First Data 2008 Annual Report Download - page 30

The Company may experience breakdowns in its processing systems that could damage customer relations and expose it to liability.
The Company depends heavily on the reliability of its processing systems in the Company's core businesses. A system outage or data loss could have a
material adverse effect on the Company's business, financial condition and results of operations. Not only would the Company suffer damage to its reputation
in the event of a system outage or data loss, but the Company may also be liable to third parties. Many of the Company's contractual agreements with
financial institutions require the payment of penalties if the Company's systems do not meet certain operating standards. To successfully operate the
Company's business, the Company must be able to protect its processing and other systems from interruption, including from events that may be beyond the
Company's control. Events that could cause system interruptions include, but are not limited to, fire, natural disaster, unauthorized entry, power loss,
telecommunciations failure, computer viruses, terrorist acts and war. Although the Company has taken steps to protect against data loss and system failures,
there is still risk that it may lose critical data or experience system failures. The Company performs the vast majority of disaster recovery operations itself,
though it utilizes select third parties for some aspects of recovery, particularly internationally. To the extent the Company outsources its disaster recovery, it is
at risk of the vendor's unresponsiveness in the event of breakdowns in the Company's systems. Furthermore, the Company's property and business interruption
insurance may not be adequate to compensate it for all losses or failures that may occur.
The Company may experience software defects, computer viruses and development delays, which could damage customer relations, decrease the
Company's potential profitability and expose it to liability.
The Company's products are based on sophisticated software and computing systems that often encounter development delays, and the underlying
software may contain undetected errors, viruses or defects. Defects in the Company's software products and errors or delays in the Company's processing of
electronic transactions could result in:
• additional development costs;
• diversion of technical and other resources from the Company's other development efforts;
• loss of credibility with current or potential customers;
• harm to the Company's reputation; or
• exposure to liability claims.
In addition, the Company relies on technologies supplied to it by third parties that may also contain undetected errors, viruses or defects that could have
a material adverse effect on the Company's business, financial condition and results of operations. Although the Company attempts to limit its potential
liability for warranty claims through disclaimers in the Company's software documentation and limitation-of-liability provisions in the Company's license and
customer agreements, the Company cannot assure that these measures will be successful in limiting the Company's liability.
Acquisitions and integrating such acquisitions create certain risks and may affect the Company's operating results.
The Company has been an active business acquirer both in the United States and internationally, and may continue to be active in the future. The
acquisition and integration of businesses involves a number of risks. The core risks are in the areas of valuation (negotiating a fair price for the business based
on inherently limited diligence) and integration (managing the complex process of integrating the acquired company's people, products, technology and other
assets so as to realize the projected value of the acquired company and the synergies projected to be realized in connection with the acquisition). In addition,
international acquisitions often involve additional or increased risks including, for example:
• managing geographically separated organizations, systems and facilities;
• integrating personnel with diverse business backgrounds and organizational cultures;
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