Energy Transfer 2015 Annual Report Download - page 59

Table of Contents
We have outsourced various functions related to our retail marketing business to third-party service providers, which decreases our control over the
performance of these functions. Disruptions or delays of our third-party outsourcing partners could result in increased costs, or may adversely affect
service levels. Fraudulent activity or misuse of proprietary data involving our outsourcing partners could expose us to additional liability.
Sunoco, Inc. has previously outsourced various functions related to our retail marketing business to third parties and expects to continue this practice with
other functions in the future.
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, Inc.’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, Inc.
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.
Cybersecurity breaches and other disruptions could compromise our information and operations, and expose us to liability, which would cause our
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.
Our information technology infrastructure is critical to the efficient operation of our business and essential to our ability to perform day-today operations.
Breaches in our information technology infrastructure or physical facilities, or other disruptions, could result in damage to our assets, safety incidents,
damage to the environment, potential liability or the loss of contracts, and have a material adverse effect on our operations, financial position and results of
operations.
53