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Risk factors

Also called Item 1A.

The section of a 10-K or 10-Q where a company describes the material risks that make an investment in it speculative or risky.

SEC rules ask for a discussion of the material factors that make an investment in the company speculative or risky, organized under headings, each risk under a caption that describes it. Source 1

Generic risks that could apply to any company are discouraged; if included, they go at the end under “General Risk Factors”. A section longer than 15 pages needs a summary of no more than two pages. Source 1 Source 2

Companies generally list their risk factors in order of importance. Source 3

The full list is in the 10-K, Item 1A. A 10-Q reports material changes. See Reading a 10-Q's risk factors. Source 4

Related terms

Where it comes up

Sources

  1. Code of Federal Regulations (eCFR): 17 CFR 229.105, Regulation S-K Item 105: Risk factors (opens in a new tab)
  2. SEC: Modernization of Regulation S-K Items 101, 103 and 105: small entity compliance guide (opens in a new tab)
  3. SEC, Investor.gov: Investor Bulletin: How to Read a 10-K/10-Q (opens in a new tab)
  4. SEC: Form 10-Q and its general instructions (opens in a new tab)

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