Energy Transfer 2012 Annual Report Download - page 62

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While outsourcing arrangements may lower our cost of operations, they also reduce our direct control over the services rendered.
It is uncertain what effect such diminished control will have on the quality or quantity of products delivered or services rendered,
on our ability to quickly respond to changing market conditions, or on our ability to ensure compliance with all applicable domestic
and foreign laws and regulations. We believe that we conduct appropriate due diligence before entering into agreements with our
outsourcing partners. We rely on our outsourcing partners to provide services on a timely and effective basis. Although we
continuously monitor the performance of these third parties and maintain contingency plans in case they are unable to perform as
agreed, we do not ultimately control the performance of our outsourcing partners. Much of our outsourcing takes place in developing
countries and, as a result, may be subject to geopolitical uncertainty. The failure of one or more of our third-party outsourcing
partners to provide the expected services on a timely basis at the prices we expect, or as required by contract, due to events such
as regional economic, business, environmental or political events, information technology system failures, or military actions,
could result in significant disruptions and costs to our operations, which could materially adversely affect our business, financial
condition, operating results and cash flow.
Our failure to generate significant cost savings from these outsourcing initiatives could adversely affect our profitability and
weaken Sunoco's competitive position. Additionally, if the implementation of our outsourcing initiatives is disruptive to our retail
marketing business, we could experience transaction errors, processing inefficiencies, and the loss of sales and customers, which
could cause our business and results of operations to suffer.
As a result of these outsourcing initiatives, more third parties are involved in processing our retail marketing information and data.
Breaches of security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information
or sensitive or confidential data about our retail marketing business or our clients, including the potential loss or disclosure of
such information or data as a result of fraud or other forms of deception, could expose us to a risk of loss or misuse of this
information, result in litigation and potential liability for us, lead to reputational damage to the Sunoco brand, increase our
compliance costs, or otherwise harm our business.
Our operations could be disrupted if our information systems fail, causing increased expenses and loss of sales.
Our business is highly dependent on financial, accounting and other data processing systems and other communications and
information systems, including our enterprise resource planning tools. We process a large number of transactions on a daily basis
and rely upon the proper functioning of computer systems. If a key system was to fail or experience unscheduled downtime for
any reason, even if only for a short period, our operations and financial results could be affected adversely. Our systems could be
damaged or interrupted by a security breach, fire, flood, power loss, telecommunications failure or similar event. We have a formal
disaster recovery plan in place, but this plan may not entirely prevent delays or other complications that could arise from an
information systems failure. Our business interruption insurance may not compensate us adequately for losses that may occur.
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause its
business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business
information and that of our customers, suppliers and business partners, and personally identifiable information of our employees,
in our data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to
our operations and business strategy. Despite our security measures, our information technology and infrastructure may be
vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could
compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access,
disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of
personal information, regulatory penalties for divulging shipper information, disruption of our operations, damage to our reputation,
and loss of confidence in our products and services, which could adversely affect our business.
The costs of providing pension and other postretirement health care benefits and related funding requirements are subject to
changes in pension fund values, changing demographics and fluctuating actuarial assumptions and may have a material
adverse effect on our financial results. In addition, the passage of the Health Care Reform Act in 2010 could significantly
increase the cost of providing health care benefits for employees.
Certain of our subsidiaries provide pension plan and other postretirement healthcare benefits to certain of their employees. The
costs of providing pension and other postretirement health care benefits and related funding requirements are subject to changes
in pension and other postretirement fund values, changing demographics and fluctuating actuarial assumptions that may have a
material adverse effect on the Partnership's future consolidated financial results. In addition, the passage of the Health Care Reform
Act of 2010 could significantly increase the cost of health care benefits for our employees. While certain of the costs incurred in
providing such pension and other postretirement healthcare benefits are recovered through the rates charged by the Partnership's
regulated businesses, the Partnership's subsidiaries may not recover all of the costs and those rates are generally not immediately
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