JPMorgan Chase will fail to identify the proper factors or that it will fail to accurately estimate the impact of factors that it identifies. Certain models used by JPMorgan Chase in connection with the determination of the allowance for credit losses have heightened performance risk in the economic environment precipitated by the effects of the COVID-19 pandemic and government stimulus. For example, at times certain macroeconomic variables employed in these models remained well outside the range of historical data used to train the models for some stress scenarios. In addition, the historical relationships between these macroeconomic variables and consumer and wholesale credit losses have deteriorated, in part due to the effects of the CARES Act and government stimulus actions. As a result, there continues to be significant uncertainty about the reliability of the projections produced by the models. To compensate for this uncertainty, JPMorgan Chase has made, and may continue to make, significant adjustments to the quantitative results of model calculations to take into consideration model imprecision, emerging risks, trends and other factors that are not yet reflected in those calculations. There can be no assurance that, even after adjustments have been made to model outputs, JPMorgan Chase will not recognize unexpected losses arising from the model uncertainty that has resulted from these developments. There can be no assurance that JPMorgan Chase’s disclosure controls and procedures will be effective in every circumstance, or that a material weakness or significant deficiency in internal control over financial reporting will not occur. Any such lapses or deficiencies could: The preparation of JPMorgan Chase’s financial statements is based on accounting standards established by the Financial Accounting Standards Board and the Securities and Exchange Commission, as well as more detailed accounting policies established by JPMorgan Chase’s management. From time to time these accounting standards or JPMorgan Chase could be adversely affected by changes in accounting standards or policies. Lapses in controls over disclosure or financial reporting could materially affect JPMorgan Chase’s profitability or reputation. Strategic If JPMorgan Chase’s management fails to develop and execute effective business strategies, and to anticipate changes affecting those strategies, JPMorgan Chase’s competitive standing and results could suffer. If management makes choices about these strategies and goals that prove to be incorrect, do not accurately assess the competitive landscape and industry trends, or fail to address changing regulatory and market environments or the expectations of clients, customers, investors, employees and other stakeholders, then the franchise values and growth prospects of JPMorgan Chase’s businesses may suffer and its earnings could decline. JPMorgan Chase’s growth prospects also depend on management’s ability to develop and execute effective In addition, JPMorgan Chase could be adversely impacted by associated changes in the competitive environment in which it operates, including changes in the availability or pricing of loan products, particularly during periods of economic stress, as well as changes related to non-U.S. financial institutions or other competitors that are not subject to this accounting standard. The ongoing impact of the adoption of CECL could include the following, each of which could result in diminished investor confidence: As of January 1, 2020, JPMorgan Chase implemented a new accounting standard, commonly referred to as the Current Expected Credit Losses (“CECL”) framework, which requires earlier recognition of expected credit losses on loans and certain other instruments. The allowance for credit losses related to certain of JPMorgan Chase’s loans and other lending-related commitments portfolios increased upon implementation of CECL, which has had a negative impact on JPMorgan Chase’s capital levels. accounting policies may change, and in some cases these changes could have a significant effect on JPMorgan Chase’s financial statements and may adversely affect its financial results or investor perceptions of those results. • greater volatility in JPMorgan Chase’s earnings and capital levels over economic cycles • potential reductions in its capital distributions, or • increases in the allowance for credit losses. • the products and services that JPMorgan Chase offers • the geographies in which it operates • the types of clients and customers that it serves • the counterparties with which it does business, and • the methods and distribution channels by which it offers products and services. • materially and adversely affect JPMorgan Chase’s business and results of operations or financial condition • restrict its ability to access the capital markets • require it to expend significant resources to correct the lapses or deficiencies • expose it to litigation or regulatory fines, penalties or other sanctions • harm its reputation, or • otherwise diminish investor confidence in JPMorgan Chase. JPMorgan Chase’s business strategies significantly affect its competitive standing and operations. These strategies relate to: 27