Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

SecureWorks disclosed 46 risk factors in its most recent earnings report. SecureWorks reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2024

Risk Distribution

43% Finance & Corporate

24% Tech & Innovation

15% Ability to Sell

9% Macro & Political

7% Legal & Regulatory

2% Production

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

SecureWorks Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2024

Main Risk Category

Finance & Corporate

With 20 Risks

Finance & Corporate

With 20 Risks

Number of Disclosed Risks

From last report

S&P 500 Average: 31

From last report

S&P 500 Average: 31

Recent Changes

2Risks added

0Risks removed

0Risks changed

Since Nov 2024

2Risks added

0Risks removed

0Risks changed

Since Nov 2024

Number of Risk Changed

No changes from last report

S&P 500 Average: 2

No changes from last report

S&P 500 Average: 2

See the risk highlights of SecureWorks in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 46

Finance & Corporate

Total Risks: 20/46 (43%)Above Sector Average

Share Price & Shareholder Rights7 | 15.2%

Share Price & Shareholder Rights - Risk 1

Our charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or with our directors, our officers or other employees, or our majority stockholder.

Our charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the exclusive forum for: - any derivative action or proceeding brought on our behalf;- any action asserting a claim of breach of a fiduciary duty owed, or other wrongdoing, by any of our directors, officers or other employees, or stockholders to us or our stockholders;- any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; and - any action asserting a claim governed by the internal affairs doctrine. Any person purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provisions. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds more favorable for disputes with us or with our directors, our officers or other employees, or our other stockholders, including our majority stockholder, which may discourage such lawsuits against us and such other persons. Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, results of operations and financial condition. Our choice of forum provision is intended to apply to the fullest extent permitted by law to the types of actions and proceedings specified above, including, to the extent permitted by the federal securities laws, to lawsuits asserting claims under such actions and proceedings and claims under the federal securities laws. Application of the choice of forum provision may be limited in some instances by applicable law. Section 27 of the Securities Exchange Act of 1934, or Exchange Act, creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the choice of forum provision will not apply to actions arising under the Exchange Act or the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, subject to a limited exception for certain "covered class actions." Due to current litigation, there is uncertainty as to whether a court would enforce the choice of forum provision with respect to claims under the Securities Act. Our stockholders will not be deemed, by operation of our choice of forum provision, to have waived claims arising under the federal securities laws and the rules and regulations thereunder.

Share Price & Shareholder Rights - Risk 2

Future sales, or the perception of future sales, of a substantial number of shares of our Class A common stock could depress the trading price of our Class A common stock.

Sales of a substantial number of shares of our Class A common stock in the public market, or the perception that these sales may occur, could adversely affect the market price of the Class A common stock. As of February 2, 2024, we have outstanding 16,392,287 shares of our Class A common stock and 70,000,000 shares of our Class B common stock. The shares of Class A common stock are freely tradeable without restriction or further registration under the Securities Act of 1933, or Securities Act, unless these shares are held by our "affiliates," as that term is defined in Rule 144 under the Securities Act, or Rule 144. As of February 2, 2024, Dell Technologies owned, indirectly through its subsidiary Dell Inc. and through Dell Inc.'s subsidiaries, no shares of our Class A common stock and all 70,000,000 outstanding shares of our Class B common stock. The shares of our Class A common stock eligible for resale by our affiliates under Rule 144, subject to the volume limitations and other requirements of Rule 144, include the 70,000,000 shares of Class A common stock issuable upon conversion of the same number of shares of our Class B common stock that are outstanding. We have entered into a registration rights agreement with Dell Marketing L.P. (the record holder of our Class B common stock), Michael S. Dell, the Susan Lieberman Dell Separate Property Trust, MSDC Denali Investors, L.P., MSDC Denali EIV, LLC and the Silver Lake investment funds that own Dell Technologies common stock in which we have granted them and their respective permitted transferees demand and piggyback registration rights with respect to the shares of our Class A common stock and Class B common stock held by them from time to time. Registration of those shares under the Securities Act would permit the stockholders under the registration rights agreement to sell their shares into the public market.

Share Price & Shareholder Rights - Risk 3

As a "controlled company" under the marketplace rules of the Nasdaq Stock Market, we may rely on exemptions from certain corporate governance requirements that provide protection to stockholders of companies that are subject to such requirements.

As of February 2, 2024, Dell Technologies beneficially owns more than 50% of the combined voting power of both classes of our outstanding shares of common stock. As a result, we are a "controlled company" under the marketplace rules of the Nasdaq Stock Market, or Nasdaq, and eligible to rely on exemptions from Nasdaq corporate governance requirements that generally obligate listed companies to maintain a board of directors having a majority of independent directors and compensation and nominating committees composed solely of independent directors. We currently rely on the exemption from the requirement to maintain a board of directors having a majority of independent directors. Although we do not currently rely on the other exemptions from Nasdaq's corporate governance requirements pertaining to the composition of compensation and nominating committees, we may decide to avail ourselves of one or more of these exemptions in the future. During any period in which we do so, investors may not have the same protections afforded to stockholders of companies that must comply with all of Nasdaq's corporate governance requirements. Our status as a controlled company could make our Class A common stock less attractive to some investors or otherwise adversely affect its trading price.

Share Price & Shareholder Rights - Risk 4

The dual-class structure of our common stock may adversely affect the trading price of our Class A common stock.

Our Class B common stock has ten votes per share and our Class A common stock has one vote per share. The limited ability of holders of our Class A common stock to influence matters requiring stockholder approval may adversely affect the market price of our Class A common stock. In addition, certain stock indices, including, but not limited to, FTSE Russell and S&P Dow Jones, have adopted eligibility criteria to exclude new companies with multiple classes of common stock from being added to certain of their stock indices. Under the current criteria, our dual-class capital structure might make our Class A common stock ineligible for inclusion in certain indices, which may cause certain mutual funds, exchange-traded funds, and other investment vehicles that track certain indices may not invest in our stock. Other major stock indices might adopt similar requirements in the future. It is challenging to gauge whether the exclusion from any indices will affect the financial valuation and market price of such an excluded company. It is possible that such policies could depress the financial valuation and stock price of a public company excluded from such indices compared to other companies that do not have multi-class capital structures.

Share Price & Shareholder Rights - Risk 5

Added

Shareholder litigation could prevent or delay the closing of the Merger or otherwise negatively impact our business, results of operations and financial condition.

Litigation relating to the Merger may be filed against the Company and the board of directors. Among other remedies, claimants could seek damages and/or to enjoin the Merger and the other transactions contemplated by the Merger Agreement. The outcome of any litigation is uncertain and any such lawsuits could prevent or delay the completion of the Merger and result in significant costs. The litigation costs, including costs associated with the indemnification of obligations to our directors, and diversion of management's attention and resources to address the claims in any litigation related to the Merger may adversely affect our business, results of operations, prospects, and financial condition. Any litigation related to the Merger may result in negative publicity or an unfavorable impression of us, which could adversely affect the price of our Class A common stock, impair our ability to recruit or retain employees, damage our relationships with our customers and business partners, or otherwise harm our operations and financial performance.

Share Price & Shareholder Rights - Risk 6

As long as Dell Technologies Inc. controls us, the ability of our other stockholders to influence matters requiring stockholder approval will be limited.

As of February 2, 2024, Dell Technologies owned, indirectly through Dell Inc. and Dell Inc.'s subsidiaries, all 70,000,000 outstanding shares of our Class B common stock, which represented approximately 81.0% of our total outstanding shares of common stock and approximately 97.7% of the combined voting power of both classes of our outstanding common stock. Our other stockholders will not be able to affect the outcome of any stockholder vote in which holders of the Class B common stock are entitled to vote as long as Dell Technologies controls the majority of the voting power of our outstanding common stock. Generally, Dell Technologies can control, directly or indirectly and subject to applicable law, significant matters affecting us, including, among others, the election and removal of our directors, and determinations with respect to business combinations, dispositions of assets or other extraordinary corporate transactions. If Dell Technologies does not provide its required affirmative vote on matters requiring stockholder approval allowing particular corporate actions when requested, we will not be able to take such action, and, as a result, our business and our results of operations may be adversely affected. While it is not expected to occur, Dell Technologies could have interests that differ from, or conflict with, the interests of our other stockholders, and could cause us to take corporate actions even if such actions are not in the interest of our company or our other stockholders, or such actions are opposed by our other stockholders. For example, the voting control possessed by Dell Technologies could discourage or prevent a change in control of our Company even if some of our other stockholders might favor such a transaction.

Share Price & Shareholder Rights - Risk 7

The market price for our Class A common stock has been and is likely to continue to be volatile or may decline regardless of our operating performance.

The stock markets, and securities of companies within the technology and software industries particularly, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies similarly situated to us. For many technology and software companies, the fluctuations in the stock prices have been unrelated or disproportionate to their operating performance. The economic impact and uncertainty of changes in the inflation, interest rate, and the macroeconomic and geopolitical environments, including Russia's ongoing conflict with Ukraine and the ongoing conflict between Israel and Hamas (including the risk of potential escalation or geographic expansion), have exacerbated price and volume volatility in both the overall stock markets and the market price of our Class A common stock. The market price of our Class A common stock may continue to fluctuate significantly in response to a variety factors, many of which are beyond our control, including: - actual or anticipated changes or fluctuations in our operating results;- the financial forecasts and guidance we may provide to the public, any changes in our forecasts or guidance, or our failure to meet the forecasts or guidance;- reactions by financial analysts, industry analysts or investors to our press releases, other public announcements, and SEC filings;- failure of financial analysts to maintain coverage of us, changes in financial estimates by any financial analysts who follow our company, or our failure to meet the financial estimates or the expectations of investors;- announcements by us or our competitors of new or enhanced offerings, or new or terminated significant contracts, commercial relationships or capital commitments;- rumors and market speculation involving us or our competitors;- material changes in investor confidence in the market for technology stocks or the stock market in general;- changes in industry analyst or investor perceptions of us, the benefits of our offerings and the industries in which we operate;- periodic price and volume fluctuations in the overall stock market;- changes in operating performance and/or stock market valuations of other technology companies generally, or those in our industry in particular;- actual or anticipated general developments in our business or our competitors' businesses or the competitive landscape;- litigation involving us, our industry, both, or investigations by regulators into our operations or those of our competitors;- developments or disputes concerning our intellectual property rights or our Taegis subscription solutions or other cybersecurity offerings, or third-party proprietary rights;- rumored, announced or completed acquisitions of businesses or technologies by us or our competitors;- breaches of, or failures relating to, privacy, data protection or information security;- new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including, but not limited to, the SEC's finalized cybersecurity disclosure requirements;- any major changes to the composition of our management team or our board of directors;- general economic conditions, whether in the United States or globally, and slow growth of our markets; and - other events or factors, including those resulting from war, pandemics, geopolitical conflict, trade embargoes, incidents of terrorism, or any responses to such events.

Accounting & Financial Operations4 | 8.7%

Accounting & Financial Operations - Risk 1

We are obligated to develop and maintain proper and effective internal control over financial reporting and any failure to maintain the adequacy of our internal controls may adversely affect investor confidence in our company, potentially resulting in a negative impact on the value of our Class A common stock.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act to furnish a report by our management each year on the effectiveness of our internal control over financial reporting. We are required to also disclose significant changes made in our internal control procedures on a quarterly basis. In addition, our independent registered public accounting firm is required annually to express an opinion as to the effectiveness of our internal control over financial reporting. During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We may experience material weaknesses or significant deficiencies in our internal control over financial reporting. Any failure to maintain internal control over financial reporting could severely inhibit our ability to report accurately our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we may be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, also could restrict our future access to the capital markets.

Accounting & Financial Operations - Risk 2

We do not expect to pay any dividends on our Class A common stock for the foreseeable future.

In accordance with our current business strategy, we intend to retain the profits we make to finance the operation and continued growth of our business; therefore, we currently do not expect to pay any cash dividends on our Class A common stock for the foreseeable future. Accordingly, for investors to realize any future profit on their investments, they must rely on the sale of our Class A common stock after its value increases.

Accounting & Financial Operations - Risk 3

Because we recognize revenue ratably over the terms of our Taegis subscription solutions contracts, decreases in sales of these solutions may not immediately be reflected in our results of operations.

The effect of significant downturns in our sales results for our Taegis subscription solutions may not be fully reflected in our results of operations in the current period, making it challenging for investors to effectively evaluate our financial performance. In fiscal 2024, approximately 83% of our revenue was derived from subscription-based solutions, attributable to Taegis subscription solutions and other subscription-based services, while approximately 17% was derived from professional services engagements. Our subscription contracts typically range from one to three years in duration and, as of February 2, 2024, averaged two years in duration. Revenue related to these contracts is generally recognized ratably over the contract term. As a result, we derive most of our quarterly revenue from contracts we entered into during previous fiscal quarters. Declines in new or renewed contracts and any renewals made at reduced annual dollar amounts occurring in a particular quarter may not be overtly reflected in our revenue for that quarter; however, they would negatively affect revenue in future quarters. Accordingly, the effects of reduced sales or renewals at lower annual dollar amounts may not be fully reflected in our results of operations until future periods. As of February 2, 2024, we billed approximately 65% of our recurring revenue in advance. We may not be able to adjust our cash outflows to match any decreases in cash received from prepayments if sales decline. In addition, we may be unable to further adjust our cost structure to account for the reduced revenue, which would negatively affect our earnings in future periods. Our subscription model also makes it difficult for us to increase our revenue rapidly through additional sales in any period, since revenue from new customers is recognized ratably over the applicable contract terms.

Accounting & Financial Operations - Risk 4

We have a history of losses and may not be able to achieve or maintain profitability.

We incurred net losses of $86.0 million in fiscal 2024, $114.5 million in fiscal 2023 and $39.8 million in fiscal 2022. Failure to increase our revenue as we grow our business could prevent us from achieving profitability or maintaining profitability on a consistent basis. As we pursue our growth strategy, our operating expenses may increase as we expand and diversify our customer base and attract and retain top talent. Our strategic initiatives may be more expensive than we expect, and we may not be able to increase our revenue to offset these increased operating expenses. Our revenue growth may slow, or revenue may decline, for a number of reasons as described elsewhere in this Risk Factors section, which may lead to increased pressure on our profit margins. If we are unable to meet these risks as we encounter them, our business, financial condition and results of operations may suffer.

Corporate Activity and Growth9 | 19.6%

Corporate Activity and Growth - Risk 1

If we fail to manage our growth effectively, we may be unable to execute our business plan and maintain high levels of customer service due to operational disruptions.

As our customer base and s Taegis subscription solutions grow, the need to expand our operations may place a strain on our resources, business operations and technology infrastructure. This strain may affect our ability to maintain the quality and successful deployment of our Taegis subscription solutions, degrading customer support after deployment. Our productivity, customer-focused culture, and the quality of our Taegis subscription solutions may be negatively affected if we do not quickly and successfully integrate and train our new employees and channel partners, particularly sales and customer success personnel. In addition, adapting our information technology infrastructure to support our growth and interoperability may require substantial investment, while also investing resources to ensure we maintain and improve our procedures relating to operations, financials and managerial controls reporting. If we are unable to manage our growth, expenses, or business operations efficiently and effectively in accordance with our strategy, our financial condition, results of operations and profitability could be negatively impacted.

Corporate Activity and Growth - Risk 2

If we cannot successfully execute our go-to-market strategy by attracting new customers, retaining existing customers or increasing the annual contract values for Taegis subscription solutions, our business, results of operations and financial performance will be adversely affected.

To achieve revenue growth, we must expand our customer base, retain existing customers, and increase our annual contract values, especially as they relate to our Taegis subscription solutions. In addition to attracting large enterprise and small and medium-sized business customers, our strategy is to continue obtaining non-U.S. customers, government entity customers and customers in other industry sectors in which our competitors may have a stronger position. If we fail to attract new customers, our revenue may decline or cease to grow. Some customers also may elect not to renew their contracts with us or negotiate to renew them on less favorable terms, resulting in our inability, on a consistent basis, to increase our annual contract values by obtaining advantageous contract renewals. We offer Taegis subscription solutions on a subscription basis under contracts with initial terms that typically range from one to three years and, as of February 2, 2024, averaged two years in duration. Our customers have no obligation to renew their contracts after the expiration of their initial terms. Our initial contracts with customers may include amounts for hardware, installation, onboarding, and other professional services that may not recur. Further, if a customer renews a contract for a term longer than the preceding term, it may pay us greater total fees than it paid under the preceding contract; however, the average annual fee may be lower because we may offer discounted rates in exchange for longer contract terms. In any of these situations, we must sell additional solutions or enhancements to the Taegis subscription solutions to maintain the same level of annual fees from the customer but may be unable to do so. As a result, existing customers renewing on lower average annual fees or choosing not to renew their contracts with us would negatively impact our revenue, financial condition and operating results.

Corporate Activity and Growth - Risk 3

Implementation of our plans to strategically realign and optimize our investments with our priorities may not be successful, which could adversely affect our reputation, profitability and financial condition.

On February 7, 2023, we announced a plan to accelerate our transition to a software-as-a-service business through our Taegis security platform and, during the three months ended August 4, 2023, the Company approved continued reorganization actions in alignment with the plan. Specifically, we reduced our workforce and made decisions to optimize and align our facilities and investments with our strategic priorities. These activities may not achieve our strategic priorities to optimize our operating expenses and enhance our prospects for profitable operations. Instead, we may experience additional unexpected costs that could negatively impact our cash flows from operations and liquidity in addition to employee attrition beyond the intended reductions, adverse effects on employee morale, diversion of management's attention, reputational impacts hindering our ability to attract and retain top talent in the future, and cause operational delays as a result of the loss of qualified employees. If we do not realize the anticipated benefits of our plan, our business, reputation, financial condition, and results of operations could be negatively impacted.

Corporate Activity and Growth - Risk 4

Our technology alliance partnerships expose us to an array of business risks and uncertainties that could prevent us from realizing the benefits we seek from these partnerships.

We have entered, and intend to continue entering, into technology alliance partnerships with third parties in alignment with our strategic growth plans. Such relationships include technology licensing, joint technology development and integration, research cooperation, co-marketing, and sell-through arrangements. We face risks relating to these partnerships, which could inhibit us from realizing the benefits we seek. Many technology alliance partnerships require significant coordination by both parties and significant time and resource commitments by their technical staffs. In cases where we are developing integrations of our Taegis subscription solutions into a partner's products or services, the integration development process may be more challenging than anticipated, and the risk of difficulties, incompatibility and undetected programming errors or defects may be higher than introducing new products or services. In addition, any particular relationship may be temporary. If we lose a significant technology alliance partner, we may lose the expected benefit of investment into the partnership. Moreover, we could incur significant expenses developing a new strategic alliance or formulating and implementing a strategic alternative.

Corporate Activity and Growth - Risk 5

We may expand through acquisitions of other companies, which could divert our management's attention and company resources from our current business, resulting in unforeseen operating difficulties, increased costs and dilution to the ownership interests of our stockholders.

We may make strategic acquisitions of other companies in addition to organic growth. We may not realize the anticipated benefits of any acquisition we are able to complete. We could experience unforeseen operating difficulties in assimilating or integrating the businesses, technologies, services, products, personnel, or operations of acquired companies, especially if the key personnel of any acquired company choose not to work for us. To complete an acquisition, we may be required to use a substantial amount of our cash, sell or use equity securities, or incur debt to secure additional funds. If we raise additional funds through issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution of their ownership, and any new equity securities we issue could have rights, preferences, and privileges senior to those of our Class A common stock. Any debt financing obtained by us in the future could involve restrictive covenants that would limit our capital-raising activities and operating flexibility. In addition, we may not be able to obtain additional financing on terms favorable to us or at all, which could limit our ability to engage in acquisitions or develop new products or technologies.

Corporate Activity and Growth - Risk 6

Added

The Merger may not be completed within the intended timeframe, or at all, and the failure to complete the Merger could adversely affect our business, results of operations, financial condition, and the market price of our Class A common stock.

The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the merger transaction, or Merger, including (i) the Company receiving the Written Consent (as defined below) (which has been satisfied, as described below), (ii) (a) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and (b) the clearance or approval under certain specified antitrust laws and foreign investment laws, (iii) the absence of any governmental authority of competent authority in certain specified jurisdictions issuing any order or other legal restraint that makes consummation of the Merger illegal or otherwise prohibited, (iv) at least 20 calendar days have elapsed since the Company's mailing to the Company's stockholders of the information statement on Schedule 14C, and (v) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement that has occurred that is continuing. Following the execution of the Merger Agreement, on October 21, 2024, Dell Technologies Inc., a Delaware corporation, who, as of October 21, 2024 indirectly held approximately 97.4% of the combined voting power of the outstanding shares of Class A common stock and Class B common stock executed and delivered to the Company a written consent, or Written Consent, approving and adopting the Merger Agreement and the transactions contemplated therein, including the Merger. As a result of the execution and delivery of the Written Consent, the holders of at least a majority of the outstanding shares of Class A common stock and Class B common stock with the right to vote thereon have adopted and approved the Merger Agreement. The delivery of the Written Consent constituted the necessary approvals of stockholders for the approval of the Merger, subject to the other conditions set forth in the Merger Agreement. Any such remaining required consents and approvals may not be received at all, may not be received in a timely fashion, or may impose conditions on the completion of the Merger. We cannot assure that all of the conditions in the Merger Agreement will be satisfied or waived on a timely basis or at all. If the conditions in the Merger Agreement are not satisfied or waived on a timely basis or at all, we may be unable to complete the Merger in the timeframe or manner currently anticipated or at all. If the Merger is delayed or not completed without realizing any of the benefits, we may be subject to a number of risks, including, but not limited to, the following: - the market price of our Class A common stock could decline to the extent that the current market price reflects a market assumption that the Merger will be completed;- the commitments of management's time and resources to the Merger could otherwise have been devoted to pursuing other beneficial opportunities for the Company;- we may experience negative reactions from the financial markets or from our clients, business partners or employees;- disruptions to our business, including adverse changes in our relationships with clients, suppliers, partners and employees, may occur;- we may be unable to attract and retain key personnel and recruit prospective employees, and the productivity of our employees may decline due to uncertainty regarding the Merger;- we may be unable to pursue alternative business opportunities or make changes to our business pending the completion of the Merger;- we have incurred, and expect to continue incurring, significant costs, expenses, and fees for professional services and other Merger-related costs, for which we may receive little or no benefit if the Merger is not completed, and many of these fees and costs will be payable by us even if the Merger is not completed; and - we may be required, if the Merger Agreement is terminated in certain limited circumstances, to pay a termination fee of $26 million as provided in the Merger Agreement, which would require us to use cash that would have otherwise been available for general corporate purposes or other uses. If any of these or other risks materialize, they could adversely impact our ongoing business, financial condition, financial results and the price of our Class A common stock.

Corporate Activity and Growth - Risk 7

In accordance with agreements between us and Dell or Dell Technologies, we have limited capabilities to pursue opportunities to raise capital, acquire other companies, or undertake other transactions without Dell's or Dell Technologies' express consent, which may limit our ability to grow our business.

To preserve its ability to effectuate a future tax-free spin-off of our company, or certain other tax-free transactions involving us, Dell Technologies is required to maintain "control" of us within the meaning of Section 368(c) of the Internal Revenue Code, which is defined as 80% of the total voting power and 80% of all other classes of stock. In addition, to preserve its ability to consolidate with us for tax purposes, Dell Technologies generally is required to maintain 80% of the voting power and 80% of the value of our outstanding stock. We have entered into an amended and restated tax matters agreement with Dell Technologies that restricts our ability to issue any stock, issue any instrument that is convertible, exercisable or exchangeable into any of our stock or which may be deemed to be equity for tax purposes, or take any other action that would be reasonably expected to cause Dell Technologies to beneficially own stock in us that, on a fully diluted basis, does not constitute "control" within the meaning of Section 368(c) of the Internal Revenue Code or causes us to become deconsolidated with respect to the Dell Technologies affiliated group, unless we have obtained Dell's prior written consent. We also have agreed to indemnify Dell Technologies for any breach by us of the tax matters agreement. As a result, we may be prevented from raising equity capital or pursuing acquisitions or other growth initiatives that involve issuing equity securities as consideration.

Corporate Activity and Growth - Risk 8

If Dell Technologies, Dell or Dell Technologies' other affiliates, or Silver Lake or its affiliates, engage in the same or similar type of business we conduct, enter partnerships with our competitors, or take advantage of business opportunities that might be attractive to us, our ability to operate successfully and expand our business may be hampered.

Our certificate of incorporation, or charter, provides that, except as otherwise agreed in writing between us and Dell Technologies, Dell or Dell Technologies' other affiliates (other than us or our controlled affiliates), referred to as the Dell Technologies Entities, have no duty to refrain from: - engaging in the same or similar activities or lines of business as those in which we are engaged;- doing business with any of our customers, partners or vendors; or - employing, or otherwise engaging or soliciting for such purpose, any of our officers, directors or employees. In addition, under our charter, Silver Lake and its affiliates, referred to as the Silver Lake Entities, which are significant stockholders in Dell Technologies, have no duty to refrain from any of the foregoing activities except as otherwise agreed in writing between us and a Silver Lake Entity. These and other related provisions of our charter may result in the Dell Technologies Entities and the Silver Lake Entities having rights to corporate opportunities in which both we and the Dell Technologies Entities or the Silver Lake Entities have an interest, which could impede our ability to operate successfully and expand our business.

Corporate Activity and Growth - Risk 9

Our inability to favorably resolve any potential conflicts or disputes that arise between us and Dell or Dell Technologies relating to our past and ongoing relationships may adversely affect our business and prospects.

Potential conflicts or disputes may arise between us and Dell or Dell Technologies in a variety of areas relating to our past or ongoing relationships, including: - intellectual property, tax, employee benefits, indemnification, and other matters arising from our agreements and relationship with Dell;- employee retention and recruiting;- business combinations involving us;- our ability to engage in activities with certain channel, technology alliance or other marketing partners;- sales or dispositions by Dell Technologies of all or any portion of its beneficial ownership interest in us;- dilution in the ownership or voting interest of Dell Technologies resulting from the issuance of additional shares of Class A common stock authorized and available under the SecureWorks Corp. 2016 Long-Term Incentive Plan;- sales of our Taegis subscription solutions and other cybersecurity offerings by Dell Technologies in accordance with our agreements with Dell or Dell Technologies;- the nature, quality and pricing of services Dell has agreed to provide to us;- business opportunities that may be attractive to both us and Dell;- Dell's ability to use and sublicense patents that we have licensed to Dell under a patent license agreement; and - product or technology developments or marketing activities that may require consent of Dell or Dell Technologies. The resolution of any potential conflicts or disputes between us and Dell or Dell Technologies over these or other matters may be less favorable to us than the resolution we might achieve if we were dealing with an unaffiliated party.

Tech & Innovation

Total Risks: 11/46 (24%)Above Sector Average

Innovation / R&D2 | 4.3%

Innovation / R&D - Risk 1

Our inability to expand our development, use and adoption of artificial intelligence, or issues presented in our development, use and adoption of artificial intelligence, could harm our reputation, expose us to liability and cause us to lose customers.

We currently incorporate certain artificial intelligence, or AI, capabilities and large language models, or LLMs, into our Taegis subscription solutions, and we endeavor to continue researching and developing AI capabilities and LLMs within our Taegis subscription solutions. As with many innovative and disruptive technologies, AI and LLMs present risks, challenges, and unintended consequences, many of which cannot be fully appreciated currently. These risks, challenges and unintended consequences could negatively affect further adoption of AI and LLMs in our Taegis subscription solutions, impacting our ability to compete effectively within the cybersecurity industry. AI algorithms and the training methodologies for such algorithms may contain flaws, which could result in ineffective, inadequate, or inaccurate AI capabilities, or could impair customer or partner acceptance of our Taegis subscription solutions leveraging such AI capabilities. Should we develop and incorporate flawed AI capabilities within our Taegis subscription solutions, such flaws would negatively impact our brand and reputation, increase costs to develop and implement new AI capabilities, or lead to a decline in sales revenue. Such impacts would harm our business, financial condition, and results of operations. Because AI is an emerging technology with a developing legal and regulatory landscape both in the United States and globally, incorporating AI into our Taegis subscription solutions and internal business processes could result in an increased risk of litigation and regulatory non-compliance due to changes in laws or regulations, including, but not limited to, intellectual property, privacy, or data protection. Our obligations to comply with current and future legal and regulatory obligations in the United States and worldwide could require us to incur significant costs to achieve compliance, which would negatively impact our business, financial condition and results of operations, or may hinder our ability to incorporate AI capabilities into our Taegis subscription solutions or distribute our Taegis subscription solutions in certain areas of the globe. As we continue to develop ways to leverage AI capabilities within our internal business operations to create economic efficiencies for our business, the use of AI capabilities in our internal business operations could present risks and challenges. While we strive to use AI in an ethical and compliant manner, we may be unsuccessful in identifying and/or resolving ethical or legal issues before they arise, which could increase our legal and regulatory risks, including, but not limited to, data privacy and security, leading to the improper transmission of proprietary or sensitive information, whether or not intentional. We could fail to implement and maintain the AI tools we develop, may incur significant research and development costs without achieving the anticipated economic efficiencies we desire, and/or may fail to establish adequate AI governance processes safeguards, which could negatively impact our business, financial condition, and results of operations.

Innovation / R&D - Risk 2

We must continue to enhance our existing Taegis subscription solutions and their underlying technologies, and develop or acquire new solutions and technologies, or we will lose customers and our competitive position will suffer.

Many of our customers operate in markets characterized by rapidly changing technologies, which require them to utilize a variety of hardware, software applications, operating systems, and networks. As their technologies grow more complex, we expect these customers to face new technological vulnerabilities and increasingly sophisticated methods of cyber-attack. To maintain or increase our market share, we must continue to adapt and improve our Taegis subscription solutions to respond to these evolving cyber-attacks without compromising the high service levels and security that our customers demand. Failure to predict, detect and respond effectively to the changing needs of our customers from these emerging technological advances through the timely development or enhancement of our Taegis subscription solutions could result in reputational harm, loss of customers and cause a negative impact to our business operations and financial condition. Our future growth is dependent on our ability to continue enhancing the efficacy of the detection and response capabilities within our Taegis software-as-a-service, or SaaS, platform and increasing the interoperability of our Taegis SaaS-based platform with third-party products and services that our customers use. If our Taegis security platform is unable to successfully analyze, categorize and process the increasing number of events, and automate response capabilities, we, our customers and/or partners might fail to identify and respond to significant threat events, which could harm the business and operations of our customers and negatively affect our business reputation, financial condition, and operating results.

Trade Secrets3 | 6.5%

Trade Secrets - Risk 1

Claims by others that we infringe their proprietary technology could harm our business and financial condition.

Third parties could claim that our technologies and the processes underlying our Taegis subscription solutions infringe or otherwise violate their proprietary rights. The software and technology industries are characterized by the existence of numerous patents, copyrights, trademarks, and trade secrets, causing frequent litigation, including by non-practicing entities, based on allegations of infringement or other violations of intellectual property rights. We expect that such claims may increase as competition in the cybersecurity market further intensifies, as we introduce new cybersecurity offerings, including within our Taegis subscription solutions (including by increasing our global presence in areas where we currently do not operate) and as the overlap of our cybersecurity offerings continue to occur with our competitors.

Trade Secrets - Risk 2

If we are unable to protect, maintain or enforce our non-patented intellectual property rights and proprietary information, our competitive position could be harmed, and we could be forced to incur significant expenses to enforce our rights.

Our business relies in part on non-patented intellectual property rights and proprietary information, such as trade secrets, confidential information, and know-how, all of which offer limited protection to our technology. The legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights in the information technology and software industries are highly uncertain and evolving. While we regularly enter into non-disclosure and confidentiality agreements with employees, vendors, customers, channel partners, technology alliance partners, and other third parties, these agreements may be breached or otherwise fail to prevent disclosure of our proprietary or confidential information effectively or to provide an adequate remedy in the event of such unauthorized disclosure. Our ability to police such misappropriation or infringement is uncertain, particularly in other countries. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and our failure to maintain trade secret protection could adversely affect our competitive business position.

Trade Secrets - Risk 3

We rely in part on patents to protect our intellectual property rights, and if our patents are ineffective in doing so, third parties may be able to use certain aspects of our proprietary technology without compensating us.

As of February 2, 2024, we owned 58 issued patents and 8 pending patent applications in the United States and six issued patents and 12 pending patent applications outside the United States. Any failure of our patents and patent strategy to adequately protect our intellectual property rights could harm our competitive position. The legal systems of some countries do not favor the aggressive enforcement of patents, and the laws of other countries may not allow us to protect our inventions with patents to the same extent as U.S. laws. Changes in patent laws, implementing regulations or the interpretation of patent laws may diminish the value of our rights. Our competitors may design around technologies we have patented, licensed, or developed. In addition, the issuance of a patent does not necessarily give us the right to practice the patented invention. Third parties may have blocking patents that could prevent us from marketing our Taegis subscription solutions and other cybersecurity offerings or practicing our own patented technology. If any of our patents is challenged, invalidated, or circumvented by third parties, and if we do not own or have exclusive rights to other enforceable patents protecting our Taegis subscription solutions or other technologies, competitors and other third parties could market products or services and use processes that incorporate aspects of our proprietary technology without compensating us, which may have an adverse effect on our business.

Cyber Security2 | 4.3%

Cyber Security - Risk 1

Cyber-attacks or other data security incidents that disrupt our operations or result in the breach or compromise of proprietary or confidential information about us, our workforce, customers, or other third parties could harm our business and expose us to costly regulatory enforcement and other liability.

As a well-known, publicly traded provider of cybersecurity offerings that is subject to the U.S. Securities and Exchange Commission's cybersecurity disclosure requirements, we are a high-profile target for threat actors, and our websites, networks, information systems, solutions and technologies may be selected for sabotage, disruption or misappropriation by cyber-attacks specifically designed to interrupt our business and harm our reputation. Our Taegis subscription solutions frequently involve collecting, filtering, and logging of customer information, while our business operations collect, process, store and dispose of our own human resources, intellectual property, and other information. We also rely, in certain limited capacities, on third-party data management providers and other vendors to host, accept, transmit or otherwise process electronic data in connection with our business operations and activities. Threat actors may seek to penetrate our network security or the security of our third-party service providers and misappropriate or compromise our confidential information or that of our customers or other third parties, create system disruptions or cause shutdowns. In addition, cyber-attacks are increasingly being used in geopolitical conflicts, including Russia's military action in Ukraine and between Israel and Hamas, which may result in increased risk to our customers, our third-party service providers, and our company as a leading cybersecurity solutions provider. We may experience breaches, security incidents or other compromises of our information technology systems. Further, hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture that could unexpectedly lead to vulnerabilities, or provide access, to our systems and data to a threat actor. Our shift to a remote-friendly organization may also increase our vulnerability, as third-party providers' networks and employees' home networks may pose a significant network security risk. The costs to address the foregoing security problems and vulnerabilities before or after a cyber or other security incident could be significant, regardless of whether the incident is malicious or the incident resulted from an attack on us directly or on a third-party vendor upon which we rely. Cyber-attacks could compromise or disrupt our internal systems, our Taegis subscription solutions or the systems of our customers or third-party service providers, resulting in interruptions, delays, or cessation of service that could disrupt business operations for us and our customers and that could impede our sales. Remediation efforts may not be successful or timely. Breaches of our security measures or those of our third-party service providers and the unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or other third parties could expose us, our customers or other affected third parties to a risk of loss or misuse of this information, potentially leading to regulatory enforcement actions, litigation and potential liability for us, and damaging our brand and reputation or otherwise harming our business. Further, we are a publicly traded company, subject to disclosure obligations set forth by the U.S. Securities and Exchange Commission, or the SEC. We are required to publicly disclose a material security incident within four business days of determining that such an incident is, or is likely, material. As a provider of cybersecurity offerings, such public disclosure could have a negative impact on our brand and reputation and may adversely impact our business, results of operation, and financial condition. In addition, we may file an initial Form 8-K filing before all relevant information is determined or before such information is available. Such a filing may cause a negative impact on our brand and reputation and cause further harm to our business and financial condition even if subsequent developments indicate the incident is not as detrimental as initially reported. Although we maintain insurance policies that may cover liabilities in certain situations in connection with a threat event or cybersecurity incident, we cannot be certain that the insurance company will cover the claim, that our insurance policy will adequately cover the liability incurred, or that such insurance will continue to be available on commercially reasonable terms. Any claim against our insurance policy, changes to the policy, or increases in premiums or deductibles could have a negative effect on our business, reputation, financial condition, or results of operation.

Cyber Security - Risk 2

New and evolving information security, cybersecurity and data privacy laws and regulations may result in increased compliance costs, impede the development or performance of our Taegis subscription solutions, and cause us to incur monetary or other penalties.

We are currently subject, and may become further subject, to federal, state and foreign laws and regulations regarding the privacy and protection of personal data or other potentially sensitive information. These laws and regulations address a range of issues, including data privacy, cybersecurity and restrictions or technological requirements regarding the collection, use, storage, protection, retention, or transfer of data. The regulatory frameworks for data privacy and cybersecurity issues that have been instituted around the world can vary substantially from jurisdiction to jurisdiction, are rapidly evolving and are likely to remain uncertain for the foreseeable future. In the United States, federal, state, and local governments have enacted data privacy and cybersecurity laws (including data breach notification laws, personal data privacy laws and consumer protection laws). For example, the California Privacy Rights Act, referred to as the CPRA, which updated the California Consumer Privacy Act of 2018, referred to as the CCPA, went into effect on January 1, 2023, and imposes obligations on certain businesses, service providers, third parties and contractors. These obligations include providing specific disclosures in privacy notices and granting California residents certain rights related to their personal data. The CCPA imposes statutory fines for non-compliance (up to $7,500 per violation). Other states have proposed privacy laws with similar compliance obligations. Internationally, most of the jurisdictions in which we operate have established their own data security and privacy legal frameworks with which we or our customers must comply. For example, in the European Economic Area, the General Data Protection Regulation, or GDPR, imposes stringent operational and governance requirements for companies that collect or process personal data of residents of the European Union and Iceland, Norway and Lichtenstein. The GDPR also provides for significant penalties for non-compliance, which can be up to four percent of annual worldwide "turnover" (a measure similar to revenues in the United States). Following the withdrawal of the United Kingdom from the European Union (i.e., Brexit), and the expiry of the Brexit transition period which ended on December 31, 2020, the European Union GDPR has been implemented in the United Kingdom, referred to as the U.K. GDPR. The U.K. GDPR sits alongside the U.K. Data Protection Act 2018, which implements certain derogations in the E.U. GDPR into English law. The requirements of the U.K. GDPR, which are (at this time) largely aligned with those under the E.U. GDPR, may lead to similar compliance and operational costs and potential fines. Some countries are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our services. In addition, under the GDPR and a growing number of other legislative and regulatory requirements globally, jurisdictions are adopting consumer, regulator and customer notification obligations and other requirements in the event of a data breach. The costs of compliance with, and other burdens imposed by, these laws and regulations may become substantial and may limit the use and adoption of our Taegis subscription solutions in new or existing locations, require us to change our business practices, impede the performance and development of our Taegis subscription solutions, lead to significant fines, penalties or liabilities for noncompliance with such laws or regulations, including through individual or class action litigation, or result in reputational harm. We also may be subject to claims of liability or responsibility for the actions of third parties with which we interact or upon which we rely in relation to various services, including, among others, vendors, and business partners.

Technology4 | 8.7%

Technology - Risk 1

Loss of our right or ability to use various third-party technologies could result in short-term disruptions to our business and may cause harm to our brand and reputation.

We rely on certain third-party vendors to provide technology to perform certain critical business functions, some of which are incorporated into our Taegis subscription solutions. We may seek to utilize additional third-party technologies in our Taegis subscription solutions, and we will continue to use technology to assist us as we operate our business. However, any unanticipated loss of our rights to use third-party or other technologies could result in business delays or hinder our ability to produce or deliver our Taegis subscription solutions until we identify, evaluate, and integrate equivalent technologies. If any of the technologies we license or purchase from others, or functional equivalents of these technologies, are no longer available to us or are no longer offered to us on commercially reasonable terms, then we may be required to either find another third-party vendor or develop these capabilities ourselves, which could result in increased costs to our business or cause delivery delays for Taegis subscription solutions. We also might have to limit the features available in our current or future Taegis subscription solutions and other cybersecurity offerings. If we fail to maintain or renegotiate some of our technology agreements with third parties or are unable to anticipate the loss of our rights to use such third-party technologies, we could face significant delays and diversion of resources in attempting to license and integrate other technologies with equivalent functions. Any inability to procure and implement suitable replacement technologies in a timely manner could adversely affect our business and results of operations by impeding delivery of our Taegis subscription solutions. In addition, any errors or defects in third-party technologies or any inability to utilize third-party technologies as intended, may negatively impact our ability to perform business activities or provide our Taegis subscription solutions to customers. Such errors, defects or vulnerabilities involving third-party technologies we utilize may also require public disclosure if we determine that they would constitute a material security incident under the SEC's cybersecurity disclosure rules. Where a disclosure is required to report a security incident involving the use of third-party technologies, our brand and reputation may be negatively impacted, which could further affect our business, results of operations and financial condition. Although we take steps to implement appropriate risk management controls over such third-party technologies, any failure to appropriately assess, test and mitigate the risks associated with the implementation of third-party technologies may cause delays in our business activities or delivery of our Taegis subscription solutions to customers, which could hinder our ability to restore operations in the event of a third-party failure.

Technology - Risk 2

If our Taegis subscription solutions do not interoperate with our customers' technology infrastructure, our Taegis subscription solutions may become less competitive, and our results of operations may be harmed.

Our Taegis subscription solutions were designed to be open without compromise, effectively interoperating with each customer's existing or future technology infrastructure, which often has different specifications, utilizes multiple protocol standards, deploys products and services from multiple security and other technology vendors, and contains products and services that were added over time. As a result, when problems occur in a customer's infrastructure or network, it may be challenging to identify the sources of these problems and avoid disruptions when we update our software or patch to defend against certain vulnerabilities. Ineffective interoperability may increase the risk of a successful cyber-attack or cause a service disruption in violation of our service level agreements, each of which may increase the risk of litigation, cause reputational harm, or reduce our revenue generation.

Technology - Risk 3

Real or perceived defects, errors, or vulnerabilities in our Taegis subscription solutions or real or perceived failure of our Taegis subscription solutions to prevent or detect threat actor activity could harm our reputation, cause us to lose customers and expose us to costly litigation.

Our Taegis subscription solutions are complex and may contain defects or errors that cannot be detected until after customer adoption. Such defects may cause our customers to be vulnerable to cyber-attacks, and hackers or other threat actors may misappropriate our customers' data or other assets or otherwise compromise their IT systems. Threat actors frequently change their tactics, techniques, and procedures to access or sabotage technology systems and networks, and attacks generally are not recognized until launched against a target. An advanced attack from a sophisticated threat actor could emerge that our Taegis subscription solutions are unable to detect or prevent. A security breach of a customer's proprietary information could result in significant legal and financial exposure to us, damage our reputation and cause customers to lose confidence in our Taegis subscription solutions, which may adversely affect our business. If a customer experiences a security breach after adopting our Taegis subscription solutions, even if our Taegis subscription solutions protected the customer from data theft or provided remediation, the customer still may be disappointed with our Taegis subscription solutions and could seek alternative cybersecurity offerings from a competitor. In addition, if any customer that is known to use our Taegis subscription solutions, especially a governmental entity or publicly traded company subject to the U.S. Securities and Exchange Commission's cybersecurity disclosure requirements, is the subject of a publicized cyber-attack, that customer or other current customers may seek to replace our Taegis subscription solutions with those provided by our competitors, regardless of whether the Taegis subscription solutions protected the customer from data theft and provided remediation. Further, even if a cyber-attack were to occur through a customer's security or network devices, applications, or endpoints that we are not contractually obligated to monitor, our reputation could be damaged if there is a misperception that Secureworks monitors all the affected customer's devices, applications, and endpoints. Any person that circumvents our security measures could misappropriate customer confidential information or other valuable property or disrupt the customer's operations. Because our Taegis subscription solutions provide and monitor information security and may protect valuable information, we still could face liability claims or claims for breach of service level agreements or product warranties. Provisions in our product agreements that limit our exposure to liability claims may not be enforceable in some circumstances or may not protect us fully against such claims and related costs. Alleviating any of these problems could require us to incur significant expense and result in interruptions to, and delays in, the delivery of our Taegis subscription solutions, which could cause us to lose existing or potential customers and damage our business and reputation.

Technology - Risk 4

Our use of open-source technology could require us in some circumstances to make the source code of our modifications to that technology available to the public, which could include source code of our proprietary technologies, restricting our ability to commercialize our cybersecurity offerings.

Some portions of our cybersecurity offerings and technologies incorporate open-source software licensed by its authors or by other third parties. To the extent that we use such software, we face risks relating to the scope and requirements of common open-source software licenses. Some of these open-source licenses contain requirements that we make available the source code for certain modifications or derivative works that we create based on the open-source software and that we license such modifications or derivative works under the terms of a particular open-source license or another license granting third parties certain rights of further use. If we combine our proprietary technology with open-source software in a certain manner, we could face periodic claims from third parties claiming ownership of, or demanding that we release, the open-source software or derivative works that we developed using such software, which could include our proprietary source code, or the third parties could seek to enforce the terms of the applicable open-source license. Our ability to commercialize our cybersecurity offerings or technologies incorporating open-source software may be restricted because, among other reasons, open-source license terms may be ambiguous and could result in unanticipated or uncertain obligations regarding our cybersecurity offerings, litigation, or loss of the right to use such software or the modifications or derivative works we develop based on such software. Therefore, there is a risk that the terms of these open-source licenses will be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our cybersecurity offerings utilizing such software. As a result, we may be required to seek licenses from third parties to continue offering certain cybersecurity offerings, re-engineer our technology to remove the open-source software or discontinue offering our certain cybersecurity offerings if re-engineering is not commercially reasonable.

Ability to Sell

Total Risks: 7/46 (15%)Below Sector Average

Competition1 | 2.2%

Competition - Risk 1

We face intense competition, including from larger companies, and may lack sufficient financial or other resources to maintain or improve our competitive position.

The market for our Taegis subscription solutions and other security consulting services is highly competitive, and we expect competition to intensify in the future from both established competitors and new market entrants. Increased competition may result in greater pricing pressure, reductions in profit margins, increases to sales and marketing expenses, replacement by newer or disruptive products or technologies including the increasing use of artificial intelligence within the cybersecurity industry, and risks to holding or increasing our market share. Many of our existing and potential competitors, particularly in the large enterprise market, enjoy substantial competitive advantages because of their longer operating histories, greater brand name recognition, larger customer bases, more extensive customer relationships, greater customer support resources, broader distribution relationships, more mature intellectual property portfolios, and greater financial and technical resources. Some of our competitors also have made strategic acquisitions or entered into partnerships or other tactical relationships to offer more comprehensive cybersecurity solutions than each competitor could offer individually. In addition, rapidly changing market conditions and significant technological advancements, partnerships, or acquisitions by our competitors, as well as continued market consolidation, may alter the market for our Taegis subscription solutions. Smaller innovative companies and large competitors making significant research and development investments could develop similar or superior products or services that compete with our Taegis security platform. Additionally, some of our larger competitors maintain broader and more diverse product and service offerings, which may lead customers to choose a competitor's bundled product or service offerings even if the competitor's security solutions have more limited functionality than our Taegis subscription solutions. These competitive pressures within our market could result in price reductions for our Taegis subscription solutions and other cybersecurity offerings, margin erosion, fewer orders, and loss of market share.

Demand1 | 2.2%

Demand - Risk 1

We generate a significant portion of our revenue from customers in the financial services industry, and changes within that industry, including new or altered compliance obligations or priorities, or an unfavorable review by the federal banking regulatory agencies could reduce demand for our Taegis subscription solutions and other cybersecurity offerings.

We derived approximately 20% of our revenue in fiscal 2024 from financial services institutions and expect to continue to derive a substantial portion of our revenue from customers in that industry. Changes in the industry, including new or altered compliance obligations or regulatory priorities, could adversely affect our revenue, profitability, and financial condition. Technology spending by financial services customers generally has fluctuated, and may continue to fluctuate, based on changing regulations, regulatory priorities and economic conditions, among other factors, including, but not limited to, restructured or reduced technology spending to improve a customer's profitability or financial risk profile or merger and acquisition activity within the financial industry, which may reduce our current and potential customer base, resulting in a smaller market for our Taegis subscription solutions. Some of our cybersecurity offerings have been deemed to achieve mission-critical functions within our financial institution customers who are regulated by one or more member agencies of the Federal Financial Institutions Examination Council, or the FFIEC. Accordingly, we are subject to periodic examination by the member agencies of the FFIEC. An unfavorable review of our processes and business operations could result in our financial institution customers not being allowed, or not choosing, to continue using our Taegis subscription solutions, which could adversely affect our revenue, financial condition, and results of operations.

Sales & Marketing4 | 8.7%

Sales & Marketing - Risk 1

Our sales cycles are long and unpredictable, and our sales efforts require considerable time and expense, which could adversely affect our results of operations.

Sales of our Taegis subscription solutions usually require lengthy sales cycles, which are typically three to nine months, but can exceed 12 months for larger customers. We spend substantial time, effort, and resources in our sales efforts without any assurance that our efforts will generate long-term contracts. Given current macroeconomic conditions, we may experience further lengthening of sales cycles for our Taegis subscription solutions. Sales to our customers can be complex and require us to educate our customers about our technical capabilities and the use and benefits of our Taegis subscription solutions. Even if we are successful in convincing a prospective customer that the Taegis subscription solutions will increase their defenses against cybersecurity threats, the customer may decide not to, or may delay its decision to, purchase the Taegis subscription solutions for various reasons, which may include budgetary constraints, timing concerns, uncertain economic conditions, unexpected administrative interruptions, or processing and other delays, all of which are outside of our control. If organizations, especially new potential customers, do not decide to adopt our Taegis subscription solutions, our sales efforts will not be economically recognized and revenue will not grow as quickly as anticipated, or at all, which would result in harm to our business, revenue, operating results, and financial condition.

Sales & Marketing - Risk 2

Our reputation and results of operations may be adversely affected by service level agreements with some of our customers that require us to provide them with credits for service failures or inadequacies.

We have agreements with certain customers that include commitments to providing them with our Taegis subscription solutions and other cybersecurity services at specified levels. If we are unable to meet these commitments, we may be obligated to extend service credits to those customers or the agreements may be terminated by the customer. The damages for failure to meet the service levels are specified in our service level agreements and generally are limited to the fees charged over the prior 12-month period. If disputed by the customer, however, such limits may not be upheld, and we may be required to pay damages that exceed such fees. Repeated or significant service failures or other inadequacies could adversely affect our reputation and results of operations.

Sales & Marketing - Risk 3

Failure to maintain high-quality customer service and support functions, including the quality of the services and support provided by our channel partners, could adversely affect our reputation and sales growth prospects.

Once our Taegis subscription solutions are deployed within our customers' networks, our customers depend on our knowledge and technical expertise to provide support services, including those provided by our channel partners in relation to the Taegis subscription solutions, to ensure the security of their IT systems. The potential for human error in connection with our customer service and support functions, or that of our channel partners, or the internal systems and networks that underpin our ability to provide the Taegis subscription solutions to our customers, even if promptly discovered and remediated, could disrupt customer operations, cause losses for customers, harm our internal operations, lead to regulatory fines or civil litigation, or damage our reputation. In addition, if we, or our channel partners, do not effectively assist our customers with the deployment of our Taegis subscription solutions, timely resolve post-deployment issues or provide effective ongoing support, our ability to retain existing customers, sell additional security solutions or subscriptions to existing customers could suffer and damage our reputation with potential customers. If we, or our channel partners, fail to meet the expectations of, or contractual obligations with, our existing customers, particularly larger enterprises that may require complex and sophisticated support, it may be more difficult to realize our strategy of selling higher-margin and differentiated cybersecurity offerings to those customers.

Sales & Marketing - Risk 4

An inability to expand our key distribution relationships could constrain the growth of our business.

We intend to continue strategically growing our business and domestic and international customer base through our channel partners, including distributors, resellers and managed security service providers. Approximately 23% of our revenue in fiscal 2024 was generated through our channel partners, which include referral agents, regional value-added resellers, trade associations, and managed security service providers. We assist these channel partners with selling our Taegis subscription solutions by providing training and other sales support, but such time, effort and expense may not result in increasing our revenue. Our channel partners may be unable to market, sell and support the Taegis subscription solutions successfully, or these partners may not be properly incentivized to sell our Taegis subscription solutions to end-users. Our inability to further develop or maintain these partnerships could reduce sales revenue of our Taegis subscription solutions. If we fail to manage our sales channels or partnerships effectively, our ability to sell our Taegis subscription solutions may be limited, adversely affecting our revenue growth and financial condition. Agreements with our partners generally are non-exclusive, and our partners may have more established relationships with one or more of our competitors. If our partners do not successfully market and sell our Taegis subscription solutions, if they choose to place greater emphasis on their own products or services or those offered by our competitors, if they are not properly incentivized to sell our Taegis subscription solutions, or if they fail to meet the expectations of our customers, our ability to expand our business and sell our Taegis subscription solutions may be negatively impacted. Our business also may suffer by losing a substantial number of our partners, failing to recruit additional partners, or partners reducing or delaying the sales of our Taegis subscription solutions. Even if we do expand relationships with our channel partners, gross margins from sales made by our partners are generally lower than gross margins to us from direct sales. In addition, sales by our partners are more likely to involve collections issues than direct sales, which may contribute to periodic fluctuations in our results of operations.

Brand / Reputation1 | 2.2%

Brand / Reputation - Risk 1

If we are unable to maintain and enhance our brand, our revenue and profitability could be adversely affected.

We believe that it is critical to maintain and enhance the Secureworks brand to grow our relationships with our existing and potential customers, channel partners, technology alliance partners, and employees in order to expand our revenue and profitability. However, our brand promotion activities may be unsuccessful. Successful promotion of our brand will depend on our marketing and public relations efforts, our ability to continue offering high-quality cybersecurity solutions and our ability to successfully differentiate our Taegis subscription solutions and other cybersecurity offerings from the services offered by our competitors. We believe our association with Dell has helped us to build relationships with many of our customers because of its globally recognized brand and the favorable market perception of the quality of its products. We have entered into a trademark license agreement with Dell Inc. under which Dell Inc. has granted us a non-exclusive, royalty-free worldwide license to use the trademark "DELL," solely in the form of "SECUREWORKS-A DELL COMPANY," in connection with our business and products, services and advertising and marketing materials related to our business. Under the agreement, our use of the Dell trademark in relation to any product, service or otherwise is subject to Dell Inc.'s prior review and written approval, which may be revoked at any time. The agreement is terminable at will by either party and, if terminated, we must cease all use of the Dell trademark in connection with any product, service, or material. If we discontinue our association with Dell in the future, we may be unable to attract new customers and channel partners.

Macro & Political

Total Risks: 4/46 (9%)Below Sector Average

Economy & Political Environment1 | 2.2%

Economy & Political Environment - Risk 1

Our revenue growth may vary due to global economic conditions, geopolitical uncertainty, and volatile financial markets, which may have an adverse effect on our business and financial condition.

Our company operates on a global basis directly and through our channel partners, serving thousands of customers worldwide. Accordingly, our business, revenue and operating results could be impacted by declining global economic conditions, geopolitical uncertainty and volatile financial markets affecting us, our channel partners, and our existing and potential customers. Impacts of the ongoing conflict between Russia and Ukraine or between Israel and Hamas (including the risk of potential escalation or geographic expansion), and geopolitical tensions between the United States and China could result in further domestic and international regulatory changes, import and export restrictions or other effects on international trade relations, hindering our ability to grow our customer base and continue servicing our existing customers. Economic weakness and uncertainty worldwide could reduce the demand for our Taegis subscription solutions, may prolong sales cycles or cause a reduction in spending by potential customers, or could make it difficult for us to accurately forecast revenue, gross margin, cash flows, and expenses, which could negatively impact our business, financial condition, and results of operations.

International Operations1 | 2.2%

International Operations - Risk 1

As we continue to expand the sale of our Taegis subscription solutions and other cybersecurity offerings to customers located outside the United States, our business increasingly will be susceptible to risks associated with international sales and operations.

We expect to increase our global presence through new or expanded relationships with local and regional strategic channel partnerships and potentially through acquisitions of other companies. International revenue, which we define as revenue contracted through non-U.S. entities, contributed approximately 37% of our total revenue in fiscal 2024. Operating in international markets requires significant management attention and financial resources and carries legal, regulatory and compliance risks. Our investments and use of other resources to establish operations and seek growth opportunities in other countries may not produce the expected levels of revenue or earnings. Conducting international operations subjects us to a variety of risks, including those described elsewhere in this section. Such risks could negatively affect our overall business, results of operations and financial condition.

Natural and Human Disruptions1 | 2.2%

Natural and Human Disruptions - Risk 1

Earthquakes, fires, power outages, floods, terrorist attacks, geopolitical and military conflicts, public health issues, and other catastrophic events could disrupt our business and ability to serve our customers and could have a material adverse effect on our business, supply chain, results of operations or financial condition.

A significant natural disaster, such as an earthquake, a fire, a flood or a significant power outage, geopolitical conflicts, such as the ongoing military action between Russia and Ukraine or between Israel and Hamas (including the risk of potential escalation or geographic expansion), increasing tensions between the United States and China, or a widespread public health issue including a pandemic such as COVID-19, could have a material adverse effect on our business, supply chain, results of operations or financial condition. We rely on public cloud providers to sustain our operations. While these public cloud providers are capable of sustaining our operations, a failure of these public cloud providers could disrupt our ability to serve our customers for a period of time. In addition, our ability to deliver our Taegis subscription solutions as agreed upon with our customers depends on the ability of our supply chain, manufacturing vendors or logistics providers to deliver products or perform services we have procured from them. If any natural disaster, terrorist attacks, war, geopolitical turmoil, civil unrest, or other catastrophic event, including widespread public health issues, impairs the ability of our vendors or service providers to provide timely support or disrupts our Taegis subscription solutions or other cybersecurity offerings, our ability to perform our customer engagements may suffer. Disruptions, such as those caused by COVID-19, resulted in restrictions on the ability of our employees or the employees of our customers, vendors, channel partners, or suppliers to travel, as well as closures of our facilities or the facilities of these third parties. Any expansion of hostilities into nearby countries related to the ongoing conflict between Russia and Ukraine may have a direct impact on our employees and operations in Romania as well as on the businesses of our customers, vendors and suppliers. Any restrictions or closures could affect our ability to sell our Taegis subscription solutions, develop and maintain customer relationships or render other security services, such as our consulting services, may adversely affect our ability to generate revenues or might lead to inadvertent breaches of contract by us or by our customers, channel partners, vendors or suppliers. While we did not experience a reduction in customer demand or lengthening in sales cycles during fiscal 2024 that we believe is attributable to COVID-19, in prior fiscal periods we did experience such reductions in demand and elongated sales cycles, which could again impact our results in future periods. Pandemics such as COVID-19 are impossible to predict in terms of extent and severity; therefore, should we encounter another pandemic, we might experience curtailed customer spending, delayed or deferred purchasing decisions, elongated sales cycles, and delays in receiving customer or partner payments. These effects, individually or in the aggregate, could have a material negative impact on our business and future financial results.

Capital Markets1 | 2.2%

Capital Markets - Risk 1

We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.

Our revenue and expenses denominated in foreign currencies are subject to fluctuations due to changes in foreign currency exchange rates. Although more of our sales contracts are denominated in U.S. dollars, our strategy to grow internationally will lead to more of our sales contracts being denominated in foreign currencies and to an increase in operating expenses incurred outside the United States. Because of significant volatility in foreign currency exchange rates, which has increased in recent periods, sales contracts that are denominated, or operating expenses that are incurred, in currencies other than in the U.S. dollar may negatively impact our financial condition and operating results. Geopolitical developments, including the ongoing conflict between Russia and Ukraine or between Israel and Hamas (including the risk of potential escalation or geographic expansion), trade tariff developments and international economic tensions between the United States and China, the strengthening of the U.S. dollar and increasing inflation could amplify the volatility of currency fluctuations and increase the real cost of our Taegis subscription solutions and other cybersecurity offerings to our customers outside the United States, which could adversely affect our non-U.S. sales and results of operations. While we do not currently use financial instruments to hedge against the risks associated with currency fluctuations, we may begin to use such instruments to partially mitigate, and increase the predictability of, the impact of fluctuations in net monetary assets denominated in foreign currencies. Any such hedges may not fully protect us against foreign currency risk.

Legal & Regulatory

Total Risks: 3/46 (7%)Below Sector Average

Regulation1 | 2.2%

Regulation - Risk 1

Governmental export or import controls or international sanctions could require additional compliance obligations or may limit our ability to compete in foreign markets.

Our cybersecurity solutions and technologies incorporate encryption technology that may be exported outside the United States only if we obtain an export license or qualify for an export license exception. Following the compliance obligations to ensure the legal export of our Taegis subscription solutions, other cybersecurity offerings and their underlying technologies may create delays in introducing our Taegis subscription solutions, other cybersecurity offerings and their underlying technologies into certain international markets or prevent certain customers from utilizing our solutions and technologies throughout their global infrastructure. Such compliance obligations could hinder our ability to export our Taegis subscription solutions, other cybersecurity offerings and their underlying technologies to some countries altogether. In addition, various countries regulate the import of our Taegis subscription solutions, other cybersecurity offerings and their underlying technologies and have enacted laws that may limit our ability to distribute, and our customers' ability to implement, such solutions, offerings, and technologies within those countries. New or modified export, import, or sanctions restrictions against certain persons, entities, regions, or countries (such as those imposed on Russia in response to the ongoing military conflict between Russia and Ukraine), changes to product classification procedures, or new or altered approaches to the enforcement or scope of existing regulations, could result in delayed adoption by new customers, or decreased use by existing customers, of our Taegis subscription solutions, other cybersecurity offerings and underlying technologies, loss of sales to potential multinational customers, and decreased revenue. Additionally, if we fail to comply with applicable export and import regulations or our sanctions compliance obligations, we may be subjected to fines or other penalties or be unable to export our Taegis subscription solutions, other cybersecurity offerings and their underlying technologies into other countries.

Taxation & Government Incentives2 | 4.3%

Taxation & Government Incentives - Risk 1

Tax matters may materially affect our financial position and results of operations.

Changes in United States and other global tax laws have impacted and will continue to impact our effective global tax rate, which may materially affect our financial position and results of operations. Further, organizations such as the Organisation for Economic Co-operation and Development have published action plans that, if adopted by countries where we do business,could increase our tax obligations in these countries. Because of the scale of our U.S. and international business activities, some of the applicable changes enacted or proposed, including those relating to cash movements, may increase our global effective tax rate and harm our business. For example, the Tax Cuts and Jobs Act of 2017 eliminates our ability to deduct research and development expenditures in the year incurred, requiring amortization in accordance with Internal Revenue Code Section 174. If this requirement remains effective without modification, it will materially increase our effective tax rate and reduce our operating cash flows. Further, portions of our operations are subject to a reduced tax rate or are tax free under various tax holidays, which periodically expire in whole or in part or may be terminated if certain conditions are not met. Although many of these holidays may be extended when certain conditions are met, we may not be able to meet such conditions. If the tax holidays are not extended, or if we fail to satisfy the conditions of the reduced tax rate, our effective tax rate could increase in the future.

Taxation & Government Incentives - Risk 2

Upon our deconsolidation from the Dell Technologies affiliated tax group, we may be unable to collect reimbursements or fully utilize related tax assets, and we might be obligated to pay to Dell Technologies certain previously realized or future tax benefits, which may adversely affect our results of operations and financial condition.

We may have payment obligations or be unable to collect reimbursements from Dell Technologies upon the deconsolidation of our Company since we will become ineligible for inclusion in the Dell Technologies affiliated tax group, which may have adversely effect on our cash flow and liquidity, the severity of which depends on the magnitude of such payments. On August 1, 2015, we entered into a tax matters agreement, or TMA, with Dell Technologies whereby, in general, Dell Technologies would reimburse us for any amounts by which our tax assets reduce the amount of tax liability owed by the Dell Technologies affiliated tax group. Under the TMA, as amended and restated in June 2023, upon deconsolidation, our Company will only fully utilize our income tax assets to the extent we generate sufficient income. On or about March 13, 2024, Dell's economic ownership of our Company dropped below 80%, and Dell Technologies can no longer utilize our tax assets for which we currently receive reimbursement. If we are unable to generate sufficient taxable income to fully utilize our tax assets, our operations and financial condition could be adversely affected. In addition, under the TMA, as amended and restated in June 2023, upon deconsolidation for tax purposes from the Dell Technologies affiliated tax group, we may be required to pay Dell Technologies in cash amounts for the benefits we previously realized under the TMA and for certain benefits Dell Technologies will no longer be receiving because of the allocation of taxes and tax assets upon the deconsolidation. The amounts that we may have to pay to Dell Technologies could reflect benefits that we have already realized or may relate to benefits that we will not realize until future periods. Such payments, if significant, could materially and adversely affect our results of operations and financial condition.

Production

Total Risks: 1/46 (2%)Below Sector Average

Employment / Personnel1 | 2.2%

Employment / Personnel - Risk 1

We rely on personnel with extensive information security expertise, and the loss of, or our inability to attract and retain, qualified personnel in this highly competitive labor market could harm our business.

Our future success depends on our ability to identify, attract, retain, and motivate qualified personnel. We depend on continued contributions by Wendy K. Thomas, our Chief Executive Officer, and our other senior executives, who have extensive information security expertise. From time to time, there may be changes to our senior management team or other key personnel resulting from termination, departure, or retirement. The temporary or permanent loss of any of these executives or key personnel could harm our business and distract from the responsibilities of those who must perform the responsibilities of lost executives or key employees or actively participate in the search for personnel to replace them. We also employ experts in information security, software coding, data science and advanced mathematics to staff our Counter Threat Unit and to support and enhance our Taegis security platform. In addition, we currently employ, and seek to further employ, individuals with cybersecurity sales expertise to continue growing revenue attributable to our Taegis subscription solutions. We face intense competition, both within and outside of the cybersecurity industry, to hire and retain individuals with the requisite expertise, including from companies that have greater resources than we do. As a result of this competition, we may be unable to attract and retain suitably qualified individuals at acceptable compensation levels who have the technical, operational, sales, and/or managerial knowledge and experience to meet our needs. Any failure by us to attract and retain qualified individuals could adversely affect our competitive market position, revenue, financial condition, and results of operations.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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