MoneyGram 2008 Annual Report Download - page 24

Table of Contents
be required to expend significant capital and other resources to protect against these security breaches or to alleviate problems caused by
these breaches. Third-party contractors also may experience security breaches involving the storage and transmission of our confidential
customer information. If users gain improper access to our or our contractor's systems or databases, they may be able to steal, publish,
delete or modify confidential customer information. A security breach could expose us to monetary liability, lead to reputational harm
and make our customers less confident in our services.
Our business is particularly dependent on the efficient and uninterrupted operation of our computer network systems and data
centers.
Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our computer network systems and
data centers. Our business involves the movement of large sums of money and the management of data necessary to do so. The success of
our business particularly depends upon the efficient and error-free handling of the money that is remitted to us and that is used to clear
payment instruments or complete money transfers. We rely on the ability of our employees and our internal systems and processes to
process these transactions in an efficient, uninterrupted and error-free manner.
In the event of a breakdown, catastrophic event (such as fire, natural disaster, power loss, telecommunications failure or physical break-
in), security breach, improper operation or any other event impacting our systems or processes or our vendors' systems or processes, or
improper action by our employees, agents, customer financial institutions or third party vendors, we could suffer financial loss, loss of
customers, regulatory sanctions and damage to our reputation. The measures we have enacted, such as the implementation of disaster
recovery plans and redundant computer systems, may not be successful and we may experience problems other than system failures. We
may also experience software defects, development delays and installation difficulties, which would harm our business and reputation
and expose us to potential liability and increased operating expenses. Certain of our agent contracts, including our contract with Walmart,
contain service level standards pertaining to the operation of our system, and give the agent a right to collect damages and in extreme
situations a right of termination for system downtime exceeding agreed upon service levels. If we face system interruptions and system
failures our business interruption insurance may not be adequate to compensate us for all losses or damages that we may incur.
If we are unable to effectively operate and scale our technology to match our business growth, our business, financial condition and
results of operations could be adversely affected.
Our ability to continue to provide our services to a growing number of agents and consumers, as well as to enhance our existing services
and offer new services is dependent on our information technology systems. If we are unable to effectively manage the technology
associated with our business, we could experience increased costs, reductions in system availability and loss of agents or consumers. Any
failure of our systems in scalability, reliability and functionality could adversely impact our business, financial condition and results of
operations.
The opening of new retail locations and acquisition or start-up of businesses create risks and may adversely affect our operating
results.
We continue to open Company-owned retail locations for the sale of our products and services. Operating these retail locations presents
new risks for us. After substantial capital investment in such retail locations it is uncertain how these locations will be accepted in the
market and how quickly transaction volume will increase to offset our investment. We may be subject to additional laws and regulations
that are triggered by our ownership of the retail locations and our employment of the individuals staffing the retail locations. There are
also certain risks inherent in operating any retail location, including theft, personal injury and property damage and risks associated with
long-term lease obligations and employee matters.
We have recently acquired and are in the process of integrating two of our former super-agents in Spain. Additionally, we may, from time
to time, acquire or start up businesses both inside and outside of the United States. The acquisition and integration of businesses, involve
a number of risks. We may not be able to successfully integrate any businesses that we acquire or open, including their facilities,
personnel, financial systems, distribution, operations and general operating procedures. If we fail to successfully integrate acquisitions,
we could
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