Sallie Mae 2010 Annual Report Download - page 13

Our credit ratings are important to our liquidity. A reduction in our credit ratings could adversely affect
our liquidity, increase our borrowing costs, limit our access to the markets or trigger obligations under certain
provisions in collateralized arrangements. Under these provisions, counterparties may require us to segregate
collateral or terminate certain contracts.
Further deterioration in the economy could result in a decrease in demand for consumer credit and credit
quality could adversely be affected. Higher credit-related losses and weaker credit quality could negatively
affect our business, financial condition and results of operations and limit funding options, including capital
markets activity, which could also adversely impact our liquidity position.
Operations.
A failure of our operating systems or infrastructure, or those of our third-party vendors, could disrupt
our business, result in disclosure of confidential customer information, damage our reputation and cause
losses.
A failure of our operating systems or infrastructure, or those of our third-party vendors, could disrupt our
business. Our business is dependent on our ability to process and monitor large numbers of daily transactions
in compliance with legal and regulatory standards and our product specifications, which we change to reflect
our business needs. As processing demands change and our loan portfolios grow in both volume and differing
terms and conditions, developing and maintaining our operating systems and infrastructure becomes increas-
ingly challenging and there is no assurance that we can adequately or efficiently develop and maintain such
systems.
Our loan originations and conversions and the servicing, financial, accounting, data processing or other
operating systems and facilities that support them may fail to operate properly or become disabled as a result
of events that are beyond our control, adversely affecting our ability to process these transactions. Any such
failure could adversely affect our ability to service our clients, result in financial loss or liability to our clients,
disrupt our business, result in regulatory action or cause reputational damage. Despite the plans and facilities
we have in place, our ability to conduct business may be adversely affected by a disruption in the
infrastructure that supports our businesses. This may include a disruption involving electrical, communications,
internet, transportation or other services used by us or third parties with which we conduct business.
Notwithstanding our efforts to maintain business continuity, a disruptive event impacting our processing
locations could adversely affect our business, financial condition and results of operations.
Our operations rely on the secure processing, storage and transmission of personal, confidential and other
information in our computer systems and networks. Although we take protective measures, our computer
systems, software and networks may be vulnerable to unauthorized access, computer viruses, malicious attacks
and other events that could have a security impact beyond our control. If one or more of such events occur,
personal, confidential and other information processed and stored in, and transmitted through, our computer
systems and networks, could be jeopardized or otherwise interruptions or malfunctions in our operations could
result in significant losses or reputational damage. We also routinely transmit and receive personal, confidential
and proprietary information, some through third parties. We have put in place secure transmission capability,
and work to ensure third parties follow similar procedures. An interception, misuse or mishandling of personal,
confidential or proprietary information being sent to or received from a customer or third party could result in
legal liability, regulatory action and reputational harm. In the event personal, confidential or other information
is jeopardized, intercepted, misused or mishandled, we may be required to expend significant additional
resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures,
and we may be subject to fines, penalties, litigation costs and settlements and financial losses that are either
not insured against or not fully covered through any insurance maintained by us. If one or more of such events
occur, our business, financial condition or results of operations could be significantly and adversely affected.
12