TomTom 2012 Annual Report Download - page 17

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A signifi cant disruption to the availability of these systems could
cause interruptions in our service to customers, loss of, or
delays in, our research and development work and/or product
shipments. Any such service interruptions may occasion signifi cant
reputational damage amongst customers and distributors and
could have a material adverse effect on our fi nancial condition
and results of operations.
Navigation
The navigation industry is shifting towards the provision of off-
the-shelf map-based navigation components that require the
minimum of integration effort and allow for differentiation by
enabling these components to be combined and pre-integrated
into proprietary ‘Connected Navigation Systems’.
Consumers and automotive manufacturers will increasingly expect
cars and in particular car infotainment systems to be connected
to the cloud and to provide a seamless user experience across
different devices (car, smartphone, web) and relevant content
and services such as real-time traffi c and routing, remote car
diagnostics and an application store. If we are unable to develop
products that allow us to compete successfully in the emerging
world of the ‘connected car’, our future growth potential, our
fi nancial position and results of operations could be materially
adversely affected.
Disaster recovery planning
We provide fl eet management services, live traffi c data and
sales via our web store on a 24-hour basis. Unforeseen business
disruptions could severely affect our business activities and the
services we offer to our customers. Any permanent or temporary
loss of these systems would result in reputational damage, loss of
revenue and liabilities to our clients. In the case of a catastrophic
disaster our company’s success rests on our ability to restore our
critical data and rebuild our IT business systems.
We have business continuity and disaster recovery planning in
place for certain systems and various eventualities. However, we
are unable to plan for every possible disaster or incident. A major
failure of a business critical system from which we are not able
to quickly recover could have a material adverse effect on our
fi nancial condition, results of operations and liquidity.
Legal and compliance risks
—
Intellectual property
We rely on a combination of trademarks, trade names, patents,
confi dentiality and non-disclosure clauses and agreements,
copyrights and design rights to defend and protect our trade
secrets and rights to the intellectual property in our products.
We may be faced with claims that we have infringed the
intellectual property rights or patents of others, which if
successfully asserted against us may result in us being ordered
to pay substantial damages or forced to stop or delay the
development, manufacture or sale of infringing products.
Any such outcome could have a material adverse effect on
our fi nancial condition, results of operations and liquidity.
Furthermore, even if we were to prevail, any litigation could
be costly and time-consuming.
Privacy of customer data
The focus of our business providing location-based products
and services to individual customers, growing public awareness
and increased scrutiny by regulatory authorities, particularly in
the EU, means that compliance with privacy regulations and
customer expectations is increasingly important in maintaining
our competitive position. While we anonymise the trace data
we collect from our individual customers, and while our privacy
programme is intended to ensure TomTom’s Privacy Principles are
adhered to throughout our operations and in the design of our
products and services, our reputation and brand may suffer if we
fail to comply with privacy regulations or otherwise fail to meet
our customers’ expectations in relation to privacy matters.
Information security
The integrity of our intellectual property and the continuity of our
business operations are substantially dependent on our ability
to maintain security over confi dential information regarding our
customers, employees, suppliers, proprietary technologies and
business processes. Our information security programme requires
that we deploy controls, processes and tools in our operations and
products to maintain the confi dentiality, availability and integrity
of such confi dential information. However, the volume and
sophistication of information security threats continues to grow.
Leaks of confi dential information, unauthorised use of our systems
and networks or defective products could adversely affect our
business and could have a material adverse effect on our fi nancial
conditions, results of operations and liquidity.
Financial risks
—
Financial risks are presented in the 2012 Financial Statements on
pages 45 to 47.
Corporate Governance
For the description of our corporate governance structure
reference is made to the separate section on page 17.