Market volatility, poor investment performance, reputational damage, global operational disruptions (e.g., pandemics, wars), third-party provider failures, technology limitations and security breaches, regulatory changes (antitrust, cybersecurity, ESG, tax), and legal proceedings (investigations, litigation) pose significant risks to the company's AUM, revenues, and income. The acquisition of Putnam Investments, while potentially beneficial, introduces integration risks and operational challenges. Impairment of intangible assets, particularly those related to Western Asset Management, is a substantial risk.
Financial Upside
Strong investment performance in global equity and bond markets, a 22% increase in AUM, and the acquisition of Putnam Investments, which adds $148.3 billion in AUM, represent potential financial upside. Increased average AUM, particularly in equity, fixed income, and multi-asset classes, suggests potential for higher investment management fees. The company's diverse product mix and global presence offer opportunities for growth in various markets.
