BAM

Brookfield Asset Management Ltd.

NYSE · FINANCIALS · INVESTMENT ADVICE

46.05

+0.12 +0.26%

USD · close Oct 21

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MKT CAP —P/E —DIV YIELD —FCF YIELD —REV TTM $5.7B +31.9%NET INCOME $3.1B +32.8%NET DEBT $2.6B52W 42.87 – 55.86SEC XBRL · TTM TO Invalid Date

How BAM rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

74%

of sentences unchanged

Added

132

new sentences

Dropped

sentences removed

Length

+1,781

words, now 23,324

New in FY2025

Risk Management Our Approach Focus on Risk Culture Maintain an effective risk culture that aligns with our business strategy and risk appetite Centralized Oversight and Coordination Coordinated management of common risks across business and functional groups, with consistent approaches and practices Shared Execution Business and functional groups have primary responsibility for identifying and managing risks within their business Managing risk is an integral and critical part of our business.
We have a well-established, proactive and disciplined risk management approach that is based on clear operating methods and a strong risk management culture.
We ensure that we have the necessary capacity and resilience to respond to changing environments by evaluating both current and emerging risks.
A robust risk management framework and methodology, that is designed to enable comprehensive and consistent management of risk across the organization, has been implemented.
We use a thorough and integrated risk assessment process to identify and evaluate risk areas across the business, including human capital, climate change, cybersecurity, liquidity, disruption, regulatory compliance and other strategic, financial, and operational risks.
Management and mitigation approaches are tailored to the specific risk areas and executed by business and functional groups for their businesses and areas of responsibility, with appropriate coordination and oversight through centralized monitoring and reporting processes.
Focus on Risk Culture A strong risk culture is the cornerstone of our risk management program: one that promotes measured and appropriate risk-taking, addresses current and emerging risks, and ensures employees conduct business with a long-term perspective and in a sustainable and ethical manner.
This culture is reinforced by the strong commitment and leadership of our senior executives and supported by the policies and practices we have implemented, including our compensation approach.
Centralized Oversight and Coordination We have implemented strong governance practices to monitor and oversee our risk management program.
Management committees bring together required expertise to manage key risk areas, ensuring appropriate application and coordination of risk management practices across our business and functional groups, and include the following: • Risk Management Steering Committee: supports the overall risk management program, and coordinates risk assessment and mitigation on an enterprise-wide basis. • Investment Committees: the respective investment committee oversees the investment process and reviews and approves investment transactions of that business group. • Conflicts Committee: resolves potential conflict situations related to investment processes and other corporate transactions. • Financial Risk Oversight Committee: reviews and monitors financial exposures. • Sustainability Leadership: oversees, coordinates and implements activities related to sustainability, including reviewing current and future initiatives, and monitoring sector and market trends. • Safety Leadership Committee: promotes a strong safety culture, monitors safety trends, and sponsors strategic initiatives related to health, safety, security and environmental matters. • Net Zero Steering Committee: develops decarbonization targets, operationalizes decarbonization approaches and shares best practices across the organization. • Cyber Leadership Committee: facilitates knowledge sharing, including identification and mitigation of emerging threats, and enhances collaboration to help ensure efficient use of resources and maintenance of effective cybersecurity programs across business groups. • Disclosure Committee: oversees the public disclosure of material information.
Shared Execution Given the diversified and decentralized nature of our operations, we seek to ensure that risk is managed as close to its source as possible and by management teams that have the most knowledge and expertise in the specific business or risk area.
As such, business specific risks—such as health and safety, environmental and other operational risks—are generally managed at the operating business level, as the risks vary based on the nature of each business.
At the same time, we monitor key risks organization-wide to ensure adequacy of risk management, adherence to applicable Brookfield policies, and sharing of best practices.
For risks that are more pervasive and correlated in their impact across the organization—such as liquidity, foreign exchange and interest rates or where we can bring specialized knowledge—we utilize a coordinated approach that is centralized amongst our corporate and business groups.
Management of strategic, reputational and regulatory and compliance risks are similarly coordinated to ensure consistent focus and implementation across the organization.
Regulatory Matters Our business, including our investment advisory and broker-dealer business, is subject to substantial and increasing regulatory compliance obligations and oversight, and this higher level of scrutiny gives rise to certain risks.
Risk Factors—Risks Relating to our Business—We are subject to numerous laws, rules and regulatory requirements which may impact our business, including resulting in financial penalties, loss of business and/or damage to our reputation in instances of non-compliance”.
Intellectual Property BAM has a non-exclusive, royalty-free license to use the name “Brookfield” and the “Brookfield” logo.
Certain Relationships and Related Transactions, and Director Independence—Trademark Sublicense Agreement”.
Other than under this limited license, BAM does not have a legal right to the “Brookfield” name or the “Brookfield” logo.
Sustainability Sustainability at Brookfield We believe that value creation and sustainable business practices are complementary goals.
Drawing on more than 100 years of experience as an owner and operator, we invest for value and seek to generate strong risk-adjusted returns for our clients across economic cycles.
Our investment strategy has remained consistent throughout our history—we focus on utilizing our operational expertise to enhance long-term value through strategic and operational improvements within our operating businesses and portfolio companies.
Our Sustainability Policy codifies our longstanding strategy of integrating sustainability considerations into decision-making.
It is based on the following guiding principles: mitigating the impact of our operations on the environment; striving to promote the well-being and safety of our workforce; upholding strong governance practices and acting as good corporate citizens.
For further information, we publish on our website an annual sustainability report, which provides details about our approach to integrating sustainability across our business.
Our disclosures consider the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) standards, and are aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
Sustainability Organization and Governance Our Board oversees our business, including reviewing major strategic initiatives and receiving progress reports on the firm’s sustainability initiatives throughout the year.
Our approach to sustainability has sponsorship and oversight from the CEOs and sustainability leads of each business group, supported by senior executives.
Functional leaders (i.e., Technology Services and Human Resources) are responsible for developing, implementing and monitoring relevant sustainability factors within their functional area.
Integrating Sustainability into Our Investment Process As part of our due diligence over investments where we have control or significant influence, we seek to assess sustainability-related opportunities and risks and factor them into the overall investment decision.
This includes leveraging industry guidance to identify sustainability factors most likely to materially impact the financial condition or operating performance of companies in a given sector.
Our Sustainability Due Diligence Protocol provides guidance to investment teams on assessing bribery and corruption, cybersecurity, health and safety, human rights, modern slavery and climate-related risks, among other factors.
Where warranted, we perform deeper due diligence, working with internal and third-party experts, as appropriate.
Investments, other than de minimis or follow on investments, must be approved by the applicable Investment Committee.
Investment teams present the Investment Committee with the merits of each transaction, its material risks, mitigants and significant opportunities for improvement, including sustainability aspects and their potential implications for investment returns.
As part of each acquisition, investment teams develop a customized integration plan that encompasses, among other items, material sustainability-related matters for evaluation or implementation.
Consistent with our management approach, it is the responsibility of management teams within each portfolio company to manage sustainability opportunities and risks through the investment’s life cycle, supported by our relevant investment teams.
Management teams regularly report to their respective boards of directors from both financial and operating perspectives, including key performance indicators that incorporate material sustainability factors.
When preparing an asset for divestiture, we seek to outline potential value creation deriving from several different factors, including relevant sustainability considerations.

and 92 more.

Gone since FY2024

RISK FACTORS You should carefully consider the following factors in addition to other information set forth in this Annual Report.
If any of the following risks were actually to occur, our business, financial condition and results of operations and the prospects and value of the Class A Shares would likely suffer.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting to give our stakeholders assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in conformity with U.S.
However, the process for establishing and maintaining adequate internal controls over financial reporting has inherent limitations, including the possibility of human error.
Our internal controls over financial reporting may not prevent or detect misstatements in our financial disclosures on a timely basis, or at all.
As at December 31, 2024, BAM used the equity method of accounting for its interest in our asset management business, and our asset management business’ results are not consolidated into BAM's financial statements, and therefore the recording of our asset management business’ transactions into its accounts is not part of BAM’s internal control structure.
BAM has provided Asset Management Company stand-alone financial statements in this report.
However, as of December 31, 2024, our asset management business was not independently required to meet Sarbanes-Oxley requirements and BAM did not have the same control and certification processes with respect to the information on our asset management business that it would have if it were a wholly-owned subsidiary of BAM.
If BAM or our auditors were to conclude that our internal controls over financial reporting were not effective in respect of any reporting period, investors could lose confidence in our reported financial information and the price of our Class A Shares could decline.
BAM is headquartered in New York, NY, but some of its officers and directors are not residents of the United States, and a portion of the assets of BAM and said persons are located outside the United States.
As a result, it may be difficult for U.S. investors to: (i) effect service of process within the United States upon BAM or those directors and officers who are not residents of the United States; or (ii) realize in the United States upon judgments of courts of the United States predicated upon the civil liability provisions of the United States federal securities laws.
Similar to the environment in the U.S., our business and how we market in jurisdictions outside the U.S. has become subject to further regulation.
The broker-dealer side of our managed assets is regulated by the SEC, the various Canadian provincial securities commissions, as well as self-regulatory organizations, including the Financial Industry Regulatory Authority in the U.S.
Most of our funds rely on Rule 506 of Regulation D under the U.S.
Securities Act to raise capital from investors.
Bribery Act 2010, the Canadian Corruption of Foreign Public Officials Act (the “CFPOA”) and Part IV of the Criminal Code (Canada), the Brazilian Clean Companies Act, the Australian Criminal Code Act 1995, the Indian Prevention of Corruption Act, and the Bermudian Bribery Act 2016.
Anti-corruption, anti-money laundering, economic sanctions, and trade control laws imposed by non-U.S. jurisdictions, such as EU and UK sanctions or blocking statutes and the UK Bribery Act, may also impose stricter or more onerous requirements than the FCPA, OFAC, the U.S.
Different laws may also contain conflicting provisions, making compliance with all laws more difficult.” In February 2022, the U.S. and other countries began imposing meaningful sanctions targeting Russia as a result of actions taken by Russia in Ukraine.
For example, under the United States Foreign Investment Risk Review Modernization Act, the Committee on Foreign Investment in the United States has the authority to review, block or impose conditions on investments by non-U.S. persons in U.S. companies or real assets deemed critical or sensitive to the U.S.
Regulation of derivatives may increase the cost of derivative contracts, reduce the availability of derivatives to protect against operational risk and reduce the liquidity of the derivatives market, all of which may reduce our use of derivatives and result in the increased volatility and decreased predictability of our cash flows.
We make investments in businesses that are based outside of the United States and we may pursue investments in unfamiliar markets, which may expose us to additional risks not typically associated with investing in the United States.
While inflation has eased and central banks began reducing interest rates in the second half of 2024, past price increases continue to affect households and weigh on confidence and spending power.
The potential for increased tariffs and trade barriers, as well as increased geopolitical risks, adds uncertainty to the long term outlook for inflation and interest rates and a reacceleration of inflation could trigger a reversal in recent interest rate decreases.
Our managed assets could be exposed to effects of catastrophic events, such as severe weather conditions, natural disasters, major accidents, pandemics/epidemics, acts of malicious destruction, climate change, war/military conflict or terrorism, which could materially adversely impact our operations.
Further, rising sea levels could, in the future, affect the value of any low-lying coastal real assets that we may manage.
Responses to these changes could result in higher costs, such as the imposition of new property taxes and increases in insurance rates or additional capital expenditures.
Increasingly, investors and lenders are incorporating sustainability considerations into their investment or lending process, respectively, alongside traditional financial considerations.
Certain of our managed assets may be subject to compliance with laws, regulations, regulatory rules and/or guidance relating to sustainability, and any failure to comply with these laws, regulations, regulatory rules or guidance could expose us to material adverse consequences, including loss, limitations on our ability to undertake licensable business, legal liabilities, financial and non-financial sanctions and penalties, and/or reputational damage.
Efforts to limit global warming may give rise to changes in regulations, reporting and consumer sentiment that could have a negative impact on our existing operations by increasing the costs of operating our business or reducing demand for our products and services.
The occurrence of any adverse health, safety or environmental event, or any changes, additions to, or more rigorous enforcement of, health, safety and environmental standards, licenses, permits or other approvals could have a significant impact on operations and/or result in material expenditures.
We rely on the use of technology and information systems, many of which are controlled by third-party service providers, which may not be able to accommodate our growth or may increase in cost and may become subject to cyber-terrorism or other compromises and shut-downs, and any failures or interruptions of these systems could adversely affect our businesses and results of operations.
In particular, our information technology systems may be subject to cyber-terrorism intended to obtain unauthorized access to our proprietary information, personally identifiable information or to client or third-party data stored on our systems, destroy or disable our data, and/or that of our business partners, disclose confidential data in breach of data privacy legislation, destroy data or disable, degrade or sabotage our systems, through the introduction of computer viruses, cyber-attacks and other means.
The sophistication of these threats continue to evolve and grow, including the risk associated with the use of emerging technologies, such as artificial intelligence and quantum computing, for nefarious purposes.
We cannot predict what effects such cyber-attacks or compromises or shut-downs may have on our business and on the privacy of the individuals or entities affected, and the consequences could be material.
Other countries where we operate are enacting or amending data protection, artificial intelligence and other technology laws to empower regulators to impose financial penalties and injunctions on certain data processing activities, which could have an adverse effect on our business.
For economic efficiency and other reasons, we may enter into insurance policies as a group (which may include BN) that are intended to provide coverage for the entire group.
The material assets of BAM consist solely of its interest in the common shares of the Asset Management Company.
After giving effect to the 2025 Arrangement, BAM owns 100% of the Asset Management Company.
BAM depends on distributions and other payments from our asset management business to provide it with the funds necessary to meet its financial obligations, as well as pay dividends to shareholders.
BAM intends to pay dividends to shareholders on a quarterly basis equal to approximately 90% of its Distributable Earnings in the preceding quarter and our asset management business intends to pay dividends to BAM on a quarterly basis sufficient to ensure that BAM can pay its intended dividend.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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