distribute capital to shareholders. JPMorganChase is subject to various
regulatory capital requirements, including leverage- and riskbased capital requirements. In
addition, as a Global Systemically Important Bank (“GSIB”), JPMorganChase is required to
hold additional capital buffers, including a GSIB surcharge, a Stress Capital Buffer (“SCB”),
and a countercyclical buffer, each of which is reassessed at least annually. The amount of
capital that JPMorganChase is required to hold in order to satisfy these leverage- and risk-
based requirements could increase at any given time due to factors such as: • actions by
banking regulators, including changes in laws, rules and regulations 21Part I • changes in
the composition of JPMorganChase’s balance sheet or developments that could increase
RWA, such as increased market risk, customer delinquencies, client credit rating
downgrades or other factors, and • increases in estimated stress losses as determined by
the Federal Reserve under the Comprehensive Capital Analysis and Review, which could
increase JPMorganChase’s SCB. Any failure by or inability of JPMorganChase to maintain
the required level and composition of capital, or unfavorable changes in applicable capital
requirements, could have an adverse impact on JPMorganChase’s shareholders, such as: •
reducing the amount of common stock that JPMorganChase is permitted to repurchase •
requiring the issuance of, or prohibiting the redemption of, capital instruments in a manner
inconsistent with JPMorganChase’s capital management strategy • constraining the
amount of dividends that may be paid on common stock, or • curtailing JPMorganChase’s
business activities or operations. In 2023, U.S. banking regulators released a proposal to
implement the final Basel III reforms which would have significantly revised the risk-based
capital requirements for banks with assets of $100 billion or more, including
JPMorganChase. In addition, in 2023 the Federal Reserve released a proposal to amend the
calculation of the GSIB surcharge. Uncertainty remains regarding the content of the final
versions of these rule proposals and how they might ultimately apply to JPMorganChase.
However, it is possible that the final rules could impact JPMorganChase’s decisions
concerning the business activities in which it will engage and its levels of capital
distributions to its shareholders. Operational JPMorganChase’s businesses are dependent
on the effectiveness of internal and external operational systems. JPMorganChase’s
businesses rely on the ability of JPMorganChase’s financial, accounting, transaction
execution, data processing and other operational systems, including devices supporting
those systems, to process, record, monitor and report a large number of transactions on a
continuous basis, and to do so accurately, quickly and securely. In addition to proper
design, installation, maintenance and training, the effective functioning of
JPMorganChase’s operational systems depends on: • the quality of the information
contained in those systems, as inaccurate, outdated, incomplete or corrupted data can
significantly compromise the functionality or reliability of a particular system and other
systems to which it transmits or from which it receives information, and • JPMorganChase’s
ability to continue to maintain and upgrade its systems on a regular and timely basis in line
with technological advancements and evolving security requirements, maintain security
and operational continuity of its systems, including by carefully managing any changes
introduced to its systems, prevent unauthorized access and the misuse of access to its
systems, and adhere to all applicable legal and regulatory requirements, particularly in
regions where JPMorganChase may face a heightened risk of malicious activity.
JPMorganChase has experienced and expects that it will continue to experience failures
and disruptions in the stability of its operational systems, including degraded performance
of data processing systems, data quality issues, disruptions of network connectivity and
malfunctioning software, as well as disruptions in its ability to access and use the
operational systems of third parties and interruptions in service from thirdparty service
providers. These incidents have resulted in various negative effects for customers,
including the inability to access account information or transact through ATM, internet or
mobile channels, the exfiltration of customer personal data, the recording of duplicative
transactions and extended delays for customers requiring services from call centers. There
can be no assurance that these and other types of operational failures or disruptions will
not occur in the future. JPMorganChase’s ability to effectively manage the stability of its
operational systems and infrastructure could be hindered by many factors, any of which
could have a negative impact on JPMorganChase and its clients, customers and
counterparties, including: • JPMorganChase’s ability to effectively maintain and upgrade
systems and infrastructure can become more challenging as the speed, frequency,
volume, interconnectivity and complexity of transactions continue to increase • attempts
by third parties to defraud JPMorganChase or its clients and customers continue to
increase, evolve and become more complex, and during periods of market disruption or
economic uncertainty, these attempts can be expected to further increase in volume •
errors made by JPMorganChase or another market participant, whether inadvertent or
malicious, could cause widespread system disruption • failure to detect weaknesses or
shortcomings in operational systems in a timely manner • isolated or seemingly
insignificant errors in operational systems could compound, or migrate to other systems
over time, to become larger issues 22• disruptions in operational systems or in the ability of
systems to communicate with each other could be caused by failures in synchronization or
encryption software, or degraded performance of microprocessors, and • attempts by third
parties to block the use of key technology solutions by claiming that the use infringes on
their intellectual property rights. JPMorganChase also depends on its ability to access and
use the operational systems of third parties, including its custodians, vendors (such as
those that provide data and cloud computing services, and security and technology
services) and other market participants (such as clearing and payment systems, CCPs and
securities exchanges). These external operational systems with which JPMorgan is
connected, whether directly or indirectly, can be sources of operational risk to
JPMorganChase. JPMorganChase may be exposed not only to a systems failure or cyber
attack that may be experienced by a vendor or market infrastructure with which
JPMorganChase is directly connected, but also to a systems breakdown or cyber attack
involving another party to which such a vendor or infrastructure is connected. Similarly,
retailers, payment systems and processors, data aggregators and other external parties
with which JPMorganChase’s customers do business can increase JPMorganChase’s
operational risk. This is particularly the case where activities of customers or other parties
are beyond JPMorganChase’s security and control systems, including through the use of
the internet, cloud computing services, and personal smart phones and other mobile
devices or services. If an external party obtains access to customer account data on
JPMorganChase’s systems, whether authorized or unauthorized, and that party
misappropriates that data, this could result in negative outcomes for JPMorganChase and
its clients and customers, including a heightened risk of fraudulent transactions using
JPMorganChase’s systems, losses from fraudulent transactions and reputational harm
arising from the perception that JPMorganChase’s systems may not be secure. As
JPMorganChase’s interconnectivity with clients, customers and other external parties
continues to expand, JPMorganChase increasingly faces the risk of operational failure or
cyber attacks with respect to the systems of those parties. Security breaches affecting
JPMorganChase’s clients or customers, or systems breakdowns or failures, security
breaches or human error or misconduct affecting other external parties, may require
JPMorganChase to take steps to protect the integrity of its own operational systems or to
safeguard confidential information, including restricting the access of customers to their
accounts. These actions can increase JPMorganChase’s operational costs and potentially
diminish customer satisfaction and confidence in JPMorganChase. Furthermore, the
widespread and expanding interconnectivity among financial institutions, clearing banks,
CCPs, payments processors, financial technology companies, securities exchanges,
clearing houses and other financial market infrastructures increases the risk that the
disruption of an operational system involving one institution or entity, including due to a
cyber attack, may cause industry-wide operational disruptions that could materially affect
JPMorganChase’s ability to conduct business. In addition, the risks associated with the
disruption of an operational system of a third party could be exacerbated to the extent that
the services provided by that system are used by a significant number or proportion of
market participants. The ineffectiveness, failure or other disruption of operational systems
upon which JPMorganChase depends, including due to a systems malfunction, cyber
incident or other systems failure, could result in unfavorable ripple effects in the financial
markets and for JPMorganChase and its clients and customers, including: • delays or other
disruptions in providing services, including the provision of liquidity or information to
clients and customers • impairment of JPMorganChase’s ability to execute transactions,
including delays or failures in the confirmation or settlement of transactions or in obtaining
access to funds or other assets required for settlement • the possibility that funds
transfers, capital markets trades or other transactions are executed erroneously • financial
losses, including due to loss-sharing requirements of CCPs, payment systems or other
market infrastructures, or as possible restitution to clients and customers • higher
operational costs associated with replacing services provided by a system that has
experienced a failure or other disruption • limitations on JPMorganChase's ability to collect
data needed for its business and operations • loss of confidence in the ability of
JPMorganChase, or financial institutions generally, to protect against and withstand
operational disruptions • dissatisfaction among JPMorganChase’s clients or customers •
significant exposure to litigation and regulatory fines, penalties or other sanctions, and •
harm to JPMorganChase’s reputation. If JPMorganChase’s operational systems, or those of
acquired businesses or of external parties on which 23Part I JPMorganChase’s businesses
depend, are unable to meet the requirements of JPMorganChase’s businesses and
operations or bank regulatory standards, or if they fail or have other significant
shortcomings, JPMorganChase could be materially and adversely affected. A successful
cyber attack affecting JPMorganChase could cause significant harm to JPMorganChase
and its clients and customers. JPMorganChase experiences numerous cyber attacks on its
computer systems, software, networks and other technology assets on a daily basis from
various actors, including groups acting on behalf of hostile countries, cyber-criminals,
“hacktivists” (i.e., individuals or groups that use technology to promote a political agenda
or social change) and others. These cyber attacks can take many forms, including attempts
to introduce computer viruses or malicious code, which are commonly referred to as
“malware,” into JPMorganChase’s systems. These attacks are often designed to: • obtain
unauthorized access to JPMorganChase's systems or to confidential information belonging
to JPMorganChase or its clients, customers, counterparties or employees • manipulate
data • destroy data or systems with the aim of rendering services unavailable • disrupt,
sabotage or degrade service on JPMorganChase’s systems • steal money, or • extort money
through the use of so-called “ransomware.” JPMorganChase also experiences: • distributed
denial-of-service attacks intended to disrupt JPMorganChase’s websites, including those
that provide online banking and other services, • a higher volume and complexity of cyber
attacks against the backdrop of heightened geopolitical tensions, and • a high volume of
disruptions to internet-based services used by JPMorganChase that are provided by third
parties. JPMorganChase has experienced security breaches due to cyber attacks in the
past, and it is inevitable that additional breaches will occur in the future. Any such breach
could result in serious and harmful consequences for JPMorganChase or its clients and
customers. A principal reason that JPMorganChase cannot provide absolute security
against cyber attacks is that it may not always be possible to anticipate, detect or
recognize threats to JPMorganChase’s systems, or to implement effective preventive
measures against all breaches due to evolving risks, including: • the techniques used in
cyber attacks evolve frequently and increase in sophistication, and therefore may not be
recognized until launched or may go undetected for extended periods • cyber attacks can
originate from a wide variety of sources, including JPMorganChase’s own employees,
cyber-criminals, hacktivists, groups linked to terrorist organizations or hostile nationstates
that can sustain malicious activities for extended periods, or third parties whose objective
is to disrupt the operations of financial institutions more generally • JPMorganChase does
not have control over the cybersecurity of the systems of the large number of clients,
customers, counterparties and third-party service providers with which it does business,
and • it is possible that a third party, after establishing a foothold on an internal network
without being detected, may gain access to other networks and systems. The risk of a
security breach due to a cyber attack could increase in the future due to factors such as: •
JPMorganChase’s ongoing expansion of its digital banking and other internet-based
product offerings and its internal use of internet-based products and applications,
including those that use cloud computing services • advances in artificial intelligence,
such as the use of machine learning, generative artificial intelligence and quantum
computing by malicious actors to develop more advanced social engineering attacks,
including targeted phishing attacks • the inability to maintain the security of information
transmitted by JPMorganChase due to advances in quantum computing that may
counteract or nullify existing information protections, and • the acquisition and integration
of new businesses. In addition, a third party could misappropriate confidential information
obtained by intercepting signals or communications from mobile devices used by
JPMorganChase’s employees. The dynamic nature of the cyber threat landscape, including
the pace of innovation and increased threat of novel attack methods, necessitates ongoing
investment in, as well as enhancement and adaptation of, cybersecurity controls, including
the adoption of enhanced security measures in certain jurisdictions. Failure to discover or
address emerging threats, known vulnerabilities or shortcomings in cybersecurity controls,
or to prioritize or complete enhancements to address them, in each case in a timely
manner, may leave JPMorganChase vulnerable to cyber attacks, potentially resulting in
data breaches, financial losses, 24reputational damage and regulatory penalties, including
the failure to prioritize or complete enhancements relating to: • preventing unauthorized
access and protecting against the misuse of access, including the maintenance and
enhancement of controls related to secure software development practices and identity
and access management, such as those relating to the management of administrative
access to systems • detecting, escalating and addressing effectively and in a timely
manner any vulnerabilities that may be present either in internally-developed software or
externally-provided software or services, including vulnerabilities that could allow
attackers to exploit unknown security flaws in software and hardware (“zero-day
vulnerabilities”) • oversight of third-party vendors and early detection of attacks against
those vendors, including ransomware attacks and attacks targeting vulnerabilities in third-
party open-source software, in support of the secure development and maintenance of
internal systems • maintaining and enhancing controls related to technology asset
management and inventory systems to prevent the risk of undetected vulnerabilities that
could undermine JPMorganChase’s ability to operate an effective control process •
upgrading the coverage and capabilities of systems and controls to protect JPMorganChase
and its clients and customers from the impact of distributed denial-of-service attacks, or to
recover from outages that could be caused by a malware or ransomware attack • the
continuing migration of client-facing services to the cloud, and modernization of those
services • strengthening network security and managing outbound connections to reduce
the risk of data loss • identifying, assessing and mitigating insider threat activities that
could lead to the misuse of JPMorganChase’s systems or client and customer information,
and • integrating acquired businesses where system integration may be complex or may
require extensive and lengthy remediation or enhancement of controls. A successful
penetration or circumvention of the security of JPMorganChase’s systems or the systems of
a vendor, governmental body or another market participant could cause serious negative
consequences, including: • significant disruption of JPMorganChase’s operations and
those of its clients, customers and counterparties, including losing access to operational
systems • misappropriation of confidential information of JPMorganChase or that of its
clients, customers, counterparties, employees or regulators • disruption of or damage to
JPMorganChase’s systems and those of its clients, customers and counterparties • the
inability, or extended delays in the ability, to fully recover and restore data that has been
stolen, manipulated or destroyed, or the inability to prevent systems from processing
fraudulent transactions • demands that JPMorganChase pay a ransom to a malicious actor
that has perpetrated a cybersecurity breach • unintended violations by JPMorganChase of
applicable privacy and other laws • financial loss to JPMorganChase or to its clients,
customers, counterparties or employees • losses to JPMorganChase in excess of cyber
insurance policy coverage • loss of confidence in JPMorganChase’s cybersecurity and
business resiliency measures • dissatisfaction among JPMorganChase’s clients,
customers or counterparties • significant exposure to litigation and regulatory fines,
penalties or other sanctions, and • harm to JPMorganChase’s reputation. The extent of a
particular cyber attack, the methods and tools used by various actors, and the steps that
JPMorganChase may need to take to investigate the attack may not be immediately clear,
and it may take a significant amount of time before such an investigation can be
completed. While such an investigation is ongoing, JPMorganChase may not necessarily
know the full extent of the harm caused by the cyber attack, and that damage may continue
to spread. These factors may inhibit JPMorganChase’s ability to provide rapid, full and
reliable information about the cyber attack to its clients, customers, counterparties and
regulators, as well as the public. Furthermore, it may not be clear how best to contain and
remediate the harm caused by the cyber attack, and certain errors or actions could be
repeated or compounded before they are discovered and remediated. Any or all of these
factors could further increase the costs and consequences of a cyber attack.
JPMorganChase can be negatively affected if it fails to identify and address operational
risks associated with the introduction of or changes to products, services and delivery
platforms or the adoption of new technologies. When JPMorganChase launches a new
product or service, introduces a new platform for the delivery or 25Part I distribution of
products or services (including mobile connectivity, electronic trading and cloud
computing), acquires or invests in a business, makes changes to an existing product,
service or delivery platform, or adopts a new technology, it may not fully appreciate or
identify new operational risks that may arise from those changes, including increased
reliance on third party providers, or may fail to implement adequate controls to mitigate the
risks associated with those changes. Any significant failure in this regard could diminish
JPMorganChase’s ability to operate one or more of its businesses or result in: • potential
liability to clients, counterparties and customers • higher compliance, operational or
integration costs • higher litigation costs, including regulatory fines, penalties and other
sanctions • damage to JPMorganChase’s reputation • impairment of JPMorganChase’s
liquidity • regulatory intervention, or • weaker competitive standing. Any of the foregoing
consequences could materially and adversely affect JPMorganChase’s businesses and
results of operations. JPMorganChase’s business and operations rely on its ability, and the
ability of key external parties, to maintain appropriately-staffed workforces, and on the
competence, trustworthiness, health and safety of employees. JPMorganChase’s ability to
operate its businesses efficiently and profitably, to offer products and services that meet
the expectations of its clients and customers, and to maintain an effective risk
management framework is highly dependent on its ability to staff its operations
appropriately and on the competence, trustworthiness, health and safety of its employees.
JPMorganChase's businesses and operations similarly rely on the workforces of third
parties, including employees of vendors, custodians and financial markets infrastructures,
and of businesses that it may seek to acquire. JPMorganChase’s businesses could be
materially and adversely affected by: • the ineffective implementation of business
decisions • any failure to institute controls that appropriately address risks associated with
business activities, or to appropriately train employees with respect to those risks and
controls • staffing shortages, particularly in tight labor markets • the possibility that
significant portions of JPMorganChase’s workforce are unable to work effectively, including
because of illness, quarantines, shelter-in-place arrangements, government actions or
other restrictions in connection with health emergencies, the spread of infectious
diseases, epidemics or pandemics, or due to extraordinary events beyond
JPMorganChase’s control such as natural disasters or an outbreak or escalation of
hostilities • a significant operational breakdown or failure, theft, fraud or other unlawful
conduct, or • other negative outcomes caused by human error or misconduct by an
employee of JPMorganChase or of another party on which JPMorganChase’s businesses or
operations rely. JPMorganChase’s operations could also be impaired if the measures taken
by it or by governmental authorities to protect the health and safety of its employees are
ineffective, or if any external party on which JPMorganChase relies fails to take appropriate
and effective actions to protect the health and safety of its employees. JPMorganChase
faces substantial legal and operational risks in the processing and safeguarding of personal
information. JPMorganChase’s businesses and operations are subject to complex and
evolving laws, rules and regulations, both within and outside the U.S., governing the privacy
and protection of personal information of individuals. Governmental authorities around the
world have adopted and are considering the adoption of numerous legislative and
regulatory initiatives concerning privacy, data protection and security. Litigation or
enforcement actions relating to these laws, rules and regulations could result in fines or
orders requiring that JPMorganChase change its data-related practices, which could have
an adverse effect on JPMorganChase’s ability to provide products and otherwise harm its
business operations. Implementing processes relating to JPMorganChase’s collection, use,
sharing and storage of personal information to comply with all applicable laws, rules and
regulations in all relevant jurisdictions, including where the laws of different jurisdictions
are in conflict, can: • increase JPMorganChase’s compliance and operating costs • hinder
the development of new products or services, curtail the offering of existing products or
services, or affect how products and services are offered to clients and customers •
demand significant oversight by JPMorganChase’s management, and • require
JPMorganChase to structure its businesses, operations and systems in less efficient ways.
Not all of JPMorganChase’s clients, customers, vendors, counterparties and other external
parties may have appropriate controls in place to protect the confidentiality, integrity or
availability of the 26information exchanged between them and JPMorganChase,
particularly where information is transmitted by electronic means. JPMorganChase could
be exposed to litigation or regulatory fines, penalties or other sanctions if personal
information of clients, customers, employees or others were to be mishandled or misused,
such as situations where such information is: • erroneously provided to parties who are not
permitted to have the information, or • intercepted or otherwise compromised by
unauthorized third parties. The increasing sophistication of artificial intelligence
technologies poses a greater risk of identity fraud, as malicious actors may exploit artificial
intelligence to create convincing false identities or manipulate verification processes. This
challenge necessitates ongoing enhancements to client verification systems and security
protocols to prevent unauthorized access and protect sensitive client information. Failure
to manage these risks or to implement effective countermeasures could lead to
unauthorized transactions, financial losses, reputational damage and increased regulatory
scrutiny. Concerns regarding the effectiveness of JPMorganChase’s measures to safeguard
personal information, or the perception that those measures are inadequate, could cause
JPMorganChase to lose existing or potential clients and customers or employees, and
thereby reduce JPMorganChase’s revenues. Furthermore, any failure or perceived failure by
JPMorganChase to comply with applicable privacy or data protection laws, rules and
regulations, or any failure to appropriately calibrate, manage and monitor access by
employees or third parties to personal information, could subject JPMorganChase to
inquiries, examinations and investigations that could result in requirements to modify or
cease certain operations or practices, significant liabilities or regulatory fines, penalties or
other sanctions. Any of these could damage JPMorganChase’s reputation and otherwise
adversely affect its businesses. In recent years, well-publicized incidents involving the
inappropriate collection, use, sharing or storage of personal information have led to
expanded governmental scrutiny of practices relating to the processing or safeguarding of
personal information by companies in the U.S. and other countries. That scrutiny has in
some cases resulted in, and could in the future lead to, the adoption of stricter laws, rules
and regulations relating to the collection, use, sharing and storage of personal information.
These types of laws, rules and regulations can prohibit or significantly restrict financial
services firms such as JPMorganChase from transferring information across national
borders or sharing information among affiliates or with third parties such as vendors,
thereby increase compliance costs and operational risk, or restrict JPMorganChase’s use
of personal information when developing or offering products or services to customers.
Some countries are considering or have adopted legislation implementing data protection
requirements or requiring local storage and processing of data which could increase the
cost and complexity of JPMorganChase’s delivery of products and services. These
restrictions could also inhibit JPMorganChase’s development or marketing of certain
products or services, or increase the costs of offering them to customers.
JPMorganChase’s operations, results and reputation could be harmed by occurrences of
extraordinary events beyond its control. JPMorganChase’s business and operational
systems could be seriously disrupted, and its reputation could be harmed, by events or
contributing factors that are wholly or partially beyond its control, including material
instances of: • cyber attacks • security breaches of its physical premises, including threats
to health and safety • power, telecommunications or internet outages, or shutdowns of
mass transit • failure of, or loss of access to, technology or operational systems, including
any resulting loss of critical data • interruption of service from third-party service providers
• damage to or loss of property or assets of JPMorganChase or third parties, and any
consequent injuries, including in connection with any construction projects undertaken by
JPMorganChase • effects of climate change • natural disasters or severe weather
conditions • accidents such as explosions or structural failures • health emergencies, the
spread of infectious diseases, epidemics or pandemics, or • events arising from local or
larger-scale civil or political unrest, any outbreak or escalation of hostilities, or terrorist
acts. JPMorganChase operates a Firmwide resiliency framework that is intended to enable
it to prepare for and adapt to changing conditions and withstand and recover from, and
address any adverse effects on its operations caused by, disruptions that may impact
critical business functions and supporting assets, including its staff, technology, data and
facilities and those of third-party service providers. Although not every form of disruption
can be anticipated or defended against, JPMorganChase 27Part I strives for resiliency or
recovery in a range of scenarios in the event of a disruption, including due to the
occurrence of an extraordinary event beyond its control. There can be no assurance that
JPMorganChase’s Firmwide resiliency framework will fully mitigate all potential resiliency
risks to JPMorganChase, its clients, and customers and third parties with which it does
business, or that its resiliency framework will be adequate to address the effects of
simultaneous occurrences of multiple or extended disruption events. In addition,
JPMorganChase’s ability to respond effectively to a disruption event could be hampered to
the extent that the members of its workforce, physical assets, systems and other support
infrastructure, or those of its third-party service providers, that are needed to address the
event are geographically dispersed, or conversely, if such an event were to occur in an area
in which they are concentrated. Further, should extraordinary events or the factors that
cause or contribute to those events become more chronic, the disruptive effects of those
events on JPMorganChase’s business and operations, and on its clients, customers,
counterparties and employees, could become more significant and long-lasting. Any
significant failure or disruption of JPMorganChase’s operations or operational systems, or
the occurrence of one or more extraordinary events that are beyond its control, could: •
hinder JPMorganChase’s ability to provide services to its clients and customers or to
transact with its counterparties • require it to expend significant resources to correct the
failure or disruption or to address the event • cause it to incur losses or liabilities, including
from loss of revenue, damage to or loss of property, or injuries • disrupt market
infrastructure systems on which JPMorganChase’s businesses rely • expose it to litigation
or regulatory fines, penalties or other sanctions, and • harm its reputation. The occurrence
of one or more extraordinary events could also negatively impact the financial condition or
creditworthiness of JPMorganChase’s clients and customers, and could lead to an increase
in delinquencies, additions to the allowance for credit losses and higher net charge-offs,
which can reduce JPMorganChase’s earnings. Data quality is essential to JPMorganChase’s
business and operations, and if JPMorganChase fails to maintain adequate data
management processes, this could adversely affect its ability to effectively manage its
businesses, comply with applicable laws, rules and regulations, or remain competitive.
JPMorganChase relies on accurate, timely and complete data to effectively operate its
systems and processes, including: • assessing risk exposures and limits • monitoring and
detecting fraudulent transactions and cyber threats • developing or maintaining models
and other analytical and judgment-based estimations, including those that use machine
learning or artificial intelligence • implementing and maintaining compliance programs,
and • preparing financial statements, disclosures and regulatory reports, as well as internal
reporting Any deficiencies in JPMorganChase’s data management processes, including
with respect to the accuracy or completeness of data, the timeliness of data collection, the
analysis or validation of data, or the safeguarding of data could undermine the reliability
and effectiveness of its operations, including: • risk management practices, including
inaccurate or untimely risk reporting • delivery of regulatory reporting or internal or external
financial reporting • compliance practices, such as those relating to transaction
monitoring, customer screening, blocking and rejecting transactions, recordkeeping or
reporting • business activities, such as those related to managing JPMorganChase's
market-making positions and liquidity and capital levels, including reliance on timely data
for informed decision-making • providing services to clients and customers, including
transaction processing, lending services, account management and customer support, or
• fraud detection and prevention processes. Any or all of these factors could impair the
ability of JPMorganChase to make sound business decisions, cause it to incur higher
operational and compliance costs, result in operational breakdowns or failure to meet its
regulatory requirements, negatively affect clients and customers, or lead to reputational
harm. Enhanced regulatory and other standards for the oversight of vendors and other
service providers can result in higher costs and other potential exposures. JPMorganChase
must comply with enhanced regulatory and other standards associated with doing
28business with vendors and other service providers, including standards relating to the
outsourcing of functions as well as the performance of significant banking and other
functions by subsidiaries. JPMorganChase incurs significant costs and expenses in
connection with its initiatives to address the risks associated with oversight of its internal
and external service providers. JPMorganChase’s failure to appropriately assess and
manage these relationships, especially those involving significant banking functions,
shared services or other critical activities, could materially adversely affect
JPMorganChase. Specifically, any such failure could result in: • potential harm to clients
and customers, and any liability associated with that harm • regulatory fines, penalties or
other sanctions • lower revenues, and the opportunity cost from lost revenues • increased
operational costs, or • harm to JPMorganChase’s reputation. JPMorganChase’s risk
management framework and control environment will not be effective in identifying and
mitigating every risk to JPMorganChase. Any inadequacy or lapse in JPMorganChase’s risk
management framework, governance structure, practices, models or reporting systems, or
in its control environment, could expose it to unexpected losses, and its financial condition
or results of operations could be materially and adversely affected. Any such inadequacy
or lapse could: • hinder the timely escalation of material risk issues to JPMorganChase’s
senior management and Board of Directors • lead to business decisions that have negative
outcomes for JPMorganChase • require significant resources and time to remediate • lead
to non-compliance with laws, rules and regulations • attract heightened regulatory scrutiny
• expose JPMorganChase to litigation, regulatory investigations or regulatory fines,
penalties or other sanctions • lead to potential harm to customers and clients, and any
liability associated with that harm • harm its reputation, or • otherwise diminish
confidence in JPMorganChase. Many of JPMorganChase’s risk management strategies and
techniques consider historical market behavior and to some degree are based on
management’s subjective judgment or assumptions. For example, many models used by
JPMorganChase are based on assumptions regarding historical correlations among prices
of various asset classes or other market indicators. In times of market stress, including
difficult or less liquid market environments, or in the event of other unforeseen
circumstances, previously uncorrelated indicators may become correlated. Conversely,
previously-correlated indicators may become uncorrelated at those times. Sudden market
movements and unanticipated market or economic events could, in some circumstances,
limit the effectiveness of JPMorganChase’s risk management strategies, causing it to incur
losses. JPMorganChase could recognize unexpected losses, its capital levels could be
reduced and it could face greater regulatory scrutiny if its models, estimations or
judgments, including those used in its financial statements, are inadequate or incorrect.
JPMorganChase has developed and uses a variety of models and other analytical and
judgment-based estimations to measure, monitor and implement controls over its market,
credit, capital, liquidity, operational and other risks. JPMorganChase also uses internal
models and estimations as a basis for its stress testing and in connection with the
preparation of its financial statements under U.S. generally accepted accounting principles
(“U.S. GAAP”). These models and estimations are based on a variety of assumptions and
historical trends, and are periodically reviewed and modified as necessary. The models and
estimations that JPMorganChase uses, including those that use machine learning or
artificial intelligence, may not be effective in all cases to identify, observe and mitigate risk
due to a variety of factors, such as: • reliance on historical trends that may not persist in
the future, including assumptions underlying the models and estimations such as
correlations among certain market indicators or asset prices • inherent limitations
associated with forecasting uncertain economic and financial outcomes • historical trend
information may be incomplete, or may not be indicative of severely negative market
conditions such as extreme volatility, dislocation or lack of liquidity • sudden illiquidity in
markets or declines in prices of certain loans and securities may make it more difficult to
value certain financial instruments • technology that is introduced to run models or
estimations may not perform as expected, or may not be well understood by the personnel
using the technology • models and estimations may contain erroneous data, valuations,
formulas or algorithms • review processes may fail to detect flaws in models and
estimations, and 29Part I • models may inadvertently incorporate biases present in data
used in the models. JPMorganChase may experience unexpected losses if models,
estimates or judgments used or applied in connection with its risk management activities
or the preparation of its financial statements are inadequate or incorrect. For example,
where quoted market prices are not available for certain financial instruments that require
a determination of their fair value, JPMorganChase may make fair value determinations
based on internally developed models or other means which ultimately rely to some degree
on management estimates and judgment. In addition, JPMorganChase may experience
increased uncertainty in its estimates if assets acquired differ from those used to develop
those models, which may lead to unexpected losses. Similarly, JPMorganChase
establishes an allowance for expected credit losses related to its credit exposures which
requires significant judgments, including forecasts of how macroeconomic conditions
might impair the ability of JPMorganChase’s clients and customers to repay their loans or
other obligations. These types of estimates and judgments may not prove to be accurate
due to a variety of factors, including when the current and forecasted environments are
significantly different from the historical environments upon which the models were
developed. The increased uncertainty may necessitate a greater degree of judgment and
analytics to inform any adjustments that JPMorganChase may make to model outputs than
would otherwise be the case. Some of the models and other analytical and judgment-
based estimations used by JPMorganChase in managing risks are subject to review by, and
require the approval of, JPMorganChase’s regulators. These reviews are required before
JPMorganChase may use those models and estimations for calculating market risk RWA,
credit risk RWA and operational risk RWA under Basel III. If JPMorganChase’s models or
estimations are not approved by its regulators, it may be subject to higher capital charges,
which could adversely affect its financial results or limit the ability to expand its
businesses. Lapses, weaknesses or deficiencies in controls over disclosure or financial
reporting could materially affect JPMorganChase’s profitability or reputation.
JPMorganChase’s businesses and operations are subject to complex and evolving laws,
rules and regulations, both within and outside the U.S., requiring continuous
enhancements to various disclosures in its financial statements and regulatory reports.
There can be no assurance that JPMorganChase’s disclosure controls and procedures will
be effective in every circumstance, or that a material weakness or significant deficiency in
internal control over financial reporting will not occur. Any such lapse, weakness or
deficiency could result in inaccurate financial reporting which, in turn, could: • materially
and adversely affect JPMorganChase’s business and results of operations or financial
condition • restrict its ability to access the capital markets • require it to expend significant
resources to correct the lapse, weakness or deficiency • expose it to litigation or regulatory
fines, penalties or other sanctions • harm its reputation, or • otherwise diminish investor
confidence in JPMorganChase. Strategic JPMorganChase’s results or competitive standing
could suffer if its management fails to develop and execute effective business strategies,
and to anticipate changes affecting those strategies. The development and execution of
effective business strategies by JPMorganChase’s management, along with the ability to
anticipate and respond to shifts in the competitive environment, are critical to
JPMorganChase's competitive standing and to achieving its strategic objectives. These
strategies relate to: • the products and services that JPMorganChase offers • the
geographies in which it operates • the types of clients and customers that it serves • the
businesses that it acquires or in which it invests • the counterparties with which it does
business • the technologies that it adopts or in which it invests, which may include new
and currently unproven technologies, and • the methods, distribution channels and third
party service providers by or through which it offers products and services. If management
makes choices about these strategies and goals that prove to be incorrect, are based on
incomplete, inaccurate or fraudulent information, do not accurately assess the competitive
landscape and industry trends, or fail to address changing regulatory and market
environments or the expectations of clients, customers, investors, employees and other
stakeholders, then the franchise values and growth prospects of JPMorganChase’s
businesses may suffer and its earnings could decline. JPMorganChase’s growth prospects
also depend on management’s ability to develop and execute effective business plans to
address these strategic priorities, both in the near term and over longer time horizons.
Management’s effectiveness in this regard will affect 30JPMorganChase’s ability to develop
and enhance its resources, control expenses and return capital to shareholders. Each of
these objectives could be adversely affected by any failure on the part of management to: •
devise effective business plans and strategies • offer products and services that meet
changing expectations of clients and customers • allocate capital in a manner that
promotes long-term stability to enable JPMorganChase to build and invest in market-
leading businesses, even in a highly stressed environment • allocate capital appropriately
due to imprecise modeling or subjective judgments made in connection with those
allocations • appropriately assess and monitor principal investments made to enhance or
accelerate JPMorganChase's business strategies • conduct appropriate due diligence on
prospective business acquisitions or investments, or effectively integrate newly-acquired
businesses • appropriately address concerns of clients, customers, investors, employees
and other stakeholders, including with respect to climate and other ESG matters • react
quickly to changes in market conditions or market structures, or • develop and enhance
the operational, technology, risk, financial and managerial resources and capabilities
necessary to grow and manage JPMorganChase’s businesses. Furthermore,
JPMorganChase may incur costs in connection with disposing of excess properties,
premises and facilities, and those costs could be material to its results of operations.
JPMorganChase faces significant and increasing competition in the rapidly evolving
financial services industry. JPMorganChase operates in a highly competitive environment in
which it must evolve and adapt to changes in financial regulation, technological advances,
increased public scrutiny and changes in economic conditions. JPMorganChase expects
that competition in the U.S. and global financial services industry will continue to be
intense. Competitors include: • other banks and financial institutions • trading, advisory
and investment management firms • finance companies • technology companies, and •
other non-bank firms that are engaged in providing similar as well as new products and
services. JPMorganChase cannot provide assurance that the significant competition in the
financial services industry will not materially and adversely affect its future results of
operations. For example, aggressive or less disciplined lending practices by non-bank
competitors could lead to a loss of market share for traditional banks, and in an economic
downturn could result in instability in the financial services industry and adversely impact
other market participants, including JPMorganChase. New competitors in the financial
services industry continue to emerge. For example, technological advances and the growth
of e-commerce have made it possible for non-depository institutions to offer products and
services that traditionally were banking products. These advances have also allowed
financial institutions and other companies to provide electronic and internet-based
financial solutions, including electronic securities and cryptocurrency trading, lending and
other extensions of credit to consumers, payments processing and online automated
algorithmic-based investment advice. Furthermore, both financial institutions and their
non-banking competitors face the risk that payments processing and other products and
services, including deposits and other traditional banking products, could be significantly
disrupted by the use of new technologies, such as cryptocurrencies and other applications
using secure distributed ledgers, that may not require intermediation. New technologies
have required and could require JPMorganChase to spend more to modify or adapt its
products to attract and retain clients and customers or to match products and services
offered by its competitors, including technology companies. In addition, new technologies
may be used by customers, or breached or infiltrated by third parties, in unexpected ways,
which can increase JPMorganChase’s costs for complying with laws, rules and regulations
that apply to the offering of products and services through those technologies and reduce
the income that JPMorganChase earns from providing products and services through those
technologies. Ongoing or increased competition may put pressure on the pricing for
JPMorganChase’s products and services or may cause JPMorganChase to lose market
share, particularly with respect to traditional banking products. This competition may be
based on quality and variety of products and services offered, transaction execution,
innovation, reputation and price. The failure of any of JPMorganChase’s businesses to meet
the expectations of clients and customers, whether due to general market conditions,
under-performance, a decision not to offer a particular product or service, changes in
client and customer expectations or other factors, could affect JPMorganChase’s ability to
attract or retain clients and customers. Any such impact could, in turn, reduce 31Part I
JPMorganChase’s revenues. Increased competition also may require JPMorganChase to
make additional capital investments in its businesses, or to extend more of its capital on
behalf of its clients to remain competitive. The effects of climate change could adversely
affect JPMorganChase’s business and operations, both directly and as a result of impacts
on its clients and customers. JPMorganChase operates in many regions, countries and
communities around the world where its business, and the activities of its clients and
customers, could be adversely affected by climate change. Climate change could manifest
as a financial risk to JPMorganChase either through changes in the physical climate or from
the process of transitioning to a lower-carbon economy. Both physical risks and transition
risks associated with climate change could have negative impacts on the financial
condition or creditworthiness of JPMorganChase’s clients and customers, on
JPMorganChase's exposure to affected companies and markets, and on the effectiveness
of JPMorganChase’s existing business strategy with respect to its operations, clients and
customers. Physical risks include the increased frequency or severity of acute weather
events, such as floods, wildfires and tropical cyclones, and chronic shifts in the climate,
such as rising sea levels, persistent changes in precipitation levels, or increases in average
ambient temperatures. Potential adverse impacts of climate-related physical risks to
JPMorganChase, its clients or customers include: • declines in asset values, including due
to the destruction or degradation of property • reduced availability or increased cost of
insurance for clients of JPMorganChase • interruptions to business operations, including
supply chain disruption, and • population migration or unemployment in affected regions.
Transition risks arise from the financial and economic consequences of society’s shift
towards a lowercarbon economy, such as changes in public policy, adoption of new
technologies or changes in consumer preferences towards low-carbon goods and services.
These risks could also be influenced by changes in the physical climate. Potential adverse
impacts of transition risks to JPMorganChase, its clients or customers include: • sudden
devaluation of assets, including unanticipated write-downs (“stranded assets”) • increased
operational and compliance costs driven by changes in climate policy • increased energy
costs driven by governmental actions and initiatives such as emission pricing and
accelerated decarbonization policies • negative consequences to business models, and
the need to make changes in response to those consequences, and • damage to
JPMorganChase’s reputation, including due to any perception that its business practices
are contrary to public policy or the preferences of different stakeholders. Climate risks can
also arise from inconsistencies and conflicts in the manner in which climate policy and
financial regulations are implemented in the many regions where JPMorganChase
operates, including initiatives to apply and enforce policy and regulation with
extraterritorial effect. Additionally, internal models and estimations used in climate risk
assessments have an increased level of uncertainty due to limited historical trend
information and the absence of standardized, reliable and comprehensive greenhouse gas
emissions data, which could lead to inaccurate disclosures or financial reporting. Conduct
Conduct failure by JPMorganChase employees can harm clients and customers, impact
market integrity, damage JPMorganChase’s reputation and trigger litigation and regulatory
action. JPMorganChase’s employees interact with clients, customers, counterparties and
other market and industry participants, and with each other, every day. All employees are
expected to demonstrate values and exhibit the behaviors that are an integral part of
JPMorganChase’s Code of Conduct and Business Principles. JPMorganChase endeavors to
embed conduct risk management throughout an employee’s life cycle, including recruiting,
onboarding, training and development, and performance management. Conduct risk
management is also an integral component of JPMorganChase’s promotion and
compensation processes. Notwithstanding these expectations, policies and practices,
certain employees have engaged in improper or illegal conduct in the past. These instances
of misconduct have resulted in litigation, and resolutions of governmental investigations or
enforcement actions involving consent orders, deferred prosecution agreements, non-
prosecution agreements and other civil or criminal sanctions. There is no assurance that
further inappropriate or unlawful actions by employees have not occurred or will not occur,
lead to a violation of the terms of these resolutions (and associated consequences), or that
any such actions will always be detected, deterred or prevented. JPMorganChase’s
reputation could be harmed by, and collateral consequences could result from, a failure by
32one or more employees to conduct themselves in accordance with JPMorganChase’s
expectations, policies and practices, including by acting in ways that harm clients,
customers, other market participants, employees or others. Some examples of this
include: • improperly selling and marketing JPMorganChase’s products or services •
engaging in insider trading, market manipulation or unauthorized trading • engaging in
improper or fraudulent behavior in connection with government relief programs •
facilitating a transaction where a material objective is to achieve a particular tax,
accounting or financial disclosure treatment that may be subject to scrutiny by
governmental or regulatory authorities, or where the proposed treatment is unclear or may
not reflect the economic substance of the transaction • failing to fulfill fiduciary obligations
or other duties owed to clients or customers • violating antitrust or anti-competition laws
by colluding with other market participants • using electronic communications channels
that have not been approved by JPMorganChase • engaging in discriminatory behavior or
harassment with respect to clients, customers or employees, or acting contrary to
JPMorganChase’s goal of fostering an inclusive workplace • managing or reporting risks in
ways that subordinate JPMorganChase’s risk appetite to business performance goals or
employee compensation objectives, and • misappropriating property, confidential or
proprietary information, or technology assets belonging to JPMorganChase, its clients and
customers or third parties. The consequences of any failure by one or more employees to
conduct themselves in accordance with JPMorganChase’s expectations, policies or
practices could include litigation, or regulatory or other governmental investigations or
enforcement actions. Any of these proceedings or actions could result in judgments,
settlements, fines, penalties or other sanctions, or lead to: • financial losses • increased
operational and compliance costs • greater scrutiny by regulators and other parties •
regulatory actions that require JPMorganChase to restructure, curtail or cease certain of its
activities • the need for significant oversight by JPMorganChase’s management • loss of
clients or customers, and • harm to JPMorganChase’s reputation. The foregoing risks could
be heightened with respect to newly-acquired businesses if JPMorganChase fails to
successfully integrate employees of those businesses or any of those employees do not
conduct themselves in accordance with JPMorganChase's expectations, policies and
practices. Reputation Damage to JPMorganChase’s reputation could harm its businesses.
Maintaining trust in JPMorganChase is critical to its ability to attract and retain clients,
customers, investors and employees. Damage to JPMorganChase’s reputation can
therefore cause significant harm to JPMorganChase’s business and prospects, and can
arise from numerous sources, including: • employee misconduct, including discriminatory
behavior or harassment with respect to clients, customers or employees, or actions that
are contrary to JPMorganChase’s goal of fostering an inclusive workplace • security
breaches, including as a result of cyber attacks • failure to safeguard client, customer or
employee information • failure to manage risks associated with its client relationships, or
with transactions or business activities in which JPMorganChase or its clients engage,
including transactions or activities that may be unpopular among one or more
constituencies • rapid and broad dissemination of misinformation and disinformation
across the media landscape, including social networking sites • incorrect, biased or
misleading results or content generated by artificial intelligence, leading to harmful
outcomes, including discrimination in lending practices against vulnerable populations,
fraud, manipulation of customers, privacy breaches or intellectual property infringement •
deficiencies or perceived failures in managing ESGrelated initiatives, including modifying or
failing to meet publicly-announced targets • operational failures • litigation or regulatory
fines, penalties or other sanctions • actions taken in executing regulatory and
governmental requirements during a global or regional health emergency, spread of
infectious disease, epidemic or pandemic • regulatory investigations or enforcement
actions, or resolutions of these matters, and • failure or perceived failure to comply with
laws, rules or regulations by JPMorganChase or its clients, 33Part I customers,
counterparties or other parties, including newly-acquired businesses, companies in which
JPMorganChase has made principal investments, parties to joint ventures with
JPMorganChase, and vendors with which JPMorganChase does business. Social and
environmental activists have been targeting JPMorganChase and other financial services
firms with public criticism concerning their business practices, including business
relationships with clients that are engaged in certain sensitive industries, such as
companies: • whose products are or are perceived to be harmful to human health, or •
whose activities negatively affect or are perceived to negatively affect the environment,
workers’ rights or communities. Activists have also taken actions intended to change or
influence JPMorganChase’s business practices with respect to ESG matters, including
public protests at JPMorganChase’s headquarters and other properties, and submitting
specific ESG-related proposals for a vote by JPMorganChase’s shareholders. In addition,
JPMorganChase has been and expects that it will continue to be criticized by activists,
politicians and other members of the public concerning business practices or positions
taken by JPMorganChase with respect to matters of public policy (such as diversity, equity
and inclusion initiatives) or regarding transactions or other business or interactions
between JPMorganChase and governmental or regulatory bodies. Furthermore,
JPMorganChase's relationships or ability to transact with clients and customers, and with
governmental or regulatory bodies in jurisdictions in which JPMorganChase does business,
could be adversely affected if its decisions with respect to doing business with companies
in certain sensitive industries are perceived to harm those companies or to align with
particular political viewpoints. The foregoing types of criticism can be more widespread
during election years in various jurisdictions, and could have the effect of focusing
attention on a company such as JPMorganChase as part of a wider public debate on public
policy matters. Furthermore, JPMorganChase's participation in or association with certain
environmental and social industry groups or initiatives could be viewed by activists or
governmental authorities as boycotting or other discriminatory business behavior. These
and other types of criticism and actions directed at JPMorganChase could potentially
engender dissatisfaction among clients, customers, investors, employees, government
officials and other stakeholders. In all of these cases, JPMorganChase’s reputation and its
business and results of operations could be harmed by: • greater scrutiny from
governmental or regulatory bodies, or further criticism from politicians and other members
of the public, including in the form of governmental or regulatory investigations or litigation
• unfavorable coverage or commentary in the media, including through social media
campaigns • certain clients and customers ceasing doing business with JPMorganChase,
and encouraging others to do so • impairment of JPMorganChase’s ability to attract new
clients and customers, to expand its relationships with existing clients and customers, or
to hire or retain employees, or • certain investors opting to divest from investments in
securities of JPMorganChase. Actions by the financial services industry generally or
individuals in the industry can also affect JPMorganChase’s reputation. For example, the
reputation of the industry as a whole can be damaged by concerns that: • consumers have
been treated unfairly by a financial institution, or • a financial institution has acted
inappropriately with respect to the methods used to offer products to customers. If
JPMorganChase is perceived to have engaged in these types of behaviors, this could
weaken its reputation among clients or customers, employees or other stakeholders.
Failure to effectively manage potential conflicts of interest or to satisfy fiduciary obligations
can result in litigation and enforcement actions, as well as damage JPMorganChase’s
reputation. JPMorganChase’s ability to manage potential conflicts of interest is highly
complex due to the broad range of its business activities which encompass a variety of
transactions, obligations and interests with and among JPMorganChase’s clients and
customers. JPMorganChase can become subject to litigation, enforcement actions, and
heightened regulatory scrutiny, and its reputation can be damaged, by the failure or
perceived failure to: • adequately address or appropriately disclose conflicts of interest,
including potential conflicts of interest that may arise in connection with providing multiple
products and services in, or having one or more investments related to, the same
transaction • identify and address any conflict of interest that a third party with which it is
does business may have with respect to a transaction involving JPMorganChase • deliver
appropriate standards of service and quality 34• treat clients and customers fairly and with
the appropriate standard of care • use client and customer data responsibly and in a
manner that meets legal requirements and regulatory expectations • provide fiduciary
products or services in accordance with the applicable legal and regulatory standards, or •
handle or use confidential information of customers or clients appropriately and in
compliance with applicable data protection and privacy laws, rules and regulations. A
failure or perceived failure to appropriately address conflicts of interest or fiduciary
obligations could result in customer dissatisfaction, litigation and regulatory fines,
penalties or other sanctions, and heightened regulatory scrutiny and enforcement actions,
all of which can lead to lost revenue and higher operating costs and cause serious harm to
JPMorganChase’s reputation. Country An outbreak or escalation of hostilities between
countries or within a country or region could have a material adverse effect on the global
economy and on JPMorganChase’s businesses within the affected region or globally.
Aggressive actions by hostile governments or groups, including armed conflict or
intensified cyber attacks, could expand in unpredictable ways by drawing in other countries
or escalating into full-scale war with potentially catastrophic consequences, particularly if
one or more of the combatants possess nuclear weapons. Depending on the scope of the
conflict, the hostilities could result in: • worldwide economic disruption • heightened
volatility in financial markets • severe declines in asset values, accompanied by
widespread sell-offs of investments • sudden increases in prices in the energy and
commodity markets or for certain safe haven currencies • substantial depreciation of local
currencies, potentially leading to defaults by borrowers and counterparties in the affected
region • disruption of global trade • diminished consumer, business and investor
confidence • refugee and humanitarian crises, and • new economic sanctions or other
regulatory requirements, including those that introduce exceptional compliance
challenges for multinational companies such as JPMorganChase. Any of the above
consequences could have significant negative effects on JPMorganChase’s operations and
earnings, both in the countries or regions directly affected by the hostilities or globally.
Further, if the U.S. were to become directly involved in such a conflict, this could lead to a
curtailment of any operations that JPMorganChase may have in the affected countries or
region, as well as in any nation that is aligned against the U.S. in the hostilities.
JPMorganChase could also experience more numerous and aggressive cyber attacks
launched by or under the sponsorship of one or more of the adversaries in such a conflict.
JPMorganChase’s business and operations in certain countries can be adversely affected
by local economic, political, regulatory and social factors. Some of the countries in which
JPMorganChase conducts business have economies or markets that are less developed
and more volatile or may have political, legal and regulatory regimes that are less
established or predictable than other countries in which JPMorganChase operates. In
addition, in some jurisdictions in which JPMorganChase conducts business, the local
economy and business activities are subject to substantial government influence or
control. Some of these countries have in the past experienced economic disruptions,
including: • extreme currency fluctuations • high inflation • low or negative growth •
defaults or reduced ability to service sovereign debt and • increased fraud or other
misrepresentation of value. The governments in these countries have sometimes reacted
to these developments by imposing restrictive policies that adversely affect the local and
regional business environment, such as: • price, capital or exchange controls, including
imposition of punitive transfer and convertibility restrictions or forced currency exchange •
expropriation or nationalization of assets, including client assets, or confiscation of
property, including intellectual property, and • changes in laws, rules and regulations. The
impact of these actions could be accentuated in trading markets that are smaller, less
liquid and more volatile than more-developed markets. These types of government actions
can negatively affect JPMorganChase’s operations in the relevant country, either directly or
by suppressing the business activities of local clients or multi-national clients that conduct
business in the jurisdiction. In addition, emerging markets countries, as well as more
developed countries, have been susceptible to 35Part I unfavorable social developments
arising from poor economic conditions or governmental actions, including: • widespread
demonstrations, civil unrest or general strikes • crime and corruption • security and
personal safety issues • an outbreak or escalation of hostilities, or other geopolitical
instabilities • overthrow of incumbent governments • terrorist attacks, and • other forms of
internal discord. These economic, political, regulatory and social developments have in the
past resulted in, and in the future could lead to, conditions that can adversely affect
JPMorganChase’s operations in those countries and impair the revenues, growth and
profitability of those operations. In addition, any of these events or circumstances in one
country can affect JPMorganChase’s operations and investments in another country or
countries, including in the U.S. People JPMorganChase’s ability to attract and retain
qualified employees is critical to its success. JPMorganChase’s employees are its most
important resource, and in many areas of the financial services industry, competition for
qualified personnel is intense. JPMorganChase endeavors to attract talented new
employees from a variety of backgrounds and retain, develop and motivate its existing
employees. JPMorganChase's efforts to hire and retain talented employees could be
hindered by factors such as: • the emerging need for more-skilled workers in an evolving
labor and workplace environment, including due to changes in technology • targeted
recruitment of JPMorganChase employees by competitors, and • modifications to or
discontinuation of JPMorganChase's hybrid work models. JPMorganChase's performance
and competitive position could be materially and adversely affected if it is unable to attract
or retain qualified employees for its workforce or to devise and execute effective
succession planning for key leadership roles, such as the Chief Executive Officer, members
of the Operating Committee and other senior leaders. In addition, advances in technology,
such as automation and artificial intelligence, may lead to workforce displacement. This
could require JPMorganChase to invest in additional employee training, manage impacts
on morale and retention, and compete for employment candidates who possess more
advanced technological skills, all of which could have a negative impact on
JPMorganChase's business and operations. Unfavorable changes in immigration or travel
policies could adversely affect JPMorganChase’s businesses and operations.
JPMorganChase relies on the skills, knowledge and expertise of employees located
throughout the world. Changes in immigration or travel policies in the U.S. and other
countries that unduly restrict or otherwise make it more difficult for employees or their
family members to work in, or travel to or transfer between, jurisdictions in which
JPMorganChase has operations or conducts its business could inhibit JPMorganChase’s
ability to attract and retain qualified employees, and thereby dilute the quality of its
workforce, or could prompt JPMorganChase to make structural changes to its worldwide or
regional operating models that cause its operations to be less efficient or more costly.
Legal JPMorganChase faces significant legal risks from litigation and formal and informal
regulatory and government investigations. JPMorganChase is named as a defendant or is
otherwise involved in many legal proceedings, including class actions, derivative actions
and other litigation or disputes with third parties, as well as criminal proceedings. Actions
currently pending against JPMorganChase may result in judgments, settlements, fines,
penalties or other sanctions adverse to JPMorganChase. Any of these matters could
materially and adversely affect JPMorganChase’s business, financial condition or results of
operations, or cause serious reputational harm. As a participant in the financial services
industry, it is likely that JPMorganChase will continue to experience a high level of litigation
and regulatory and government investigations related to its businesses and operations.
Regulators and other government agencies conduct examinations of JPMorganChase and
its subsidiaries both on a routine basis and in targeted exams, and JPMorganChase’s
businesses and operations are subject to heightened regulatory oversight. This heightened
regulatory scrutiny, or the results of such an investigation or examination, may lead to
additional regulatory investigations or enforcement actions. There is no assurance that
those actions will not result in resolutions or other enforcement actions against
JPMorganChase. Furthermore, a single event involving a potential violation of law or
regulation may give rise to numerous and overlapping investigations and proceedings,
either by multiple federal, state or local agencies and officials in the U.S. or, in some
instances, regulators and other governmental officials in non-U.S. jurisdictions. 36In
addition, if another financial institution violates a law or regulation relating to a particular
business activity or practice, this will often give rise to an investigation by regulators and
other governmental agencies of the same or similar activity or practice by JPMorganChase.
JPMorganChase could become subject to a significant regulatory investigation and be
unable to disclose specific information concerning that investigation to the public if such a
disclosure would violate JPMorganChase’s obligations under applicable rules and
regulations to maintain the confidentiality of confidential supervisory information, even if
the resolution of that investigation could have a material adverse effect on
JPMorganChase’s business, operations, results or financial condition. Regulatory
investigations, examinations or other initiatives by U.S. and non-U.S. governmental
authorities may subject JPMorganChase to judgments, settlements, fines, penalties or
other sanctions, and may require JPMorganChase to restructure its operations and
activities or to cease offering certain products or services. All of these potential outcomes
could harm JPMorganChase’s reputation or lead to higher operational costs, thereby
reducing JPMorganChase’s profitability, or result in collateral consequences. In addition,
the extent of JPMorganChase’s exposure to legal and regulatory matters can be
unpredictable and could, in some cases, exceed the amount of reserves that
JPMorganChase has established for those matters.