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Prospect Capital (PSEC) Risk Analysis

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning. Prospect Capital disclosed 4 risk factors in its most recent earnings report. Prospect Capital reported the most risks in the “Tech & Innovation” category.

Risk Overview Q4, 2025

Risk Distribution
4Risks
Sector Avg.Finance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Risk Change Over Time

Prospect Capital disclosed risks per quarterNo. of Risks0255075100125Q3Q4Q12023Q4Showing: Q4, 2025
Risks removedRisks addedRisks changedProspect Capital Risk Factors
No changes from previous report

Risk Highlights Q4, 2025

Main Risk Category
Tech & Innovation
With 2 Risks
Number of Disclosed Risks
4
-106
From last report
S&P 500 Average: 32
Recent Changes
1Risks added
0Risks removed
0Risks changed
Since Dec 2025
Number of Risk Changed
0
-2
From last report
S&P 500 Average: 1

Risk Word Cloud

we may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.difficulty paying our required distributionsregulations governing our operation as a bdc affect our ability to raise, and the way in which we raise, additional capital. these constraints may hinder our investment adviser's ability to take advantage of attractive investment opportunities and to achieve our investment objective.to achieve our investment objectivefailure to extend our existing credit facility, the revolving period of which is currently scheduled to expire on september 9, 2023, could have a material adverse effect on our results of operations and financial position and our ability to pay expenses and make distributions.our ability to pay expensesif we fail to qualify as a ric, we will have to pay corporate-level taxes on our income, and our income available for distribution would be reduced.to pay corporate-level taxesholders of the 5.35% preferred stock may not be permitted to exercise conversion rights upon a change of control triggering event. if exercisable, the change of control triggering event conversion feature of the 5.35% preferred stock may not adequately compensate such preferred stockholders, and the change of control triggering event conversion and redemption features of the 5.35% preferred stock may make it more difficult for a party to take over the company or discourage a party from taking over the company.change of control triggering eventthe prolonged russian invasion of ukraine and the resulting international response may have a material adverse impact on us and our portfolio companies.prolonged russian invasion of ukraineour business model depends upon the development and maintenance of strong referral relationships with other asset managers and investment banking firms.maintenance of strong referral relationshipsif we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. as a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.effective system of internal controlthe application of the risk retention rules under section 941 of the dodd-frank act to clos may have broader effects on the clo and loan markets in general, potentially resulting in fewer or less desirable investment opportunities for us.dodd-frank act to closif we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a bdc or be precluded from investing according to our current business strategy.to our current business strategy

Risk Factors Full Breakdown - Total Risks 4

Cyber Security2 | 50.0%
  • Cyber Security - Risk 1
    Management's Role in Cybersecurity Risk Management

    The Company’s management, including the Company’s CCO, manage the Company’s cybersecurity program. The CCO supervises the Company’s oversight function generally and relies on the Adviser’s technology team to assist with assessing and managing material risks from cybersecurity threats. The CCO has been responsible for this oversight function as CCO of the Company for more than five years and has worked in the financial services industry for more than 20 years, during which time the CCO has gained expertise in assessing and managing risk applicable to the Company.Management of the Company is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents impacting the Company, including through the receipt of notifications from service providers and reliance on communications with risk management, legal, information technology, and/or compliance personnel of the Adviser.73

  • Cyber Security - Risk 2
    Board of Director Oversight of Cybersecurity Risks

    Our Board of Directors provides strategic oversight on cybersecurity matters, including risks associated with cybersecurity threats. Our Board of Directors receives periodic updates from the Company’s Chief Compliance Officer (“CCO”), which incorporates updates provided by the Adviser regarding the overall state of the Adviser’s cybersecurity program, information on the current threat landscape, and risks from cybersecurity threats and cybersecurity incidents impacting the Company.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky. The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment. They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result. It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process. Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”. Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report. According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing. You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector. Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements. A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below. 1. Financial & Corporate Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results. Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing. Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments. Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances. 2. Legal & Regulatory Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company. Regulation – risks related to compliance, GDPR, and new legislation. Environmental / Social – risks related to environmental regulation and to data privacy. Taxation & Government Incentives – risks related to taxation and changes in government incentives. 3. Production Costs – risks related to costs of production including commodity prices, future contracts, inventory. Supply Chain – risks related to the company’s suppliers. Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls. Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation. 4. Technology & Innovation Innovation / R&D – risks related to innovation and new product development. Technology – risks related to the company’s reliance on technology. Cyber Security – risks related to securing the company’s digital assets and from cyber attacks. Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying. 5. Ability to Sell Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers. Competition – risks related to the company’s competition including substitutes. Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration. Brand & Reputation – risks related to the company’s brand and reputation. 6. Macro & Political Economy & Political Environment – risks related to changes in economic and political conditions. Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19. International Operations – risks related to the global nature of the company. Capital Markets – risks related to exchange rates and trade, cryptocurrency.