Travelers 2014 Annual Report Download - page 71

Table of Contents
Our operations rely on the reliable and secure processing, storage and transmission of confidential and other information in our computer
systems and networks. Computer viruses, hackers and employee or vendor misconduct, and other external hazards, could expose our data systems
to security breaches, cyber
- attacks or other disruptions. In addition, we routinely transmit and receive personal, confidential and proprietary
information by e
- mail and other electronic means. While we attempt to develop secure transmission capabilities with third - party vendors and others
with whom we do business, we may be unable to put in place secure capabilities with all of such vendors and third parties and, in addition, these
third parties may not have appropriate controls in place to protect the confidentiality of the information.
Like other global companies, our computer systems are regularly subject to and will continue to be the target of computer viruses, malware or
other malicious codes, unauthorized access, cyber
- attacks or other computer - related penetrations. While we have experienced threats to our data
and systems, to date, we are not aware that we have experienced a material breach of cyber
- security. However, over time, and particularly recently,
the sophistication of these threats continues to increase. Our administrative and technical controls as well as other preventative actions we take to
reduce the risk of cyber incidents and protect our information may be insufficient to detect or prevent unauthorized access, other physical and
electronic break - ins, cyber - attacks or other security breaches to our computer systems or those of third parties with whom we do business. In
addition, new technology that could result in greater operational efficiency may further expose our computer systems to the risk of cyber
- attacks.
We have increasingly outsourced certain technology and business process functions to third parties and may continue to do so in the future.
If we do not effectively develop, implement and monitor our outsourcing relationships, third party providers do not perform as anticipated or we
experience technological or other problems with a transition, we may not realize expected productivity improvements or cost efficiencies and may
experience operational difficulties, increased costs and a loss of business. Our outsourcing of certain technology and business process functions
to third parties may expose us to increased risk related to data security or service disruptions, which could result in monetary and reputational
damages. For example, while it did not materially and adversely impact our operations or results, we terminated a contract with one of our
outsourcing vendors in the fourth quarter of 2013 because they breached that contract by providing proprietary Company information to one of
our competitors. In addition to risks caused by third party providers, our ability to receive services from third party providers outside of the United
States might be impacted by cultural differences, political instability, unanticipated regulatory requirements or public policy inside or outside of the
United States.
The increased risks identified above could expose us to data loss, disruption of service, monetary and reputational damages and significant
increases in compliance costs and costs to improve the security and resiliency of our computer systems. The compromise of personal, confidential
or proprietary information could also subject us to legal liability or regulatory action under evolving cyber
- security, data protection and privacy
laws and regulations enacted by the U.S. federal and state governments, the European Union or other jurisdictions or by various regulatory
organizations or exchanges. As a result, our ability to conduct our business and our results of operations might be materially and adversely
affected.
We are subject to a number of risks associated with our business outside the United States. We conduct business outside the United
States primarily in Canada, the United Kingdom and the Republic of Ireland. In addition, we have a joint venture in Brazil and may also explore
opportunities in other countries, including Latin American countries and other emerging markets such as India.
In conducting business outside of the United States, we are subject to a number of significant risks, particularly in emerging economies. These
risks include restrictions such as price controls, capital
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