Northrop Grumman 2012 Annual Report Download - page 24

NORTHROP GRUMMAN CORPORATION
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Our business could be negatively impacted by security threats, including physical and cybersecurity threats, and
other disruptions.
As a defense contractor, we face various security threats, including cybersecurity threats to gain unauthorized access
to sensitive information; threats to the safety of our directors, officers, and employees; threats to the security of our
facilities and infrastructure; and threats from terrorist acts. Although we utilize various procedures and controls to
monitor and mitigate these threats, there can be no assurance that these procedures and controls will be sufficient to
prevent security threats from materializing. If any of these events were to materialize, they could lead to losses of
sensitive information or capabilities, harm to personnel or infrastructure, or damage to our reputation, and could
have a material adverse effect on our financial position, results of operations, or cash flows.
Cybersecurity threats are evolving and include, but are not limited to, malicious software, attempts to gain
unauthorized access to data, denial of service attacks, and other electronic security breaches that could lead to
disruptions in mission critical systems, unauthorized release of confidential or otherwise protected information and
corruption of data. These events could damage our reputation and lead to financial losses from remedial actions, loss
of business or potential liability.
We also manage information technology systems for various customers and other third parties. While we operate
under information security policies and procedures for managing these systems, we generally face similar
cybersecurity threats for these systems as for our own.
Unforeseen environmental costs could have a material adverse effect on our financial position, results of
operations, or cash flows.
Our operations are subject to and affected by a variety of federal, state, local and foreign environmental laws and
regulations. In addition, we could be affected by future laws or regulations, including those imposed in response to
climate change concerns and other actions. Compliance with current and future environmental laws and regulations
currently requires and is expected to continue to require significant operating and capital costs.
Environmental laws and regulations provide for substantial fines and criminal sanctions for violations, and may limit
our operations or require the installation of costly pollution control equipment or operational changes to limit
pollution emissions or discharges and/or decrease the likelihood of accidental hazardous substance releases. We also
incur, and expect to continue to incur, costs to comply with current federal and state environmental laws and
regulations related to the cleanup of pollutants previously released into the environment. In addition, if we were
found to be in violation of the Federal Clean Air Act or the Clean Water Act, the facility or facilities involved in the
violation could be placed by the EPA on the “Excluded Parties List” maintained by the General Services
Administration. The listing could continue until the EPA concludes that the cause of the violation had been
corrected. If we were listed on the Excluded Parties List it could have a material adverse effect on our financial
position, results of operations and cash flows. Listed facilities generally cannot be used in performing any
U.S. Government contract until the violation is corrected.
The adoption of new laws and regulations, stricter enforcement of existing laws and regulations, imposition of new
cleanup requirements, discovery of previously unknown or more extensive contamination, litigation involving
environmental impacts, sanctions or penalties, could negatively impact our ability to recover such costs under
previously priced contracts or financial insolvency of other responsible parties could cause us to incur costs in the
future that could have a material adverse effect on our financial position, results of operations, or cash flows.