Risk factors

General overview. Our business is complex, dynamic, entrepreneurial, and international. Accordingly, it is subject to a number of significant risks in the ordinary course of its operations. If we cannot or do not successfully manage the risks associated with the services we provide, our operations, business, operating results, reputation, and/or financial condition could be materially and adversely affected.

One of the challenges of a global business such as ours is to determine in a sophisticated manner the critical enterprise risks that exist or may newly develop over time as our business evolves. We must then determine how best to employ reasonably available resources to prevent, mitigate, and/or minimize those risks that we are able to identify as having the greatest potential to cause significant damage from an operational, financial, or reputational standpoint. An important dynamic we must also consider and appropriately manage is how much and what types of commercial insurance to obtain and how much potential liability may remain uninsured consistent with the infrastructure that is in place within the organization to identify and properly manage it.

Various factors over which we have no control significantly affect commercial real estate markets. These include:

  • Macro movements of the stock, bond, currency and derivatives markets;
  • The political environment;
  • Government policy and regulations, in each case whether at local, national or international levels; and
  • The cost and availability of natural and non-renewable resources used to operate real estate.

As an example, the severe financial disruption and global recession that occurred during 2008 and 2009 materially impacted global real estate markets as the volume and pace of commercial real estate transactions contracted and real estate pricing and leasing in many countries and markets fell substantially. More recently, political uncertainties in Russia, certain countries in the Middle East, and Brazil have diminished the willingness of multinational companies to expand their businesses in those countries, which in each case has affected our business. Although commercial real estate markets in most major cities were stable to improved during 2015, primarily as a result of the low interest rate environment that has been encouraged by the activities of various central banks, their continued strength has in some cases remained uncertain for various reasons. These include:

  • The slowdown of the economy in China;
  • The sharp drop in oil prices combined with increased actual and potential output from the United States and Iran, among other countries;
  • The sharp drop in the prices of other commodities, partially as the result of the slowdown in demand from China;
  • The significant decline in global equities markets that has continued into the early part of 2016;
  • Uncertainties resulting from the randomness of terrorist acts, the effects of mass migration from countries experiencing hostilities in the Middle East, and the effects of climate change;
  • Risks from potential cyber-attacks, the sophistication of which continues to grow;
  • Uncertainties relating to the potential outcome of the November 2016 presidential election in the United States;
  • The dynamic nature of government policy and regulations, in each case whether at local, national, or international levels; and
  • The cost and availability of natural and non-renewable resources used to operate real estate.

Governments are addressing the different problematic situations in different and sometimes unpredictable and politically motivated ways. Accordingly, it is inherently difficult to make accurate predictions about the future movements in the markets in which we operate.

For additional information, please see Item 1A. Risk Factors on pages 39-67 of our 2015 Annual Report.

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