Citigroup Inc.

takeovers, unavailability of service, computer viruses or other malicious code,cyberattacks and other events that could have an adverse security impact.Despite the defensive measures Citigroup has taken, these threats may comefrom external actors such as governments, organized crime and hackers,third parties such as outsource or infrastructure-support providers andapplication developers, or may originate internally from within Citigroup.Given the high volume of transactions at Citigroup, certain errors may berepeated or compounded before they are discovered and rectified.Citigroup also faces the risk of operational disruption, failure, terminationor capacity constraints of any of the third parties that facilitate Citigroup’sbusiness activities, including exchanges, clearing agents, clearing houses orother financial intermediaries. Such parties could also be the source of anattack on or breach of Citigroup’s operational systems, data or infrastructure. Inaddition, as Citigroup’s interconnectivity with its clients grows, it increasinglyfaces the risk of operational failure with respect to its clients’ systems.If one or more of these events occurs, it could potentially jeopardizethe confidential, proprietary and other information processed and storedin, and transmitted through, Citigroup’s computer systems and networks,or otherwise cause interruptions or malfunctions in Citi’s, as well as itsclients’ or other third parties’, operations, which could result in reputationaldamage, financial losses, regulatory penalties and/or client dissatisfactionor loss.Failure to maintain the value of the Citigroup brand couldharm Citi’s global competitive advantage and its strategy.Citi’s ability to continue to leverage its extensive global footprint, and thusmaintain one of its key competitive advantages, depends on the continuedstrength and recognition of the Citigroup brand on a global basis, includingthe emerging markets as other financial institutions grow their operationsin these markets and competition intensifies. The Citi name is integral toits businesses as well as to the implementation of its strategy to be a globalbank for its clients and customers. Maintaining, promoting and positioningthe Citigroup brand will depend largely on the success of its ability to provideconsistent, high-quality financial services and products to these clients andcustomers around the world. Citigroup’s brand could be harmed if its publicimage or reputation were to be tarnished by negative publicity, whether ornot true, about Citigroup or the financial services industry in general, orby a negative perception of Citigroup’s short-term or long-term financialprospects. Failure to maintain its brand could hurt Citi’s competitiveadvantage and its strategy.80