McKesson 2016 Annual Report Download - page 30

McKESSON CORPORATION
government including monetary damages and criminal and civil penalties. In addition, any of our government
contracts could be terminated or we could be suspended or debarred from all government contract work. The
occurrence of any of these actions could harm our reputation and could have a material adverse impact on our
results of operations.
Our future results could be materially affected by a number of public health issues whether occurring in the
United States or abroad.
Public health issues, whether occurring in the United States or abroad, could disrupt our operations, disrupt
the operations of suppliers or customers, or have a broader adverse impact on consumer spending and confidence
levels that would negatively affect our suppliers and customers. We have developed contingency plans to address
infectious disease scenarios and the potential impact on our operations, and we will continue to update these
plans as necessary. However, there can be no assurance that these plans will be effective in eliminating the
negative impact of any such diseases on the Company’s operating results. We may be required to suspend
operations in some or all of our locations, which could have a material adverse impact on our financial position
and results of operations.
We rely on sophisticated computer systems to perform our business operations. Although we and our
customers use a variety of security measures to protect our and their computer systems, a failure or
compromise of our or our customers’ computer systems from a cyberattack, natural disaster, or malfunction
may result in material adverse operational and financial consequences.
Our business relies on the secure electronic transmission, storage, and hosting of sensitive information,
including protected health information, financial information and other sensitive information relating to our
customers, company and workforce. We routinely process, store and transmit large amounts of data in our
operations, including sensitive personal information, protected health information, financial information, and
confidential information relating to our business or third parties. Some of the data that we process, store and
transmit may travel outside of the United States. Additionally, we outsource some important IT functions to
external service providers worldwide.
Despite our implementation of a variety of security measures, our and our customers’ computer systems
could be subject to cyberattacks and unauthorized access, such as physical and electronic break-ins or
unauthorized tampering. Like other global companies, we and our customers have experienced threats to data and
systems, including malware and ransomware attacks, unauthorized access, system failures, and disruptions.
A failure or compromise of our or our customers’ computer systems may jeopardize the confidential,
proprietary, and sensitive information processed, stored, and transmitted through such computer systems. Such
an event may result in significant damage to our reputation, financial losses, litigation, increased costs, regulatory
penalties, customer attrition, brand impairment, or other business harm. These risks may increase in the future as
we continue to expand our internet and mobile strategies and to build an integrated digital enterprise.
We could experience losses or liability not covered by insurance.
In order to provide prompt and complete service to our major Distribution Solutions segment’s customers,
we maintain significant product inventory at certain of our distribution centers. While we seek to maintain
property insurance coverage in amounts sufficient for our business, there can be no assurance that our property
insurance will be adequate or available on acceptable terms. One or more large casualty losses caused by fire,
earthquake or other natural disaster in excess of our coverage limits could have a material adverse impact on our
results of operations.
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