10 Examples of New Company Risk Factors Driven by the Ukraine Crisis

As the war in Ukraine continues to develop, companies are beginning to disclose potential impacts of Russia’s invasion. Verity Director of Research shares initial findings.

Ben Silverman, Head of Verity Research
March 2, 2022

In Brief 

  • Risk factors are commonly updated to acknowledge impacts of large-scale geopolitical events.  
  • Important disclosures are those specific to the event; not general boilerplate additions. 
  • Examples include impacts to supply chain, clinical trials, staffing, and sanctions. 

Many companies have updated Risk Factors and other disclosures in a boilerplate fashion to take into account Russia’s attack on Ukraine.  

This occurs anytime there is a large-scale geopolitical event and typically impacts disclosures related to the general economic impact of such events, similar but not limited to COVID-19 and climate change disclosures. It’s the disclosures specific to the event that are important to key in on.  

Here are ten examples of new and notable risk factors we discovered in VerityData financial research software. 

Ed. Note: With valued team members based in Ukraine, all of us at Verity continue to support the humanitarian efforts for Ukrainian communities during this time of crisis.

Impacts to Supply Chain  

Medical device makers add to Risk Factors, disclosing that Russia’s attack on Ukraine may create supply chain issues.  

Merit Medical Systems (MMSI)

Manufacturer of proprietary disposable medical devices warns that Russia’s attack on Ukraine may create supply chain problems. 

The military conflict between Russia and Ukraine may increase the likelihood of supply interruptions and further hinder our ability to find the materials we need to make our products. Supply disruptions are making it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain products.

Source: Risk Factor disclosure in 10-K – March 1, 2022  | View in Verity

LivaNova PLC (LIVN)

Manufacturer of medical devices used for cardiac surgery and neuromodulation. 

On February 24, 2022, for example, Russia launched an invasion in Ukraine which has the potential to affect our ability to import certain materials used to manufacture our products and sell our products in these countries.

Source: Risk Factor disclosure in 10-K – March 1, 2022 | View in Verity

Dentsply Sirona (XRAY)

Dental equipment manufacturer and dental consumables producer. 

While it is difficult to estimate the impact of current or future sanctions on the Company’s business and financial position, these sanctions could adversely impact the Company’s sales, cost of procuring raw materials, or distribution costs in future periods.

Source: Risk Factor disclosure in 10-K – March 1, 2022 | View in Verity

Impacts to Clinical Trials 

Biotechnology and pharmaceutical companies add to Risk Factors, disclosing that Russia’s attack on Ukraine may impact clinical trials. 

Albireo Pharma (ALBO)

Rare disease company focused on the development of novel bile acid modulators to treat rare pediatric and adult liver diseases. 

In addition, currently there is a conflict involving Russia and Ukraine, and this may impact our contract research organizations, clinical data management organizations, and clinical investigators’ ability to conduct certain of our trials in Eastern European countries, and may prevent us from obtaining data on patients already enrolled at sites in these countries. This could negatively impact the completion of our clinical trials and/or analyses of clinical results, which may increase our product development costs and materially harm our business.

Source: Risk Factor disclosure in 10-K – March 1, 2022  | View in Verity

Intra-Cellular Therapies (ITCI)

Develops novel drugs for the treatment of neuropsychiatric and neurologic diseases, and other disorders of the central nervous system. 

Further, we are currently conducting clinical trials for our product candidates in many countries, including the United States, Europe, Russia and Ukraine and may expand to other geographies. Timely enrollment of, completion of and reporting on our clinical trials is dependent upon these global clinical trial sites which are, or in the future may be, adversely affected by political instability or conflict. For example, in connection with Studies 501, 502 and 503 for MDD and Study 403 for major depressive episodes with mixed features in bipolar disorder, we have third-party clinical sites located in Ukraine and Russia, which are experiencing significant conflict. Political instability and conflict in Ukraine and Russia, and any other areas in the world where we have clinical operations, may delay our trials and negatively affect our business and operations in those regions.

Source: Risk Factor disclosure in 10-K – March 1, 2022 | View in Verity

Vir Biotechnology (VIR)

Clinical-stage immunology company focused on treating and preventing serious infectious diseases. 

While we have active clinical trial sites in the Ukraine and nearby European countries, if political or civil conditions require it, our sites may need to delay or suspend clinical trial activities. In in addition, enrollment and retention of patients in clinical trials could be disrupted by geopolitical events, including civil or political unrest (such as the ongoing conflict between Ukraine and Russia)…

Source: 10-K Risk Factor disclosure – February 28, 2022 | View in Verity

Impacts Related to Sanctions 

Companies disclose potential impact due to sanctions against Russia. 

Mirion Technologies (MIR)

Provider of detection, measurement, analysis and monitoring solutions to the nuclear, defense, medical and research end markets. 

Our business may also be affected by new sanctions and export controls targeting Russia and other responses to Russia’s invasion of Ukraine.

We currently have existing contracts and an order backlog with Russian customers and customers in other countries whose contracts with us may be financed by, or involve, Russian entities. The imposition of enhanced export controls and economic sanctions on transactions with Russia and Russian entities by the United States, the United Kingdom, and/or the European Union could prevent us from performing existing contracts, recognize revenue from our backlog, pursuing new

Source: Risk Factor disclosure in 10-K – March 1, 2022 | View in Verity

Five9 (FIVN)

Provider of cloud contact center solutions. 

In addition, our operations in Russia are subject to additional regulatory and political risk and additional compliance costs in connection with sanctions and other trade controls imposed by the United States and other governments in response to Russia’s military operations in Ukraine … If the relationship between Russia and the United States significantly worsens, or if Russia, the United States, or other countries impose additional economic sanctions, supply chain restrictions, or other restrictions on doing business, and we are restricted or precluded from continuing our software development operations in Russia, our costs could increase, and our product development efforts, business and results of operations could be harmed.

Source: 10-K Risk Factor disclosure – February 28, 2022 | View in Verity

Ranpak Holdings (PACK)

Producer of 100% sustainable, paper-based packaging and automated paper packing solutions. 

Also, in 2021 we purchased approximately 18.5% of our raw paper requirements in Europe (which approximates 11.4% of global supply) from a supplier in Russia. As a result of the conflict in the Ukraine, there is a risk that we may need to secure an alternative supplier.

Source: 10-K Risk Factor disclosure – February 28, 2022 | View in Verity

Staffing Impacts

Outsourcing to Ukraine may impact results of operations. 

LivePerson (LPSN)

Developer and producer of conversational commerce and AI software. 

… we rely on a third-party service provider that utilizes approximately 100 engineers based in Ukraine for a portion of our engineering and software development initiatives. If this third party’s operations were disrupted or discontinued due to local instability or political, economic or military conditions, then our ability to provide services to some of our current customers and the development of new products or enhancement of existing products could be delayed, and our results of operations could be adversely affected.

Source: 10-K Risk Factor disclosure – February 28, 2022 | View in Verity

Bottom Line

These are just ten examples of companies that have been or may be directly impacted by Russia’s invasion of Ukraine beyond the macro impact of such an event. Companies will continue to make disclosures as the impact of Russia’s action ripples through governments, board rooms, and economies throughout the world. Being aware of these disclosures is an important risk management tool. 

Author: Ben Silverman

Related Resources

Outperformance Starts Here

See how Verity accelerates winning investment decisions for the world's leading asset managers.

Request a Demo