( 1 ) for further information on derivative instruments and hedging activities , see note 12 to the consolidated financial statements in item 8 . ( 2 ) includes mutual funds , pension funds , private equity and real estate funds , exchanges and clearinghouses and diversified financial services . operational risk . operational risk refers to the risk of loss , or of damage to the company 2019s reputation , resulting from inadequate or failed processes , people and systems or from external events ( e.g