Dow Chemical 2014 Annual Report Download - page 45

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health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and
enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could
inhibit or interrupt the Company's operations, or require modifications to its facilities. Accordingly, environmental, health or
safety regulatory matters could result in significant unanticipated costs or liabilities.
Chemical Safety: Increased concerns regarding the safe use of chemicals in commerce and their potential impact on the
environment have resulted in more restrictive regulations from local, state and federal governments and could lead to
new regulations.
Concerns regarding the safe use of chemicals in commerce and their potential impact on health and the environment reflect a
growing trend in societal demands for increasing levels of product safety and environmental protection. These concerns could
manifest themselves in stockholder proposals, preferred purchasing and continued pressure for more stringent regulatory
intervention. These concerns could also influence public perceptions, the viability of the Company's products, the Company's
reputation and the cost to comply with regulations. In addition, terrorist attacks and natural disasters have increased concerns
about the security and safety of chemical production and distribution. These concerns could have a negative impact on the
Company's results of operations.
Local, state and federal governments continue to propose new regulations related to the security of chemical plant locations and
the transportation of hazardous chemicals, which could result in higher operating costs.
Operational Event: A significant operational event could negatively impact the Company's results of operations.
As a diversified chemical manufacturing company, the Company's operations, the transportation of products, cyber attacks, or
severe weather conditions and other natural phenomena (such as drought, hurricanes, earthquakes, tsunamis, floods, etc.) could
result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors or the public at
large, which could have a negative impact on the Company's results of operations.
Major hurricanes have caused significant disruption in Dow's operations on the U.S. Gulf Coast, logistics across the region, and
the supply of certain raw materials, which had an adverse impact on volume and cost for some of Dow's products. Due to the
Company's substantial presence on the U.S. Gulf Coast, similar severe weather conditions or other natural phenomena in the
future could negatively affect Dow's results of operations.
Cyber Vulnerability: The risk of loss of the Company’s intellectual property, trade secrets or other sensitive business
information or disruption of operations could negatively impact the Company’s financial results.
Cyber attacks or security breaches could compromise confidential, business critical information, cause a disruption in the
Company’s operations or harm the Company's reputation. The Company has attractive information assets, including intellectual
property, trade secrets and other sensitive, business critical information. While the Company has a comprehensive cyber
security program that is continuously reviewed, maintained and upgraded, a significant cyber attack could result in the loss of
critical business information and/or could negatively impact operations, which could have a negative impact on the Company’s
financial results.
Company Strategy: Implementing certain elements of the Company's strategy could negatively impact the Company's
financial results.
The Company currently has manufacturing operations, sales and marketing activities, joint ventures, as well as proposed and
existing projects of varying size in emerging geographies. Activities in these geographies are accompanied by uncertainty and
risks including: navigating different government regulatory environments; relationships with new, local partners; project
funding commitments and guarantees; expropriation, military actions, war, terrorism and political instability; sabotage;
uninsurable risks; suppliers not performing as expected resulting in increased risk of extended project timelines; and
determining raw material supply and other details regarding product movement. If the manufacturing operations, sales and
marketing activities, and/or implementation of these projects is not successful, it could adversely affect the Company's financial
condition, cash flows and results of operations.
The Company has also announced a number of portfolio management actions, including the potential divestiture of global
businesses and potential reduction of the Company's equity interest in certain joint ventures. If the execution or implementation
of these transactions is not successful, it could adversely impact the Company's financial condition, cash flows and results of
operations.
Goodwill: An impairment of goodwill could negatively impact the Company's financial results.
At least annually, the Company assesses goodwill for impairment. If an initial qualitative assessment identifies that it is more
likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is
performed. The Company may also elect to skip the qualitative testing and proceed directly to quantitative testing. If the