Verisk Analytics Inc

Item 1A.

Risk Factors

You should carefully consider the following risks and all of the other information set forth in this annual report on Form 10-K before deciding to invest in any of our securities. If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer. In such case, the trading price of our securities, including our common stock, could decline due to any of these risks, and you may lose all or part of your investment. In additi

Strategic and Operational Risks Related to Our Business

We are subject to competition to the effects of tin many of the markets in which we operate and we may not be able to compete effectively.

Some markets in which we operate or which we believe may provide growth opportunities for us are highly competitive, and are expected to remain highly competitive. We compete on the basis of quality, customer service, product and service selection, and pricing. Our competitive position in various market segments depends upon the relative strength of competitors in the COVID-19 pandemicsegment and the resources devoted to competing in that segment. Due to their size, certain competitors may be able to allocate greater resources to a particular market segment than we can. As a result, these competitors may be in a better position to anticipate and resulting global disruptions opond to changing customer preferences, emerging technologies and market trends. In addition, new competitors and alliances may emerge to take market share away, and as we enter into new lines of business, due to acquisition or otherwise, we face competition from new players with different competitive dynamics. We may be unable to maintain our competitive position in our market segments, especially against larger competitors. We may also invest further to upgrade our systems in ourder to compete. If we fail to successfully compete, our business and o, financial position and results of operations discussed in Item 7 of Part II, "Management's Dis may be adversely affected.

To the extent the availability of free or relatively inexpensive information increases, the demand for some of our solutions may decrease.

Public sources of free or relatively inexpensive information have become increasingly available recently, particularly through the Internet, and this trend is expected to continue. Governmental agencies in particular have increased the amount of information to which they provide free public access. Public sources of free or relatively inexpensive information may reduce the demand for our solutions. To the extent that cussion Analysis of Financial Conditomers choose not to obtain solutions from us and instead rely on information obtained at little or no cost from these public sources, our business and results of operations may be adversely affected.

If we are unable to develop successful new solutions or if we experience defects, failures and delays associated with the introduction of new solution as, our business could suffer serious harm.

Our growth and Results of Operatsuccess depend upon our ability to develop and sell new solutions. If we are unable to develop new solutions,"  or if we are not successful in introducing and in the risk /or obtaining regulatory approval or acceptance for new solutions, or products we develop factors below, ae sufficient pricing pressure to make them unattractive to pursue, we may not be able to grow our business, or growth may occur more slowly than we anticipate. In additional, significant undetected errors or unforeseen effecdelays in new solutions may affect market acceptance of our solutions and could harm our business, financial condition or results from the COVID-19 pof operations. In the past, we have experienced delays while developing andemic and the global economic climate may gi introducing new solutions, primarily due to difficulties in developing models, acquiring data and adapting to particular operating environments. Errors or defects in our solutions that are significant, or are perceived to be significant, could result in rejection of our solutions, damage to our reputation, loss of revenues, diversion of development resources, an increase in product liability claims, and increases in service and support costs and warranty claims.

We typically face a long selling cycle to secure new contracts that require significant resource commitments, which result in a long lead time before we receive risevenues from new relationships.

We to or amplify many of the risks discussed bypically face a long selling cycle to secure a new contract and there is generally a long preparation period in order to commence providing the services. We typically incur significant business development expenses during the selling cycle and we may not succeed in winning a new customers business, in which case we receive no revenues and may receive no reimbursement for such expenses. Even if we succeed in develow.

Risks Related to Oping a relationship with a potential new customer, we may not be successful in obtaining contractual commitments after the selling cycle or in maintaining contractual commitments after the implementation cycle, which may have a material adverse effect on our Bbusiness

s, results of operations and financial condition.

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We could lose our access to data from external sources, which could prevent us from providing our solutions.

We depend upon data from external sources, including data received from customers and various government and public record services, for information used in our databas repositories. In general, we do not own the information in these databas repositories, and the participating organizations could discontinue contributing information to the databas repositories. Our data sources could withdraw or increase the price for their data for a variety of reasons, and we could also become subject to legislative, judicial, or contractual restrictions on the use of such data, in particular if such data is not collected by the third parties in a way that allows us to legally use and/or process the data. In addition, some of our customers have been, andWe are also reliant on in the future mayternal continue to be, stockholderrols of our company. If our customers percentage of ownership of our common stock decreases, orthird parties to ensure the accuracy of they cease to be stockholders of our company, there cir data. If a third party suffers reputational damage from an be no aunderlying issurance that our customers will e, we may discontinue to provide data to the same extent or on the same termsusing their services. If a substantial number of data sources, or certain key sources, were to withdraw or be unable to provide their data, or if we were to lose access to data due to government regulation o, decline in reputation or if the collection of data became uneconomical, our ability to provide solutions to our customers could be impacted, which could materially adversely affect our business, reputation, financial condition, operating results, and cash flows.

Agreements with our data suppliers are short-term agreements. Some suppliers are also competitors, which may make us vulnerable to unpredictable price increases and may cause some suppliers not to renew certain agreements. Our competitors could also enter into exclusive contracts with our data sources. If our competitors enter into such exclusive contracts, we may be precluded from receiving certain data from these suppliers or restricted in our use of such data, which would give our competitors an advantage. Such a termination or exclusive contracts could have a material adverse effect on our business, financial position, and operating results if we were unable to arrange for substitute data sources.

We derive a substantial portion of our revenues from U.S. PC primary insurers. If there is a downturn in the U.S. insurance industry or that industry does not continue to accept our solutions, our revenues will decline.

Revenues derived from solutions we provide to U.S. PC primary insurers account for a substantial portion of our total revenues. During the year ended December 31, 202223, approximately 69% of our revenue was derived from solutions provided to U.S. PC primary insurers. Also, our invoices for certain of our solutions are linked in part to premiums in the U.S. PC insurance market, which may rise or fall in any given year due to loss experience and capital capacity and other factors in the insurance industry that are beyond our control. In addition, our revenues will decline if the insurance industry does not continue to accept our solutions.

Factors that might affect the acceptance of these solutions by PC primary insurers include the following:

A downturn in the insurance industry, pricing pressure or lower acceptance of our solutions by the insurance industry could result in a decline in revenues from that industry and have a material adverse effect on our financial condition, results of operations and cash flows.

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Acquisitions, other strategic relationships and dispositions of our business, and related integration and separation risks, could result in operating difficulties and other harmful consequences, and we may not be successful in achieving the anticipated benefits of such transactions.

Our long-term business strategy includes growth through acquisitions and other strategic relationships. Future acquisitions may not be completed on acceptable terms and acquired assets, data or businesses may not be successfully integrated into our operations, and we may ultimately divest unsuccessful acquisitions or investments. Moreover, from time to time we may also undertake dispositions of certain businesses or assets. Any acquisitions, investments and dispositions will be accompanied by the risks commonly encountered in such transactions. Such risks include, among other things:

The anticipated benefits of many of our acquisitions may not materialize. Future acquisitions or dispositions could result in the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill and other intangible assets, any of which could harm our financial condition.

We typically fund our acquisitions through our debt facilities. Although we have capacity under committed facilities, those may not be sufficient. Therefore, future acquisitions may require us to obtainmay incur substantial additional financing through indebt or equity, which may not be available on favorable terms or at all and could resultedness in dilution. In addiconnection, to the extent we cannot identify or consummate, on terms acceptable to us,  with future acquisitions that are complementary.

In or otherwise attractive to our business, we may experieder to finance difficulty in achieving future growth.

There may be consolidaacquisition in our end customer markets, which could reduce the use of our services.

Mergers or consolidations among our customers could reduce the number of our customers and potential customers. This could adversely affectare an important part of our revenues even if these events do not reduce the aggregate number of customers or the activities of the consolidated entities. If our customers merge with or are acquired by other entities that are not our customers, or that use fewer of our services, they may discolong-term growth strategy, we may incur substantinue or reduce their use of our services. Theal adverse effects of consolidadition will be greater in sectors that we are particularly dependent upon, for example, in the PC insurance sector. Any of these dal indebtedness and such increased levelopmentsrage could materially aadversely affect our business, financial condition, operating results, and cash flows.

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If we a. In particulare unable to develop successful new solutions or if we experience defects, failures and delays associat, the increased with the introduction of new solutions, our businessleverage could suffer serious harm.

Our growth and success depend upon oincrease our vulnerability to develop and sell new solutions. If we are unable to develop new solutions, or if we are not successful in introducing and/or obtaining regulatory approval or acceptance for new solutions, or productssustained, adverse macroeconomic we develop face sufficient pricing praknessure to make them unattractive to pursue, we may not be able to grow our business, or growth may occur more slowly than we anticipate. In addition, significant undetected errors or delays in new solutions may affect market acceptance of our solutions, limit our ability to obtain further financing and could harmlimit our business, financial condition or results of operations. In the past, we have exability to pursue other operienced delays while developingational and introducing new solutions, primarily due to difficulties in developing models, acquiring data and adapting to particular operating environmentstrategic opportunities. Errors or defects in our solutions that are significant, or are perceived to be significant, could result in rejection of our solutions, damage to our reputation, loss of revenues, diversion of development resources, an Further, the Federal Reserve has increase in product liability claims, and increases in service and support costs and warranty claims.

We typically face a long selling cycle to secure new contracts thad its benchmark interest require significant resource commitments, which resate mult in a long leadiple time before we receive revenues from new relationships.

We typically face a long selling cycle s in 2023 in a bid to secure a new contract and there is generally a loreduce rising preparainflation period in order to commence providingrates in the services. We typically incur significant business development expenses during the selling cycle and we may not succeed in winning a new customers business,United States. These interest rate increases have resulted in which case we receive no revenueshigher short-term and may receive no reimbursement for such expenselong-term borrowing costs. Even if we succeed in dThe increased leveloping a relationship with a rage, potential new customer, we may not be sulack of accessful in obtaining contractual commitments after the selling cycle or in maintaining contractual commitments after the implementation cycle, which may to financing and increased expenses could have a material adverse effect on our business, results of operations and ffinancial condition.

To the extent the availability, results of free or relatively inexpensive informoperation increases, the dems and for some of our solutions may decrease.

Public sources of free or relatively inexpensive informcash flows.

There may be consolidation have become increasingly available recently, particularly through the Internin our end customer market, and this trend is expected to continue. Governmental agencies in particular have increasedwhich could reduce the amountuse of information to which they provide free public access. Public sourceour services.

Mergers of free or relatively inexpensive informr consolidation may reduce the demand for our solutions. To the extents among our customers could reduce that customers choose not to obtain solutions from us and instead rely on information obtained at little or no cost from these public sources, our business and results of operations may be ae number of our customers and potential customers. This could adversely affected.

O our senior leadership team is critical to our continued success and the loss of such personnel could harm our business.

Our future success substantially depends on the continued service and performanrevenues even if these events do not reduce of the meaggregate numbers of our senior leadership team. These personnel possess business and technical capabilicustomers or the activities that are difficult to replace.

However, as a general practice we do not of the consolidated enter into employee contracts with the members oities. If our senior management operating team, except fcustomers merge with or certain limited situations. If we lose key members of our senior management operating team, we may not be able to effectively manage are acquired by other entities that are not our current operationsstomers, or meet ongoing and future business challenges, and this may have a material adverse effect onthat use fewer of our businesservices, results of operations and financial condition.

We may fail to attract and retain enough qualified employees to supportthey may discontinue or reduce their use of our operations, which could have anservices. The adverse effect on our ability to expand our business and service our customers.

Our business relies on large numbers of skilled employees and our success depends on our ability to attract, train and retain a sufficis of consolidation will be greater in sectors that we are particularly dependent number of qualified eupon, for examployees. If our attrition rate increases, our operating efficiency and productivity may decrease. We compete for employees not only with other companies in our industry, but also with companies in other industries, such as software services, engineering services and financial services companies, and there is a limited pool of employees who have the skills and training needed to do oe, in the PC insurance sector. Any of these developments could materially adversely affect our work.

If our business continues to grow, the number of people we will need to hire will increase. We will also need to increase our hiring if we are not able to maintain our attrition rate through our current recruiting, financial condition, operating results, and retention policies. Increased competition for employees could have a cash flows.

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Fin adverse effect on our ability to expancial and our business and service our customers, as well as cause us Economic Risks Related to incOur greater personnel expenses and training costs.

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Business

General economic, political and market forces and dislocations beyond our control could reduce demand for our solutions and harm our business.

The demand for our solutions may be impacted by domestic and international factors that are beyond our control, including macroeconomic, political and market conditions, the energy transition driven by climate change and decarbonization, the availability of short-term and long-term funding and capital, the level and volatility of interest rates, currency exchange rates, and inflation. Any one or more of these factors may contribute to reduced activity and prices in the securities markets generally and could result in a reduction in demand for our solutions, which could have an adverse effect on our results of operations and financial condition. A significant additional decline in the value of assets for which risk is transferred in market transactions could have an adverse impact on the demand for our solutions.

We may incur substantOur financial addpositional indebtedness in connection with future acquisitions.

In order to finance acqui may be impacted by audit examinations or changes in tax laws or tax rulings.

Our existing corporate structure and tax positions, which are a have been important part of our long-term growlemented in a manner which we believe is compliant with strategy, we maycurrent prevailing tax laws. However, changes incur substantial additional indebtedness existing tax laws or rulings, including Federal, State and such increased leverage International, could adversely affehave a significant impact on our business. In particular, the increased leverage could increase our vulnereffective tax rate, cash tax positions and deferred tax assets and liability to sustained,ies. Tax audit examinations with an adverse macroeconomic weakness, limit our ability to obtaoutcome could have a negative effect in further financing and limit our ability to pursue o jurisdictions in which we operate. Furthermore, ther opera Organizational and strateg for Economic opportunities. Further, the Federal Reserve Co-operation and Development (OECD) has increasssued its benchmark interest rate multiple times in 2022 in a bid to reduce rising inflation rates in the United States, and it is Pillar Two model rules for a global minimum tax of 15% that has been agreed upon in principle by over 140 countries. Although we do not expected that additional rate hikes may be adopted i Pillar Two to materially increase our tax expense, the ultimate impact will depend on the future. These interest rate increases have resultedimplementation of specific rules in higher short-term and long-term borrowingeach jurisdiction. Accordingly, we will costs. The increasedntinue to monitor global leverage,gislative action for potential lack of access to financing and increased expenses could have a material adverse effect oimpacts. In addition, our tax positions are impacted by fluctuations in our earnings and financial condition, results of operations in the various countries in which we do business.

Cybersecurity and cash flows.

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Product/Technology Risks Related to Our Intellectual Property and CybersecurityBusiness

Fraudulent or unpermitted data access and other cyber-security or privacy breaches may negatively impact our business and harm our reputation.

Security breaches in our facilities, computer networks, and databas repositories may cause harm to our business and reputation and result in a loss of customers. Many of our solutions involve the storage and transmission of proprietary information and sensitive or confidential data. , which are significantly complex with various uses across businesses and locations. With a large number of inter-related systems, keeping the technology current and managing vulnerabilities is challenging. As with other global companies, our systems are regularly subject to cyber-attacks, cyber-threats, attempts at fraudulent access, physical break-ins, computer viruses, attacks by hackers and similar disruptive problems. As cyber-threats continue to evolve, we are required to expend significant additional resources to continue to modify and enhance our protective measures and to investigate and remediate any information security vulnerabilities and incidents. Despite efforts to ensure the integrity of our systems and implement controls, processes, policies and other protective measures, we may not be able to anticipate or detect all security breaches or fraudulent access attempts, nor may we be able to implement guaranteed preventive measures against such security breaches or fraudulent access attempts. Cyber-threats are rapidly evolving and we may not be able to anticipate, prevent or detect all such attacks and could be held liable for any security breach or loss.

Third-party contractors, including cloud-based service providers, also may experience security breaches involving the storage and transmission of proprietary information. If users gain improper access to our databas repositories, they may be able to steal, publish, delete or modify confidential third-party information that is stored or transmitted on our networks. Our business relies on the secure processing, transmission, storage and retrieval of confidential, proprietary and other information in our computer and data management systems and networks, and in the computer and data management systems and networks of third parties. In addition, to access our network, products and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.

In addition, customers, employees or others misuse of and/or gaining fraudulent or unpermitted access to or failure to properly secure our information or services could cause harm to our business and reputation and result in loss of customers. Any such misappropriation and/or misuse of or failure to properly secure our information could result in us, among other things, being in breach of certain data protection and related legislation.

A security or privacy breach may affect us in the following ways:

Incidents in which consumer data has been fraudulently or improperly acquired or viewed, or any other security or privacy breaches, have in the past occurred, and may in the future occur and could go undetected. The number of potentially affected consumers identified by any future incidents is inherently uncertain. Any such incident could materially adversely affect our business, reputation, financial condition, operating results and cash flows. In addition, media or other reports of perceived security vulnerabilities to our systems or those of our third-party suppliers, even if no breach has been attempted or occurred, could also adversely impact our reputation and materially impact our business.

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We could face claims formay lose key business assets, through the loss of data center capacity or the intelrruption of telectual propertyommunications links, the infringement, which if sucternet, or power sourcessful, which could restrict us from significantly impede our ability to do busing and providingess.

Our operations depend on our technologies and solutionability, as well as to our customhat of third-party service providers.

There to whom we has been substantial lve outsourced several critigacal function and os, to protect data centers, whether proceeding in cloud or dedicated environments, particularly in the U.S., regarding patent and othand related technology against damage from hardware failure, fire, flood, power intelloss, telectual property rightommunications failure, impacts of terrorism, breaches in the informasecurity (such as the action technology industry. Ts of computer hackers), natural disasters, or othere is a risk that we are infringing, or may in the futu disasters. Certain of our facilities are infringe,located in areas that could be intellectumpacted by coastal property rightflooding, earthquakes of third partier other disasters. We have, from time-to-time, been subject to litigatiThe online services we provide are dependent on alleging intellinks to telectualommunications property infringement. We monitor third-party patentviders. In addition, we generate a significant amount of our revenues through telesales centers and patent applicationwebsites that may be relevant to our technologies and we utilize in the acquisition of new customers, fulfillment of solutions and we carry out freedomservices and responding to operate analysis where we deem appropriate. However,customer inquiries. We may not have such monitoring and analysis has not been, and is unlikfficient redundant operations to cover a loss or failure in all of these areas in a timely in the future to be,manner. Certain of our customer comprehensive, and it ntracts provide that our online servers may not be possiunavailable to detect all potentially relevant patents and patfor specified periods of time. Any damage to our or our third-party service providers data cent applers, failure of our telecommunications. Since the patent application pro links or inability to access can take several years to complete, there may be currently pending applicathese telesales centers or websites could cause interruptions, unknown to us, in operations that may laterterially adversely affect our ability to meet customers resquirements, resulting in issudecreased patents that cover our products andrevenue, operating income and earnings per share.

A technologies. As a result, we may infringe existing and fuy vendor that provides critical services, such as cloud-based infrastructure third-party patents, creates a single point of which we are not aware. failure resulting in pricing or contract lock-in risk.

As we expand our operations there ismigrate to a higher risk that such activity could infringe thecloud-based information technology infrastructure and delivery model (distributed computing intellefrastructual property rights of third parties.

Third-partyre platform for business), systems are consolidated inteo a smallectual propertyr number of large infringement claims and any resultant litigation against us or our technology astructure suppliers. We cannot easily switch cloud providers, meaning that any disruption of or interference with our use of a partners or providers, cicular supplier, would subjeimpact us to liability for damages, restrict us from using and providingour operations and our business would be adversely impacted. Any of the few of these suppliers could suffer an our technologies and solutionstage which would in turn result in an outage for one or operatingmore of our business generally, or require changesproducts. These suppliers could also be subject to be made to our technologies and solutions. Even if we prevail, litigation isregulatory actions, or conflicts of interest which could force us to seek alternative suppliers in a short time period, at an econsuming and expensomic disadvantage.

Generative to defend and wAI use by our customers or other third parties could result in the diversion of managements time and attention.

Ifreplacement of our existing products and/or solutions or the reduction of their relevance.

For a successful claim of infringement is broubset of our products we rely on proprietary or copyright against us and wed material which could be fail ed into develop non-infringing technologies and solugenerative AI large language models without our knowledge. This could result in duplications or to obtain licenses on a timely of our products or solutions by generative AI tools and cost-effective basis, this could materially adversely affectreduce the relevance or value proposition of such products or solutions.

Our own use of AI, including but not limited to generative AI, to enhance our business, reputation, fiproducts could lead to unancialticipated condition, operatsequences such as ethical, compliance, privacy-observing results, bias-reducing, and cash flows.

We may lo/or intellectual property issues.

Increasing use key business assets, through the loss of data center capacity of AI, including but not limited to generative AI models, in our internal systems may create new attack methods for the interruption of telecommunadversaries and raise ethical, technologications links, the internet, or powl, legal, regulatory, and other sourcechallenges, which could significantmay negatively impedeact our ability to do business.

brands and demand for our products and services. Our operations depebusiness policies and on our ability, as wellinternal security controls may not keep pace with these changes as that ofnew threats emerge, or third-pare emerging cybersecurity service provregulations in jurisdictions worldwiders to whom we have outsourced several critical functions,. Additionally, we are actively adding new generative AI features to protect data centers, whether in cloud orour services. Because the generative AI landscape is dedicated environmveloping and inherents, and related technology against damage fromly risky, no assurance can be given that such strategies and offerings will be successful or will not hardware failure, firem our reputation, flood, power loss, telecommunications failinancial condition, and operating results. Product feature, impacts of terrorism, breaches ins that rely on generative AI may be susceptible to unanticipated security (such as the actions of computer hackthreats from sophisticated advers), naturaries.

We use analytical disasters, or other disasters. Certain of our facilities are lomodels to assist our customers in key areas, such as underwriting, claims, reserving, and cated in areas thatastrophe risks, but actual results could be impacted by coastal flooddiffer materially from the model outputs and related analyses.

We use various modeling, earthquakes  techniques (e.g., scenarios, predictive, stochastic and/or other disasters. The online services we forecasting) and data analytics to analyze and estimate exposures, loss trends and other risks associated with our provide are dependent on links to telecommunicationsducts. We use the modeled outputs and related analyses to assist customers with decision-making (e.g., underwriting, providers. In addition, we generate a significant amount of our revenues through telesalicing, claims, reserving, reinsurance, and catastrophe risk). The modeled outputs and related analyses centerare subject to various and websites that we utilizssumptions, uncertainties, model errors and the in the acquisitherent limitations of new customerany statistical analysis, fulfillment including the use of solutions and servicehistorical internal and industry data. In addition, the modeled outputs and responding to customerlated analyses may occasionally contain inquiraccuracies. We may not have sufficient redundan, perhaps in material respects, including as a result opef inaccurations to covee inputs or a loss or failure in all of pplications thereof. Climate change and othese areas in a timely manner. Cr variables may make modeled outcomes less certain of our customer contracts provide that our online serversr produce new, non-modeled risks. Consequently, actual results may not be unavailable for specifidiffer materially from our modeled periods of time. Any damage to ourresults. If, based upon these models or our third-party servicether factors, we providers data centers, failure of our telecommunications links or inability to access inaccurate information to customers, or overestimate these telesales centers or websites could cause interrup risks we are exposed to, new business growth and retentions in operations that of our existing business materiallyy be adversely affect our ability to meet customers requirements,ed which could have an adverse effect on our resulting in decreased revenue,s of operating income and earnings per share.

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Risks Related to Legal, Regulatory and Compliance MatterRisks Related to Our Business

We will continue to rely upon proprietary technology rights, and if we are unable to protect them, our business could be harmed.

Our success depends, in part, upon our intellectual property rights. To date, we have relied primarily on a combination of copyright, patent, trade secret, and trademark laws and nondisclosure and other contractual restrictions on copying and distribution to protect our proprietary technology. This protection of our proprietary technology is limited, and our proprietary technology could be used by others without our consent. In addition, patents may not be issued with respect to our pending or future patent applications, and our patents may not be upheld as valid or may not prevent the development of competitive products. Businesses we acquire also often involve intellectual property portfolios, which increase the challenges we face in protecting our strategic advantage. Any disclosure, loss, invalidity of, or failure to protect our intellectual property could negatively impact our competitive position, and ultimately, our business. Our protection of our intellectual property rights in the U.S. or abroad may not be adequate and others, including our competitors, may use our proprietary technology without our consent. Furthermore, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of resources and could harm our business, financial condition, results of operations, and cash flows.

Regulatory developments could negatively impact our business.

Because personal, public and non-public information is stored in some of our databas repositories, we are vulnerable to government regulation and adverse publicity concerning the use of our data. We provide many types of data and services that already are subject to regulation under the Fair Credit Reporting Act, Gramm-Leach-Bliley Act, Drivers Privacy Protection Act, the European Unions General Data Protection Regulation, the Dodd Frank Wall Street Reform and Consumer Protection Act and to a lesser extent, various other federal, state, and local laws and regulations. These laws and regulations are designed to protect the privacy of the public and to prevent the misuse of personal information in the marketplace. However, many consumer advocates, privacy advocates, and government regulators believe that the existing laws and regulations do not adequately protect privacy. They have become increasingly concerned with the use of personal information, particularly social security numbers, department of motor vehicle data and dates of birth. As a result, they are lobbying for further restrictions on the dissemination or commercial use of personal information to the public and private sectors. Similar initiatives are under way in other countries in which we do business or from which we source data. We have implemented various measures to comply with the data privacy and protection principles of the European Unions General Data Protection Regulation, however, there can be no assurances that such methods will be deemed fully compliant. If we are unable to comply with the data privacy and protection principles adopted pursuant to the General Data Protection Regulation, it will impede our ability to conduct business between the U.S. and the E.U. which could have a material adverse effect on our business, financial position, results of operations or cash flows.

The following legal and regulatory developments also could have a material adverse effect on our business, financial position, results of operations or cash flows:

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Our financial position may be impacted by audit examinations or changes in tax laws or tax rulings.

Our existing corporate structure and tax positions have been implemented in a manner in which we believe is compliant with current prevailing tax laws. However, changes in existing tax laws or rulings, including Federal, State and International, could have a significant impact on our effective tax rate, cash tax positions and deferred tax assets and liabilities. Tax audit examinations with an adverse outcome could have a negative effect in the jurisdictions in which we operate. Furthermore, the Organization for Economic Co-operation and Development (OECD) released its Base Erosion and Profit Shifting (BEPS) action plans which may also lead to future tax reform that could affect our results. In addition, our tax positions are impacted by fluctuations in our earnings and financial results in the various countries in which we do business.

We are subject to antitrust, consumer protection, intellectual property and other litigation, as well as governmental investigations, and may in the future become further subject to such litigation and investigations; an adverse outcome in such litigation or investigations could have a material adverse effect on our financial condition, revenues and profitability.

We participate in businesses (particularly insurance-related businesses and services) that are subject to substantial litigation, including antitrust, consumer protection and intellectual property litigation. In addition, our insurance specialists are in the business of providing advice on standard contract terms, which if challenged could expose us to substantial reputational harm and possible liability. We are subject to the provisions of a 1995 settlement agreement in an antitrust lawsuit brought by various state Attorneys General and private plaintiffs, which imposes certain constraints with respect to insurer involvement in our governance and business.

Our failure to successfully defend or settle any litigation or resolve any governmental investigation could result in liability that, to the extent not covered by our insurance, could have a material adverse effect on our financial condition, revenues and profitability. Given the nature of our business, we may be subject to litigation or investigation in the future. Even if the direct financial impact of such litigation or investigations is not material, settlements or judgments arising out of such litigation or investigations could include further restrictions on our ability to conduct business, including potentially the elimination of entire lines of business, which could increase our cost of doing business and limit our prospects for future growth.

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We could face claisks Related to International Operams for intellectual property infringement, which if successful could restrict us from using and providing our technologies and solutions

We are to our customers.

There has been subject to competition in many of stantial litigation and other proceedings, particularly in the U.S., regarding patent and othe marketr intellectual property rights in which we operatthe information technology industry. There is a risk that we and were infringing, or may not be able to compete effectively.

Some markets in which we in the future infringe, the intellectual property rights of third parties. We have, from time-to-time, been subject to litigation alleging intellectual properate or which wety infringement. We monitor third-party patents and patent applications that may believe may provide growth relevant to our technologies and solutions and we carry out freedom to opportunities for us are highly erate analysis where we deem appropriate. However, such monitoring and analysis has not been, and is unlikely in the future to be, competitrehensive, and are exp it may not be possible to detected to remain highly competitive. We  all potentially relevant patents and patent applications. Since the patent application process can take several years to complete on the basis of quality, custom, there may be currently pending applications, unknown to us, that may later service,result in issued patents that cover our products and service selection,technologies. As a result, we may infringe existing and pricing. Our competitive posfuture third-party patents of which we are not aware. As we expand our operations there is a higher risk that such activity could infringe the intellectual property rights of third parties.

Third-party intellectual property infringement claims and any resultant litigation in various market segments depends upon the relative strength ofagainst us or our technology partners or providers, could subject us to liability for damages, restrict us from using and providing our technologies and solutions or operating our business generally, or require changes to be made to our technologies and solutions. Even if we prevail, litigation is time competitorsnsuming and expensive to defend and would result in the segdiversion of management s time and the resourcesattention.

If a successful claim of infringement is brought against us and we fail to devoted to competing in that segment. Due to their size, certain competitors may belop non-infringing technologies and solutions or to obtain licenses on a timely and cost-effective basis, this could materially adversely affect our business, reputation, financial condition, operating results, and cash flows.

We ablere subject to allocate greater resources to a particular market segment than we can. As a result, these extensive procurement laws and regulations, including those that enable the U.S. government to terminate contracts for convenience. Our business and reputation could be adversely affected if we or those we do business with fail to comply with or adapt to existing or new procurement laws and regulations which are constantly evolving.

We and others with which we do business must competitors may be in a better ly with laws and regulations relating to the award, administration and performance of U.S. government contracts. Government contract laws and regulations affect how we do business with our customers and imposition toe certain risks anticipate ad costs on our business. A violation of these laws and respond to changing customer preferencgulations by us, our employees, or others working on our behalf, such as a supplier or a joint venture partner, could harm our reputation and result in the imposition of fines and penalties, emergthe termination of our contracts, suspension or debarment from bidding on or being technologiawarded contracts, loss of our ability to perform services and market trendcivil or criminal investigations or proceedings. In addition,  costs to comply with new competitors and alliances may emerge to take market shagovernment regulations can increase our costs, reduce our margins, and adversely affect our competitiveness.

Government contract laws and regulations can impose terms, obligations or penalties that are away, adifferent than those typically found as we enter into new linesin commercial transactions. One of the significant differences is that the U.S. government may terminate any of businesour government contracts, due to acquisition or otherwise, we face competition from new players with different competitive dynamics. We may be unable to maintain ounot only for default based on our performance, but also at its convenience. Generally, prime contractors have a similar right under subcontracts related to government contracts. If a contract is terminated for convenience, we typically would be entitled to receive payments for our allowable costs incurred and the proportionate share of fees or earnings for the work performed. However, to the extent insufficient funds have been appropriated by the U.S. government to a particular program to cover our costs upon a termination for competitive posnvenience, the U.S. government may assert that it is not required to appropriate addition in our market segal funding. If a contract is terminated for default, the U.S. government could make claims to reduce the contract value or recover its procurements, es costs and could assess other specially against larger  penalties, in some cases in excess of the contract value, exposing us to liability and adversely affecting our ability to competitors. We may also invest further to upgrade oue for future contracts and orders. In addition, the U.S. government could terminate a prime contract under which we are a subcontractor, notwithstanding the fact that our performance and the quality of the products or syervices we delivered were consistems in order to compete. If we fail to succnt with our contractual obligations as a subcontractor. Similarly, the U.S. government could indirectly terminate a program or contract by not appropriating funding. The decision to terminate programs or contracts for convenience or default could adversely affect our businessful and future financial performance.

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Generaly compete, o Risk Factors related to our bBusiness, financi

Our operations are subject to additional positrisks inherent in international operations.

With operation and results of os in 19 countries, we provide services to the insurance industry worldwide, including operations in various developing nations. Both current and future foreign operations maycould be adversely affected.

Our operations are subject to additional risks in by unfavorable geopolitical developments, including legal and regulatory changes; tax changes; changes in trade policies; changes to visa or immigration policies; regulatory restrictions; government leadership changes; political events and upheaval; sociopolitical instability; social, political or economic instability resulting from climate change; and nationalization of our operations without compensation. Adverse activity in any one country could negatively impact operations, increase our loss exposure under certain of our insurance products, and could, otherent in internwise, have an adverse effect on our business, liquidity, results of operational operationss, and financial condition depending on the magnitude of the events and our net financial exposure at that time in that country.

Conducting extensive international operations subjects us to risks that are inherent in international operations, including challenges posed by different pricing environments and different forms of competition; lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs and other barriers; unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties, or other trade restrictions; differing technology standards; difficulties in collecting accounts receivable; difficulties in managing and staffing international operations; varying expectations as to employee standards; potentially adverse tax consequences, including possible restrictions on the repatriation of earnings; and reduced or varied protection for intellectual property rights in some countries. In addition, our international operations subject us to obligations associated with anti-corruption laws and regulations, such as the U.K. Bribery Act 2010, the U.S. Foreign Corrupt Practices Act and regulations established by the U.S. Office of Foreign Assets Control. Government agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against companies for violations of export controls, anti-corruption laws or regulations, and other laws, rules, sanctions, embargoes, and regulations. 

Moreover, international operations could be interrupted and negatively affected by economic changes, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, and other economic or political uncertainties. All of these risks could result in increased costs or decreased revenues, either of which could have a material adverse effect on our financial condition, results of operations and cash flows.

We are subject to the increased risk of exchange rate fluctuations.

As amay fail to attract and retain enough qualified employees to support our operations, which could have an adverse effect on our ability to expand our business and service our customers.

Our business relies on large numbers of skilled employees and our success depends on our ability to attract, train and result tain a sufficient number of oqualified employees. If our oattrition rate increases, our operations outside of the U.S., we face greater exposure to movements in currency exchange rates, which may caung efficiency and productivity may decrease. We compete for employees not only with other companies in our industry, but also with companies in other industries, such as software services, engineering services and financial services companies, and there is a limited pool of employees who have the skills and training needed to do our work.

If our business continues to grow, the number of people we will need to hire will increase. We will also need to increase our revenue hiring if we are not able to maintain our attrition rate through our current recruiting and operating resultsretention policies. Increased competition for employees could have an adverse effect on our ability to differ materially fromexpand our business and service our customers, as well as cause us to incur greater personnel expectanses and training costs.

Physical and transitions. Our risks associated with climate change and its consequences could disrupt operating results could beons, threaten the safety of employees, or negatively affected dependiimpact our financial performance.

While we seek to be a strategic partner to the global insurance industry in analyzing risks related to climate change and building onresilience, we recognize the amouat there are inherent of risks wherevenue anr business is conducted. Climate-related expense denominvents and its associated in foreign currencies. As exchange rates vary, revenue, cosrisks including acute physical risk such as heatwave, hurricane/cyclone, inland flooding, and wildfire, and chronic physical risk such as sea level rise and water stress could disrupt of revenue, operating expenses, and other operating resultur operations and threaten the safety of our employees. Transition risks associated with achieving a lower-carbon global economy encompassing policy and legal risk such as potential costs associated with the introduction of mandatory global carbon pricing and potential regulatory mandates involving climate-related reporting obligations, when remeasurtechnology risk such as the potential increase in costs associated in U.S. dollars, may diffwith a mandated transition to low-emissions technologies, market risk such as the potential impacts of a market shift in customer materiallydemand toward low-carbon solutions, and reputation risk such as potential impacts on our business from eincreasing stakeholder expectations. Although we may apply certain related to real or perceived deficiencies associated with our climate leadership, strategiy, performance, or disclosures to mcould negatively impact our financial performance.

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We are transitigate foreign currency risk, oning to a new Enterprise Resource Planning system and our ability to manage our business and monitor results is highly dependent upon information and communication systems. A failure of these strategies may not eliminystems or the ERP implementation could disrupt our business and results of operations.

We are highly dependent upon a variety of internal computer and telecommunication systems to operate our exposurebusiness, including our enterprise resource planning (ERP) systems.

In order to foreign exchange rate fluctucontinue support of our growth, we are making significant technological upgrades to our informations and would involve cost systems. We are in the process of implementing a company-wide, single ERP software system and related processes to perform various functions and risks ofimprove on the efficiency of our global business. This is a lengthy and expensive process their own, such as ongoing managemenat will result in a diversion of resources from other operations. Continued execution of the project plan, or a divergence from it, may result in cost overruns, project delays or business interruptions. In addition, divergence from our project plan could impact timehe timing and/or expertise,tent of benefits we external costs topect to achieve from the system and process efficiencies.

Any disruptions, delays or deficiencies in the design and/or implement tation of the strategies and potential accounting implicanew ERP system, or in the performance of our legacy systems, particularly any disruptions, delays or deficiencies that impact our operations, could adversely affect our ability to effectively run and manage our business and adversely affect our reputation, competitive position, business, results of operations and financial conditions.

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Risks Related to Our Common Stock

If there are substantial sales of our common stock, our stock price could decline.

The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem attractive. As of December 31, 20223, our ten largest shareholders owned 40.3% of our common stock, including 2.5% of our common stock owned by our Employee Stock Ownership Plan or ESOP. Such stockholders are able to sell their common stock in the public market from time to time without registration, and subject to limitations on the timing, amount and method of those sales imposed by securities laws. If any of these stockholders were to sell a large number of their common stock, the market price of our common stock could decline significantly. In addition, the perception in the public markets that sales by them might occur could also adversely affect the market price of our common stock.

Pursuant to our equity incentive plans, options to purchase approximately 4,037,798 2,732,670shares of common stock were outstanding as of February 2416, 20234. We filed a registration statement under the Securities Act, which covers the shares available for issuance under our equity incentive plans (including for such outstanding options) as well as shares held for resale by our existing stockholders that were previously issued under our equity incentive plans. Such further issuance and resale of our common stock could cause the price of our common stock to decline.

Also, in the future, we may issue our securities in connection with investments and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding common stock.

Our capital structure, level of indebtedness and the terms of anti-takeover provisions under Delaware law and in our amended and restated certificate of incorporation and bylaws could diminish the value of our common stock and could make a merger, tender offer or proxy contest difficult or could impede an attempt to replace or remove our directors.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable or make it more difficult for stockholders to replace directors even if stockholders consider it beneficial to do so. Our certificate of incorporation and bylaws:

In addition, Section 203 of the Delaware General Corporation Law may inhibit potential acquisition bids for us. As a public company, we are subject to Section 203, which regulates corporate acquisitions and limits the ability of a holder of 15% or more of our stock from acquiring the rest of our stock. Under Delaware law, a corporation may opt out of the anti-takeover provisions, but we do not intend to do so.

These provisions may prevent a stockholder from receiving the benefit from any premium over the market price of our common stock offered by a bidder in a potential takeover. Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

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