Western Digital 2015 Annual Report Download - page 32

reactions to such acts by various governmental agencies and security regulators worldwide will have on shipping costs.
Acts of terrorism, either domestically or abroad, could create further uncertainties and instability. To the extent this
results in disruption or delays of our manufacturing capabilities or shipments of our products, our business, operating
results and financial condition could be adversely affected.
Sudden disruptions to the availability of air transportation, or ocean or land freight lanes, could have an impact on our
operations.
We generally ship our products to our customers, and receive shipments from our suppliers, via air, ocean or land
freight. The sudden unavailability or disruption of air transportation, cargo operations or ocean, rail or truck freight
lanes caused by, among other things, labor difficulties or disputes, severe weather patterns or other natural disasters,
or political instability or civil unrest, could impact our operating results by impairing our ability to timely and effi-
ciently deliver our products.
If our technology infrastructure, systems or products are compromised, damaged or interrupted by cyber attacks, data security
breaches, other security problems, security vulnerabilities, design defects, or sustain system failures, our operating results and
financial condition could be adversely affected.
We experience cyber attacks of varying degrees on our technology infrastructure and systems and, as a result,
unauthorized parties have obtained in the past, and may in the future obtain, access to our computer systems and
networks. Cyber attacks can include computer viruses, computer denial-of-service attacks, worms, and other malicious
software programs or other attacks, covert introduction of malware to computers and networks, impersonation of
authorized users, and efforts to discover and exploit any security vulnerabilities or security weaknesses, as well as
intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism by
third parties and sabotage. We believe cyber attack attempts are increasing in number and that cyber attackers are
developing increasingly sophisticated systems and means to not only attack systems, but also to evade detection or to
obscure their activities. Our products are also targets for cyber attacks. While some of our products contain encryption
or security algorithms to protect third-party content or user-generated data stored on our products, these products
could still be hacked or the encryption schemes could be compromised, breached, or circumvented by motivated and
sophisticated attackers.
In addition, our technology infrastructure and systems are vulnerable to damage or interruption from natural
disasters, power loss and telecommunications failures. Further, our products contain sophisticated hardware and
operating system software and applications that may contain security problems, security vulnerabilities, or defects in
design or manufacture, including “bugs” and other problems that could interfere with the intended operation of our
products.
If efforts to breach our infrastructure, systems or products are successful or we are unable to protect against these
risks, we could suffer interruptions, delays, or cessation of operations of our systems, and loss or misuse of proprietary
or confidential information, intellectual property, or sensitive or personal information. Breaches of our infrastructure,
systems or products could also cause our customers and other affected third parties to suffer loss or misuse of propri-
etary or confidential information, intellectual property, or sensitive or personal information, and could harm our rela-
tionships with customers and other third parties. As a result, we could experience additional costs, indemnification
claims, litigation, and damage to our brand and reputation. All of these consequences could harm our reputation and
our business and materially and adversely affect our operating results and financial condition.
We are subject to laws, rules, and regulations in the U.S. and other countries relating to the collection, use, sharing, and security
of third-party data including personal data, and our failure to comply with these laws, rules and regulations could subject us to
proceedings by governmental entities or others and cause us to incur penalties, significant legal liability, or loss of customers, loss
of revenue, and reputational harm.
We are subject to laws, rules, and regulations in the U.S. and other countries relating to the collection, use, and
security of third-party data including data that relates to or identifies an individual person. In many cases, these laws
apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, and
among us, our subsidiaries and other parties with which we have commercial relations. Our possession and use of
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