Cigna 2013 Annual Report Download - page 54

PART I
ITEM 1A. Risk Factors
morale or create other operational or financial problems for us. use to serve our customers and health care professionals and to operate
Terminating or transitioning arrangements with key vendors could our business. If our data were found to be inaccurate or unreliable due
result in additional costs or penalties, risks of operational delays or to fraud or other error, or if we (or the third-party service parties we
potential errors and control issues during the termination or transition utilize) were to fail to maintain information systems and data integrity
phase. We may not be able to find an alternative partner in a timely effectively, we could experience operational disruptions that may
manner or on acceptable financial terms. If there is an interruption in impact our customers and health care professionals and hinder our
business or loss of access to data resulting from a termination or ability to establish appropriate pricing for products and services, retain
transition, we may not be able to meet the demands of our customers and attract customers, establish reserves and report financial results
and, in turn, our business and results of operations could be timely and accurately and maintain regulatory compliance, among
unfavorably impacted. other things.
In addition, our business is highly dependent upon our ability to
perform, in an efficient and uninterrupted fashion, necessary business
Acquisitions, joint ventures and other transactions
functions, such as: claims processing and payment; internet support
involve risks and we may not realize the expected
and customer call centers; and the processing of new and renewal
benefits because of integration difficulties,
business. A power outage, cyber-attack or other failure of one or more
underperformance relative to our expectations and
of information technology or other systems could cause slower
other challenges.
response times, resulting in claims not being processed as quickly as
clients or customers desire, decreased levels of client or customer
As part of our growth strategy, we regularly consider and enter into service and satisfaction, and harm to our reputation. Because our
strategic transactions, including mergers, acquisitions, joint ventures, information technology and other systems interface with and depend
licenses and other partnerships (collectively referred to as on third-party systems, we could experience service denials if demand
‘‘transactions’’), with the expectation that these transactions will result for such service exceeds capacity or a third-party system fails or
in various benefits. Our ability to achieve the anticipated benefits of experiences an interruption. If sustained or repeated, such a business
these transactions is subject to numerous uncertainties and risks, interruption, systems failure or service denial could have a material
including our ability to integrate operations, resources and systems in adverse effect on our business, results of operations, financial
an efficient and effective manner; the failure to achieve expected condition and liquidity.
revenues, earnings or cash flow, business opportunities, efficiencies,
growth prospects or other anticipated benefits; challenges in Like other companies in our industry, we have been and may in the
implementing business plans; changes in laws and regulations or future be the subject of cyber-security breaches. Computer systems
conditions imposed by regulators applicable to the business; retaining may be vulnerable to physical break-ins, computer viruses,
key employees; and general competitive factors in the marketplace. programming errors, attacks by third parties or similar disruptive
Failure to achieve these anticipated benefits could result in increased problems. If a cyber-security breach of our systems or the systems of a
costs, decreases in expected revenues, earnings or cash flow, and third-party service provider occurs, it could also interrupt our
goodwill or other intangible asset impairment charges. Further, we operations and damage our reputation. We also could be subject to
may finance transactions by issuing common stock for some or all of liability if sensitive customer information is misappropriated. Any
the purchase price, which could dilute the ownership interests of our compromise of security could result in additional government
shareholders, or by incurring additional debt that could impact our regulations, the loss of existing customers, impaired ability to secure
ability to access capital in the future. new customers, increased operating expenses, financial losses, and
additional litigation or other claims that could have a material adverse
In addition, effective internal controls are necessary to provide reliable effect on our business, results of operations, financial condition and
and accurate financial reports and to mitigate the risk of fraud. The liquidity.
integration of businesses is likely to result in our systems and internal
controls becoming increasingly complex and more difficult to
manage. Any difficulties in the assimilation of businesses into our
Effective investment in and execution of
control system could cause us to fail to meet our financial reporting
improvements to our information technology
obligations. Ineffective internal controls also could cause investors to
infrastructure and functionality are important to our
lose confidence in our reported financial information, which could
strategy and failure to do so may impede our ability
negatively impact the trading price of our stock and our access to
capital. to deliver cost-effective services necessary to compete
in the market.
Our information technology strategy and execution are critical to our
Our business depends on our ability to properly
continued success. Increasing regulatory and legislative mandated
maintain the integrity of our data and the
changes will place additional demands on our information technology
uninterrupted operation of our systems and business
infrastructure that could have a direct impact on available resources
functions, including information technology and
for projects more directly tied to strategic initiatives. We must
other business systems.
continue to invest in long-term solutions that will enable us to
anticipate customer needs and expectations, enhance the customer
Our business is highly dependent on maintaining both effective
experience and act as a differentiator in the market. Our success is
information systems and the integrity and timeliness of the data we
22 CIGNA CORPORATION - 2013 Form 10-K