Exelon 2015 Annual Report Download - page 63

Table of Contents
The Registrants are subject to physical security and cybersecurity risks. (Exelon, Generation, ComEd, PECO and BGE)
The Registrants face physical security and cybersecurity risks as the owner-operators of generation, transmission and distribution facilities
and as a participant in commodities trading. Threat sources continue to seek to exploit potential vulnerabilities in the electric and natural gas utility
industry associated with protection of sensitive and confidential information, grid infrastructure and other energy infrastructures, and such attacks
and disruptions, both physical and cyber, are becoming increasingly sophisticated and dynamic. Continued implementation of advanced digital
technologies increase the potentially unfavorable impacts of such attacks. A security breach of the physical assets or information systems of the
Registrants, their competitors, interconnected entities in RTOs and ISOs, or regulators could impact the operation of the generation fleet and/or
reliability of the transmission and distribution system or subject the Registrants to financial harm associated with theft or inappropriate release of
certain types of information, including sensitive customer, vendor, employee, trading or other confidential data. The risk of these system-related
events and security breaches occurring continues to intensify, and while we have been, and will likely continue to be, subjected to physical and
cyber-attacks, to date we have not experienced a material breach or disruption to our network or information systems or our service operations.
However, as such attacks continue to increase in sophistication and frequency, we may be unable to prevent all such attacks in the future. If a
significant breach occurred, the reputation of Exelon and its customer supply activities may be adversely affected, customer confidence in the
Registrants or others in the industry may be diminished, or Exelon and its subsidiaries may be subject to legal claims, any of which may
contribute to the loss of customers and have a negative impact on the business and/or results of operations. Moreover, the amount and scope of
insurance we maintain against losses resulting from any such events or security breaches may not be sufficient to cover our losses or otherwise
adequately compensate us for any disruptions to our business that may result. ComEd’s, PECO’s and BGE’s deployment of smart meters
throughout their service territories may increase the risk of damage from an intentional disruption of the system by third parties. In addition, new or
updated security regulations or unforeseen threat sources could require changes in current measures taken by the Registrants or their business
operations and could adversely affect their results of operations, cash flows and financial position.
Failure to attract and retain an appropriately qualified workforce could negatively impact the Registrants’ results of operations. (Exelon,
Generation, ComEd, PECO and BGE)
Certain events, such as an employee strike, loss of contract resources due to a major event, and an aging workforce without appropriate
replacements, could lead to operating challenges and increased costs for the Registrants. The challenges include lack of resources, loss of
knowledge and a lengthy time period associated with skill development. In this case, costs, including costs for contractors to replace employees,
productivity costs and safety costs, could arise. The Registrants are particularly affected due to the specialized knowledge required of the
technical and support employees for their generation, transmission and distribution operations. If the Registrants are unable to successfully attract
and retain an appropriately qualified workforce, their results of operations could be negatively impacted.
The Registrants could make investments in new business initiatives, including initiatives mandated by regulators, and markets that may
not be successful, and acquisitions could not achieve the intended financial results. (Exelon, Generation, ComEd, PECO and BGE)
Generation continues to pursue growth in its existing businesses and markets and further diversification across the competitive energy value
chain. Generation is pursuing investment opportunities in renewables, development of natural gas generation, distributed generation, potential
expansion of the existing natural gas and oil Upstream and wholesale gas businesses, and entry into
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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