Best examples of risks and uncertainties in MD&A examples

Real-world examples of risks and uncertainties in MD&A examples

Regulators keep saying the same thing: stop writing vague, copy‑pasted risk language and start writing about your business. The best examples of risks and uncertainties in MD&A examples all have one thing in common: they connect a specific risk to a specific line in the financial statements or a specific part of the strategy.

Below are several categories where you can see how this works in practice, along with realistic sample wording modeled on public filings.

1. Macroeconomic and interest rate risk – concrete MD&A wording

A classic example of risks and uncertainties in MD&A examples shows up in interest‑rate‑sensitive industries: banks, REITs, auto finance, and any company with heavy floating‑rate debt.

A strong MD&A example doesn’t just say “interest rates may fluctuate.” It ties rate moves directly to net interest margin, borrowing costs, and customer behavior:

“Our results of operations are highly sensitive to changes in interest rates. During 2023 and 2024, the Federal Reserve’s rate increases raised our average borrowing costs by approximately 180 basis points. If benchmark interest rates remain elevated or increase further, we may experience additional margin compression as our funding costs reprice more rapidly than the yields on our fixed‑rate loan portfolio. Prolonged higher rates could also reduce loan demand and increase credit losses, which would adversely affect our net income and regulatory capital ratios.”

This kind of example of risk and uncertainty connects:

• A specific external factor (Fed rate hikes)
• A financial metric (margin compression, credit losses)
• A timeframe (2023–2024 experience, forward‑looking uncertainty)

For context on interest rate trends and policy, MD&A writers often monitor the Federal Reserve’s data and commentary at the Board of Governors site: https://www.federalreserve.gov.

2. Supply chain disruption and geopolitical risk – best examples from 2024–2025

Post‑pandemic, some of the best examples of risks and uncertainties in MD&A examples are in the supply chain sections of manufacturers, retailers, and technology hardware companies.

A weak disclosure says: “We may experience supply chain disruptions.”

A stronger, more specific example of MD&A language looks like this:

“We rely on a limited number of semiconductor manufacturers in East Asia for key components used in our networking products. During 2022 and 2023, COVID‑19 lockdowns, port congestion, and energy constraints in the region extended lead times from an average of 8 weeks to over 20 weeks, increasing our inventory carrying costs and delaying customer shipments. Ongoing geopolitical tensions, export controls, or additional public health restrictions could further disrupt our supply chain, increase input prices, or limit our ability to serve customers in North America and Europe, which would negatively impact our revenue and gross margins.”

This example of risk and uncertainty:

• Names the region and component (East Asia semiconductors)
• References historical impact (lead times, inventory costs)
• Explains forward exposure (export controls, tensions, public health)

For geopolitical and trade context, MD&A teams often watch sources like the World Trade Organization (https://www.wto.org) and the U.S. International Trade Administration (https://www.trade.gov).

3. Cybersecurity and data privacy – examples include operational and reputational damage

Cyber risk is no longer optional in MD&A. The SEC adopted specific cybersecurity disclosure rules in 2023, and the best examples of risks and uncertainties in MD&A examples now integrate cyber threats with business operations, not just legal compliance.

A realistic MD&A disclosure example might read:

“We rely on complex information technology systems, including cloud‑based platforms, to process customer transactions and store sensitive personal and financial data. We have experienced, and expect to continue to experience, attempts to compromise our systems through phishing, ransomware, and other cyber attacks. While none of these incidents has had a material impact to date, a significant breach could disrupt operations, result in theft or unauthorized disclosure of customer data, subject us to regulatory investigations and penalties under U.S. and foreign privacy laws, and damage our reputation. The increasing sophistication of attackers and the integration of third‑party AI tools into our environment increase the uncertainty of our cyber risk profile.”

This example of risk and uncertainty does several things well:

• Acknowledges actual attempts/incidents (not pretending risk is theoretical)
• Connects cyber events to operations, regulation, and reputation
• Notes emerging factors like AI tools and attacker sophistication

The SEC’s cybersecurity disclosure rules and guidance are available at https://www.sec.gov, which is one of the primary reference points for MD&A writers.

4. Climate, ESG, and physical risk – examples of risks and uncertainties in MD&A examples

Climate‑related risks are no longer confined to energy and utilities. Insurers, real estate companies, agriculture, and consumer products businesses are now offering more detailed examples of risks and uncertainties in MD&A examples related to physical and transition risk.

A physical climate risk example might look like this:

“A significant portion of our distribution centers and retail locations are located in coastal regions of the United States that are exposed to hurricanes, flooding, and other extreme weather events. In 2023, severe storms in the Southeast temporarily closed 14 stores and one distribution center, resulting in approximately $12 million in lost sales and incremental repair costs. Climate change is expected to increase the frequency and severity of such events over time, which could result in higher insurance premiums, property damage, business interruption, and reduced asset values.”

A transition risk example of risk and uncertainty could say:

“Evolving climate‑related regulations, including proposed SEC climate disclosure rules and state‑level greenhouse gas reporting requirements, may require significant investments in data collection, reporting systems, and emissions reduction initiatives. Failure to meet stakeholder expectations regarding climate and other ESG matters could also affect our access to capital and our ability to attract and retain employees.”

For scientific context on climate trends, some companies cite sources like the U.S. National Oceanic and Atmospheric Administration (NOAA) at https://www.noaa.gov or the Intergovernmental Panel on Climate Change (IPCC) at https://www.ipcc.ch.

5. AI, automation, and technology disruption – 2024–2025 MD&A examples

If you are drafting MD&A in 2024–2025 and you ignore AI, investors will assume you are either not paying attention or not being candid. The newest examples of risks and uncertainties in MD&A examples increasingly mention artificial intelligence, both as an opportunity and as a risk.

Here is a forward‑looking AI risk example:

“We are investing in artificial intelligence and machine learning tools to enhance our product offerings and internal processes. These technologies are rapidly evolving, and there is significant uncertainty regarding how regulators will oversee their development and use. If we fail to adopt AI tools as quickly or effectively as our competitors, our products may become less competitive. Conversely, if our AI models generate inaccurate or biased outputs, or if we misuse customer data in training these models, we could face reputational harm, legal claims, or regulatory penalties.”

This example of risk and uncertainty highlights:

• Execution risk (failing to adopt AI effectively)
• Model risk (inaccurate or biased outputs)
• Regulatory uncertainty (evolving oversight)

For broader discussion of AI risks and ethics, MD&A writers sometimes consult academic and policy work from institutions like Harvard University (https://cyber.harvard.edu) or the National Institute of Standards and Technology (NIST) AI Risk Management Framework at https://www.nist.gov.

6. Regulatory, legal, and policy changes – examples include sector‑specific shocks

Regulatory risk is not new, but the pace of change has accelerated in areas like data privacy, consumer protection, antitrust, and financial regulation. Some of the best examples of risks and uncertainties in MD&A examples come from companies that tie regulatory shifts to specific revenue streams.

A sector‑specific MD&A example might state:

“We generate a significant portion of our revenue from overdraft and nonsufficient funds (NSF) fees. The Consumer Financial Protection Bureau (CFPB) has proposed and may adopt additional rules or enforcement actions limiting these fees or changing how they are disclosed to consumers. If implemented, these changes could materially reduce our fee income and require us to modify our account terms and customer communications, which would increase compliance costs and could impact customer behavior.”

Another example of risk and uncertainty in a different sector:

“Our operations in the European Union are subject to the General Data Protection Regulation (GDPR), and we expect additional privacy and data localization laws to be adopted in other jurisdictions where we operate. Compliance with these evolving requirements may require us to modify our data handling practices, limit cross‑border data transfers, or invest in new infrastructure, which could increase operating expenses and affect our ability to scale internationally.”

For regulatory developments, MD&A preparers often monitor the SEC (https://www.sec.gov), the CFPB (https://www.consumerfinance.gov), and sector‑specific agencies.

7. Human capital, labor markets, and remote work – example of modern MD&A risk language

Post‑COVID, investors want to know how companies are managing talent, remote work, and labor cost inflation. The more thoughtful examples of risks and uncertainties in MD&A examples now include explicit human capital risks.

A realistic human capital risk disclosure might read:

“Our success depends on our ability to attract, develop, and retain highly skilled employees, particularly in engineering, data science, and sales. Labor markets for these roles remain competitive, and wage inflation has increased our compensation costs in recent years. Our hybrid work model may also create challenges in maintaining our culture, collaboration, and employee engagement. If we are unable to hire or retain key personnel, or if we experience higher‑than‑expected turnover, our product development and customer acquisition efforts could be adversely affected.”

This example of risk and uncertainty links:

• Labor market conditions (competition, wage inflation)
• Business strategy (product development, sales)
• Operating model (hybrid work and culture)

For broader labor market data and trends, many MD&A teams reference the U.S. Bureau of Labor Statistics at https://www.bls.gov.

8. Liquidity, credit, and going concern – examples of risks and uncertainties in MD&A examples when things get tight

When liquidity is strained, MD&A stops being a formality and becomes survival disclosure. Some of the clearest examples of risks and uncertainties in MD&A examples appear in distressed or highly leveraged companies.

A liquidity risk example:

“We have a significant amount of indebtedness, with \(450 million of term loans maturing in 2026 and \)200 million of senior notes maturing in 2027. Our ability to meet these obligations depends on our future operating performance and our ability to refinance or extend our debt. Rising interest rates and tighter credit conditions have increased the cost and reduced the availability of new financing. If we are unable to generate sufficient cash flows from operations or obtain additional financing on acceptable terms, we may need to reduce or delay capital expenditures, sell assets, or seek other strategic alternatives, any of which could adversely affect our business.”

A going concern‑adjacent example of risk and uncertainty might say:

“Our recurring losses from operations and negative cash flows raise substantial doubt about our ability to continue as a going concern. Our plans to address this uncertainty include cost reduction initiatives, renegotiation of certain debt covenants, and potential equity financing. There can be no assurance that these plans will be successful, and if we are unable to improve our liquidity position, we may be forced to significantly curtail or cease operations.”

These examples are blunt, but that candor is exactly what regulators and investors expect when risk is no longer hypothetical.

How to use these examples of risks and uncertainties in MD&A examples without copying boilerplate

It’s tempting to treat the best examples of risks and uncertainties in MD&A examples as templates. That’s how you end up with filings that all sound the same—and comment letters from the SEC asking why your risk factors look like they were written for a different company.

Instead, use each example of risk and uncertainty as a pattern:

• Start with a specific driver (interest rates, storms, AI adoption, regulation, labor market)
• Describe the mechanism (how that driver hits revenue, cost, liquidity, or strategy)
• Anchor with history or data where you can (e.g., “in 2023 we experienced…”)
• Be honest about uncertainty (you don’t know if or when it will happen again)

When you do that, your own MD&A will read less like a legal shield and more like what it’s supposed to be: a management‑level explanation of how risk and uncertainty actually show up in your numbers.

FAQ: examples of risks and uncertainties in MD&A examples

Q1. What are common examples of risks and uncertainties in MD&A examples?
Common examples include interest rate and macroeconomic volatility, supply chain disruptions, cybersecurity incidents, climate and extreme weather events, regulatory and policy changes, AI and technology disruption, human capital challenges, and liquidity or refinancing risk. The best MD&A examples tie each of these directly to margins, revenue, cash flow, or strategic objectives.

Q2. How detailed should an example of risk and uncertainty be in MD&A?
Detailed enough that a reasonable investor can understand the connection between the risk and the company’s financial condition or results of operations. A strong example of risk and uncertainty typically names the affected business line or geography, references past incidents or trends where available, and explains how future events could affect revenue, costs, cash flows, or capital structure.

Q3. Can I reuse another company’s MD&A wording if their examples include similar risks?
You can study other companies’ filings for inspiration, but you should not copy their language. Regulators expect company‑specific disclosure. Even if the category of risk is similar, your exposure, scale, geography, and mitigation strategies will differ. Use other filings as examples of risks and uncertainties in MD&A examples to guide structure and clarity, then rewrite from the perspective of your own business.

Q4. Where can I find real examples of MD&A risk disclosures?
You can search Form 10‑K and 20‑F filings on the SEC’s EDGAR database at https://www.sec.gov/edgar/search. Look at companies in your industry and size range. Focus on MD&A sections and risk factors that clearly explain how specific events (like rate hikes, cyber incidents, or storms) affected results, and how management is thinking about the uncertainty going forward.

Q5. How often should MD&A risk and uncertainty examples be updated?
At least annually for Form 10‑K, and more frequently if there are material changes for Form 10‑Q or foreign private issuer reports. If you experience a major cyber incident, a significant acquisition or divestiture, a liquidity crunch, or a new regulatory development that materially changes your risk profile, your MD&A should be updated to reflect those new examples of risks and uncertainties in MD&A examples rather than relying on prior‑year language.