Company Case assignment

Open Posted By: surajrudrajnv33 Date: 12/02/2021 High School Research Paper Writing

Due in 24 hours

Category: Business & Management Subjects: Auditing Deadline: 12 Hours Budget: $150 - $300 Pages: 3-6 Pages (Medium Assignment)

Attachment 1


Washington, D.C. 20549





Commission file number: 1-2207

THE WENDY’S COMPANY (Exact name of registrant as specified in its charter)

Delaware 38-0471180 (State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

One Dave Thomas Blvd. 43017

Dublin, Ohio (Zip Code) (Address of principal executive offices)

Registrant’s telephone number, including area code: (614) 764-3100 ---------------------------------

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $.10 par value WEN The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of common equity held by non-affiliates of The Wendy’s Company as of June 28, 2019 was approximately $3,631.8 million. As of February 18, 2020, there were 223,032,261 shares of The Wendy’s Company common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated herein by reference from The Wendy’s Company’s

definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after December 29, 2019.


Special Note Regarding Forward-Looking Statements and Projections

This Annual Report on Form 10-K and oral statements made from time to time by representatives of the Company may contain or incorporate by reference certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “estimate,” “goal,” “upcoming,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address future operating, financial or business performance, strategies or initiatives, future efficiencies or savings, anticipated costs or charges, future capitalization, anticipated impacts of recent or pending investments or transactions and statements expressing general views about future results or brand health are forward-looking statements within the meaning of the Reform Act. Forward-looking statements are based on our expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. Many important factors could affect our future results and cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors include, but are not limited to, the following:

• the impact of competition, including from outside the quick-service restaurant industry;

• changes in consumer tastes and preferences and discretionary consumer spending;

• prevailing conditions and disruptions in the national and global economies, including areas with a high concentration of Wendy’s restaurants;

• food safety events, including instances of food-borne illness, involving Wendy’s, its supply chain or other food service companies;

• the success of our operating, promotional, marketing or new product development initiatives, including risks associated with our plans to enter the breakfast daypart across the U.S. system;

• our ability to achieve our growth strategy through net new restaurant development, including the availability of suitable locations and terms, and the success of our Image Activation program, including the ability of reimaged restaurants to positively affect sales;

• changes in commodity and other operating costs, including supply, distribution and labor costs;

• our ability to attract and retain qualified restaurant personnel;

• shortages or interruptions in the supply or distribution of food or other products and other risks associated with our independent supply chain purchasing co-op;

• consumer concerns regarding the nutritional aspects of our products;

• the effects of disease outbreaks, epidemics or pandemics;

• the effects of negative publicity that can occur from increased use of social media;

• risks associated with our international operations, including our ability to achieve our international growth strategy;

• risks associated with our digital commerce strategy, platforms and technologies, including our ability to adapt to changes in industry trends and consumer preferences;

• our dependence on computer systems and information technology, including risks associated with the failure, interruption or breach of our systems or technology or other cyber incidents or deficiencies;

• risks associated with our plan to realign and reinvest resources in our IT organization to accelerate growth;


• our ability to effectively manage the acquisition and disposition of restaurants or successfully implement other strategic initiatives;

• conditions beyond our control, such as adverse weather conditions, natural disasters, hostilities, social unrest or other catastrophic events;

• the availability and cost of insurance;

• our ability to protect our intellectual property;

• the continued succession and retention of key personnel and the effectiveness of our leadership structure;

• compliance with legal or regulatory requirements, the impact of legal or regulatory proceedings and risks associated with an increased focus on environmental, social and governance issues;

• risks associated with leasing and owning significant amounts of real estate, including a decline in the value of our real estate assets or liability for environmental matters;

• the effects of charges for impairment of goodwill or other long-lived assets;

• risks associated with our securitized financing facility and other debt agreements, including our overall debt levels;

• the availability, terms and deployment of capital, including the amount and timing of equity and debt repurchases;

• other risks and uncertainties referred to in this Annual Report on Form 10-K (see especially “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in our other current and periodic filings with the Securities and Exchange Commission.

In addition to the factors described above, there are risks associated with our predominantly franchised business model that could impact our results, performance and achievements. Such risks include our ability to identify, attract and retain experienced and qualified franchisees, the business and financial health of franchisees, the ability of franchisees to meet their royalty, advertising, development, reimaging and other commitments, participation by franchisees in brand strategies and the fact that franchisees are independent third parties that own, operate and are responsible for overseeing the operations of their restaurants. Our predominantly franchised business model may also impact the ability of the Wendy’s system to effectively respond and adapt to market changes.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this Annual Report on Form 10-K as a result of new information, future events or developments, except as required by federal securities laws, although we may do so from time to time. We do not endorse any projections regarding future performance that may be made by third parties.

Explanatory Note

The Wendy’s Company (“The Wendy’s Company”) is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (formerly known as Wendy’s International, Inc.). Wendy’s International, LLC is the indirect parent company of (1) Quality Is Our Recipe, LLC (“Quality”), which is the owner and franchisor of the Wendy’s® restaurant system in the United States and all international jurisdictions except for Canada, and (2) Wendy’s Restaurants of Canada Inc., which is the owner and franchisor of the Wendy’s restaurant system in Canada. As used in this report, unless the context requires otherwise, the term “Company” refers to The Wendy’s Company and its direct and indirect subsidiaries, and “Wendy’s” refers to Quality when the context relates to ownership of or franchising the Wendy’s restaurant system and to Wendy’s International, LLC when the context refers to the Wendy’s brand. References in this Annual Report on Form 10-K (the “Form 10-K”) to restaurants that we “own” or that are “Company-operated” include owned and leased restaurants.


Item 1. Business.

Company Overview

Wendy’s is primarily engaged in the business of operating, developing and franchising a system of distinctive quick-service restaurants serving high quality food. Wendy’s opened its first restaurant in Columbus, Ohio in 1969. Today, Wendy’s is the world’s third largest quick-service restaurant company in the hamburger sandwich segment, with 6,788 restaurants in the United States and 30 foreign countries and U.S. territories as of December 29, 2019.

At December 29, 2019, there were 5,852 Wendy’s restaurants in operation in the United States. Of these restaurants, 357 were operated by the Company and 5,495 were operated by a total of 241 franchisees. In addition, at December 29, 2019, there were 936 Wendy’s restaurants in operation in 30 foreign countries and U.S. territories, all of which were franchised. See “Item 2. Properties” herein for a listing of the number of Company-operated and franchised locations across the Wendy’s system.

The Company’s principal executive offices are located at One Dave Thomas Blvd., Dublin, Ohio 43017, and its telephone number is (614) 764-3100.

Corporate History

The Wendy’s Company’s corporate predecessor was incorporated in Ohio in 1929 and was reincorporated in Delaware in June 1994. Effective September 29, 2008, in conjunction with the Wendy’s Merger (as defined below), the Company’s corporate name was changed from Triarc Companies, Inc. to Wendy’s/Arby’s Group, Inc. (“Wendy’s/Arby’s”). Effective July 5, 2011, in connection with the sale of Arby’s Restaurant Group, Inc. (“Arby’s”), Wendy’s/Arby’s changed its name to The Wendy’s Company.

Merger with Wendy’s

On September 29, 2008, Triarc Companies, Inc. and Wendy’s International, Inc. completed their merger (the “Wendy’s Merger”) in an all-stock transaction in which Wendy’s shareholders received 4.25 shares of Wendy’s/Arby’s Class A common stock for each Wendy’s common share owned. In the Wendy’s Merger, approximately 377,000,000 shares of Wendy’s/Arby’s Class A common stock were issued to Wendy’s shareholders. In addition, effective on the date of the Wendy’s Merger, Wendy’s/Arby’s Class B common stock was converted into Class A common stock. In connection with the May 28, 2009 amendment and restatement of Wendy’s/Arby’s Certificate of Incorporation, Class A common stock was redesignated as “Common Stock.”

Sale of Arby’s

On July 4, 2011, Wendy’s Restaurants completed the sale of 100% of the common stock of Arby’s to ARG IH Corporation (“ARG”), a wholly-owned subsidiary of ARG Holding Corporation (“ARG Parent”), for $130.0 million in cash (subject to customary purchase price adjustments) and 18.5% of the common stock of ARG Parent (through which Wendy’s Restaurants indirectly retained an 18.5% interest in Arby’s). Our 18.5% equity interest was diluted to 12.3% on February 5, 2018, when a subsidiary of ARG Parent acquired Buffalo Wild Wings, Inc. As a result, our diluted ownership interest included both the Arby’s® and Buffalo Wild Wings® brands under the newly formed combined company, Inspire Brands, Inc. (“Inspire Brands”). On August 16, 2018, the Company sold its remaining 12.3% ownership interest to Inspire Brands for $450.0 million. (Arby’s is a registered trademark of Arby’s IP Holder, LLC and Buffalo Wild Wings is a registered trademark of Buffalo Wild Wings, Inc.)

Fiscal Year

The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 29, 2019” or “2019,” (2) “the year ended December 30, 2018” or “2018” and (3) “the year ended December 31, 2017” or “2017,” all of which consisted of 52 weeks.

Business Segments

As a result of the realignment of our management and operating structure during 2019 as discussed in Note 5 of the Financial Statements and Supplementary Data contained in Item 8 herein, the Company adopted a new segment reporting structure beginning in the fourth quarter of 2019. As part of this new structure, the Company made the following changes: (1) it combined its Canadian business with its International segment and (2) it separated its real estate and development operations into its own segment.


The Company is now comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our Canadian restaurant real estate joint venture (“TimWen”). In addition, Global Real Estate & Development earns fees from facilitating franchisee-to- franchisee restaurant transfers (“Franchise Flips”) and providing other development-related services to franchisees. See Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Item 7 herein and Note 26 of the Financial Statements and Supplementary Data contained in Item 8 herein for segment financial information.

The Wendy’s Restaurant System

The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants. Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of December 29, 2019.

Restaurant Openings and Closings

During 2019, Wendy’s opened two new Company-operated restaurants and closed three generally underperforming Company-operated restaurants. During 2019, Wendy’s franchisees opened 180 new restaurants and closed 102 generally underperforming restaurants.

The following table sets forth the number of Wendy’s restaurants in operation at the beginning and end of each fiscal year from 2017 to 2019:

2019 2018 2017 Restaurants open at beginning of period 6,711 6,634 6,537 Restaurants opened during period 182 159 174 Restaurants closed during period (105) (82) (77)

Restaurants open at end of period 6,788 6,711 6,634

Restaurant Operations

Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring filet of chicken breast sandwiches, which are prepared to order with the customer’s choice of condiments. Wendy’s menu also includes chicken nuggets, chili, french fries, baked potatoes, freshly prepared salads, soft drinks, Frosty® desserts and kids’ meals. In addition, the restaurants sell a variety of promotional products on a limited time basis. Wendy’s also currently offers breakfast in some restaurants in the United States and, as previously announced, plans to enter the breakfast daypart across the U.S. system on March 2, 2020. Wendy’s breakfast menu features a variety of breakfast sandwiches, biscuits and croissants, sides such as seasoned potatoes, oatmeal bars and seasonal fruit, and a beverage platform that includes hot coffee, cold brew iced coffee and our vanilla and chocolate Frosty-ccino iced coffee.

Free-standing Wendy’s restaurants generally include a pick-up window in addition to a dining room. Approximately two-thirds of sales at Company-operated restaurants occur through the pick-up window.

Wendy’s strives to maintain quality and uniformity throughout all restaurants by publishing detailed specifications for food products, preparation and service, continual in-service training of employees, restaurant operational audits and field visits from Wendy’s supervisors. In the case of franchisees, field visits are made by Wendy’s personnel who review operations, including quality, service and cleanliness and make recommendations to assist in compliance with Wendy’s specifications.

Supply Chain, Distribution and Purchasing

As of December 29, 2019, three independent processors (five total production facilities) supplied all of the beef used by Wendy’s restaurants in the United States. In addition, five independent processors (11 total production facilities) supplied all of the chicken used by Wendy’s restaurants in the United States. In addition, there was one main in-line distributor of food, packaging


and beverage products, excluding breads, that serviced approximately 52% of Wendy’s restaurants in the United States and five additional in-line distributors that, in the aggregate, serviced approximately 47% of Wendy’s restaurants in the United States. Wendy’s and its franchisees have not experienced any material shortages of food, equipment, fixtures or other products that are necessary to maintain restaurant operations. Wendy’s anticipates no such shortages of products and believes that alternate suppliers and distribution sources are available. Suppliers and distributors to the Wendy’s system must comply with United States Department of Agriculture (“USDA”) and United States Food and Drug Administration (“FDA”) regulations governing the manufacture, packaging, storage, distribution and sale of all food and packaging products.

Wendy’s has a purchasing co-op relationship agreement with its franchisees that establishes Quality Supply Chain Co-op, Inc. (“QSCC”). QSCC manages, for the Wendy’s system in the United States and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment under national agreements with pricing based upon total system volume. QSCC’s supply chain management facilitates the continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the United States and Canada. Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations. Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend.

Wendy’s does not sell food or restaurant supplies to its franchisees.

Quality Assurance

Wendy’s quality assurance program is designed to verify that the food products supplied to our restaurants are processed in a safe, sanitary environment and in compliance with our food safety and quality standards. Wendy’s quality assurance personnel conduct multiple on-site sanitation and production audits throughout the year at all of our core menu product processing facilities, which include beef, chicken, pork, buns, french fries, Frosty® dessert ingredients and produce. Animal welfare audits are also conducted every year at all beef, chicken and pork facilities to confirm compliance with our required animal welfare and handling policies and procedures. In addition to our facility audit program, weekly samples of beef, chicken and other core menu products from our distribution centers are randomly sampled and analyzed by a third-party laboratory to test conformance to our quality specifications. Wendy’s representatives regularly conduct evaluations and inspections of all Company-operated and franchise restaurants to test conformance to our sanitation, food safety and operational requirements. Wendy’s has the right to terminate franchise agreements if franchisees fail to comply with quality standards.

Information Technology

Wendy’s relies on computer systems and information technology to conduct its business. Wendy’s utilizes both commercially available third-party software and proprietary software owned by the Company to run the point-of-sale and kitchen delivery functions and certain other consumer-facing and back-office functions in Wendy’s restaurants. Wendy’s has invested significant resources to focus on consumer-facing technology, including installing a single point-of-sale system for Wendy’s U.S. and Canadian restaurants, activating mobile ordering via Wendy’s mobile apps and establishing delivery arrangements with third-party vendors for Wendy’s U.S. and Canadian restaurants. We believe our digital platforms are critical to creating a more seamless user experience, providing insights to enhance our relationship with customers and meeting consumer demand for customization, speed and convenience. In December 2019, Wendy’s implemented a plan to realign and reinvest resources in our IT organization to strengthen our ability to accelerate growth. We are partnering with a third-party global IT consultant on this new structure to leverage their global capabilities and enable a more seamless integration between our digital and corporate IT assets.

Trademarks and Service Marks

Wendy’s or its subsidiaries have registered certain trademarks and service marks in the United States Patent and Trademark Office and in international jurisdictions, some of which include Wendy’s®, Old Fashioned Hamburgers® and Quality Is Our Recipe®. Wendy’s believes that these and other related marks are of material importance to its business. Domestic trademarks and service marks have their next required maintenance filings at various times from 2020 to 2029 in order to keep such registrations in force, while international trademarks and service marks have various durations of ten to 15 years. Wendy’s generally intends to maintain and renew its trademarks and service mark registrations in accordance with applicable deadlines.


Wendy’s entered into an Assignment of Rights Agreement with the Company’s founder, Dave Thomas, and his wife dated as of November 5, 2000 (the “Assignment”). Wendy’s had used Mr. Thomas, who was Senior Chairman of the Board until his death on January 8, 2002, as a spokesperson and focal point for its products and services for many years. With the efforts and attributes of Mr. Thomas, Wendy’s has, through its extensive investment in the advertising and promotional use of Mr. Thomas’ name, likeness, image, voice, caricature, endorsement rights and photographs (the “Thomas Persona”), made the Thomas Persona well known in the United States and throughout North America and a valuable asset for both Wendy’s and Mr. Thomas’ estate. Under the terms of the Assignment, Wendy’s acquired the entire right, title, interest and ownership in and to the Thomas Persona, including the sole and exclusive right to commercially use the Thomas Persona.

Research and Development

New product development is important to the Wendy’s system. The Company believes that the development and testing of new and improved products is critical to increasing sales, attracting …

Attachment 2

Risk Categorization and Definition (RCD) Tool ‐ Summarized Version   

CATEGORY  Sub‐Category  Definition 


Copyright © SimErgy. All rights reserved.   

FINANCIAL    A category of risks related to unexpected changes in external  markets, prices, rates, and liquidity supply and demand. See also  market risk, credit risk, and liquidity risk. 


Unexpected changes in external markets (such as stock markets),  prices (such as commodity prices), or rates (such as interest  rates), related to (a) general market movements (although the  source for this is often economic risk) or (b) a specific asset on the  company’s balance sheet. Some examples include equity market  risk, interest rate risk, and currency risk. 


Unexpected changes in credit markets (availability), prices (credit  spreads), or credit‐worthiness of issuers, related to (a) general  credit market movements (although the source for this is often  economic risk) or (b) a specific issuer of a fixed‐income security  on the company’s balance sheet or (c) a counterparty to whom  the company has extended credit. 


Unexpected changes in liquidity supply or demand, related to  three different levels of impact on the company: (a) untimely  asset sales; (b) inability to meet contractual demands; or (c)  default. A change in liquidity supply involves an unexpected  change in the ability to sell assets as expected in the market, in  terms of price, volume, or timeliness. A change in liquidity  demand involves an unexpected change in demand for liquidity  by option holders, such as  bondholders exercising early put options or ‘‘run‐onthe‐bank’’  situations for financial services companies, where account  holders suddenly request the withdrawal of funds from their  accounts, en masse. 


Unexpected changes in the economy. This is often the source of  risk that triggers multiple simultaneous unexpected changes in  other items, such as consumer disposable income (impacting  demand for the company’s products or services), employment  markets (impacting the company’s fixed expenses),  inflation/deflation (impacting the company’s variable costs),  items related to market risk, and items related to credit risk. 

STRATEGIC    A category of risks related to unexpected changes in key  elements of strategy formulation or execution. This is highly  variable by company and must be customized. 


Viability of strategy—such as choice of products, distribution  channels, markets, or value proposition— does not match  expectations. This is highly variable by company and must be  customized. 

STRATEGIC  EXECUTION  Strategy is not implemented as expected. Note: Execution risk is  highly variable by company and must be customized. 

STRATEGIC  GOVERNANCE  Governance is not functioning as expected 

Risk Categorization and Definition (RCD) Tool ‐ Summarized Version   

CATEGORY  Sub‐Category  Definition 


Copyright © SimErgy. All rights reserved.   


RELATIONSHIPS  Unexpected change in strategic relationships (e.g., parent  company or joint venture partner) 

STRATEGIC  COMPETITOR  Unexpected change in competitive landscape, such as new  entrants, aggressive competitor actions against the company,  price wars, and so forth. 

STRATEGIC  SUPPLIER  Unexpected changes in supplier environment, such as supplier  capacity, supplier failure, or change in the cost of goods or  services. 


Unexpected changes in the company’s relationship with external  stakeholders with public voices, such as the media, consumer  advocates, equity analysts, rating agencies, regulators, and  politicians. 


Unexpected changes in laws or regulations 


Unexpected changes in the business environment of foreign  countries in which the company operates, such as unexpected  changes in the government’s stability, attitude toward foreign  companies, and tariffs. 

OPERATIONAL    A category of risks related to unexpected changes in elements  related to operations, such as human resources, technology,  processes, and disasters. 



Human resources (i.e., people) are not performing as expected,  such as unexpected changes in talent management, performance,  productivity, and conduct. 

OPERATIONAL  TECHNOLOGY  Technology not performing as expected. Some examples include  data security, data privacy, data integrity, capacity, and reliability 

OPERATIONAL  LITIGATION  Unexpected civil suits or judgments against company 

OPERATIONAL  COMPLIANCE  Level of compliance not matching expectations (e.g., fines for  noncompliance are higher than expected) 


Unexpected change in the amount of fraud by external parties. 


Unexpected natural or man‐made disasters, such as weather‐ related (such as hurricane, flood, tornado, earthquake, and  drought), health‐related (such as pandemic), accidental (such as  fire), general acts of destruction (such as war, terrorism, and  rioting), and specific acts of destruction against the company  (such as product tampering, attack on employees, and sabotage).  This also includes unexpected man‐made disasters caused by  company employees or agents, such as environment damage. 

OPERATIONAL  PROCESSES  Processes are not functioning as expected (e.g., processes are too  convoluted)