Tucows 2015 Annual Report Download - page 48

We could experience system failures and capacity constraints which could diminish our ability to effectively provide our
services and could damage our reputation and harm our operating results.
The availability of our services depends on the continuing operation of our information technology and
communications systems. Any damage to or failure of our systems could result in interruptions in our service, which could
reduce our revenues and profits, and damage our brand. Our systems are vulnerable to damage or interruption from
earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of
service attacks or other attempts to harm our systems. Some of our data centers are located in areas with a high risk of
major earthquakes. Our data centers are also subject to break-ins, sabotage and intentional acts of vandalism, and to
potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully
redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a
decision to close a facility without adequate notice or other unanticipated problems at our data centers could result in
lengthy interruptions in our service.
Our systems face security risks, and any compromise of the security of these systems could disrupt our business,
damage our reputation and result in the disclosure of confidential information, liability for damages and loss of
customers.
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 customers and employees. We have previously been the target of attempted attacks and must monitor
and develop our systems to protect our and our customer’s data from misappropriation. Our ability to securely process and
maintain this information is critical to our business. Despite our security measures, our systems may be vulnerable to
unauthorized access by hackers or others, computer viruses and other disruptive problems. Someone who is able to
circumvent security measures could misappropriate customer or proprietary information or cause interruptions in Internet
operations. Internet and online resellers have in the past experienced, and may in the future experience, interruptions in
service because of the accidental or intentional actions of Internet users, current and former employees or others.
We may need to expend significant capital and other resources to protect against the threat of security breaches or
alleviate problems caused by breaches. Eliminating computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to users accessing our websites and the web pages that deliver our content
services. An information technology systems security breach may lead to a material disruption of our systems and/or the
loss of business information, which may materially and adversely affect our business. Risks relating to such a security
breach may include, among other things: a material adverse impact on our business and future financial results due to the
theft, destruction, loss, misappropriation or release of confidential data, negative publicity resulting in reputation or brand
damage with our customers, vendors or peers due to the theft, destruction, loss, misappropriation or release of confidential
data, operational or business delays resulting from the disruption of information technology systems and subsequent
clean-up and mitigation activities and adverse effects on our compliance with regulatory laws and regulations. Repeated or
substantial interruptions could result in the loss of customers and reduced revenues.
We may have difficulty scaling and adapting our existing architecture to accommodate increased traffic and technology
advances or changing business requirements, which could lead to the loss of customers and cause us to incur additional
expenses.
To be successful, our network infrastructure must perform well and be reliable. The greater the user traffic and the
greater the complexity of our services, the more computing power we will need. We have spent and expect to continue to
spend substantial amounts on the purchase of new equipment to upgrade our technology and network infrastructure to
enable it to handle increased traffic. This expansion is expensive and complex and could result in inefficiencies or
operational failures. If we do not expand successfully, or if we experience inefficiencies and operational failures, the
quality of our services and our customers’ experience could decline. This could damage our reputation and lead us to lose
current and potential customers. Cost increases, loss of traffic or failure to accommodate new technologies or changing
business requirements could harm our operating results and financial condition.
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