Table of Contents The Company Depends on Skilled Employees and Could Be Impacted by a Shortage of Critical Skills: Much of the  future success of the company depends on the continued service, availability and integrity of skilled employees,  including technical, marketing and staff resources. Skilled and experienced personnel in the areas where the  company competes are in high demand, and competition for their talents is intense. Changing demographics and  labor work force trends may result in a shortage of or insufficient knowledge and skills. In addition, as global  opportunities and industry demand shifts, realignment, training and scaling of skilled resources may not be  sufficiently rapid or successful. Further, many of IBM’s key employees receive a total compensation package that  includes equity awards. Any new regulations, volatility in the stock market and other factors could diminish the  company’s use or the value of the company’s equity awards, putting the company at a competitive disadvantage. The Company’s Business Could Be Impacted by Its Relationships with Critical Suppliers: IBM’s business employs  a wide variety of components (hardware and software), supplies, services and raw materials from a substantial  number of suppliers around the world. Certain of the company’s businesses rely on a single or a limited number of  suppliers, including for server processor technology for certain semiconductors. Changes in the business condition  (financial or otherwise) of these suppliers could subject the company to losses and affect its ability to bring products  to market. Further, the failure of the company’s suppliers to deliver components, supplies, services and raw  materials in sufficient quantities, in a timely manner, and in compliance with all applicable laws and regulations  could adversely affect the company’s business. In addition, any defective components, supplies or materials, or  inadequate services received from suppliers could reduce the reliability of the company’s products and services and  harm the company’s reputation. Product and Service Quality Issues Could Impact the Company’s Business and Operating Results: The company  has rigorous quality control standards and processes intended to prevent, detect and correct errors, malfunctions  and other defects in its products and services. If errors, malfunctions, defects or disruptions in service are  experienced by customers or in the company’s operations there could be negative consequences that could impact  customers’ business operations and harm the company’s business’s operating results. The Company Could Be Impacted by Its Business with Government Clients: The company’s customers include  numerous governmental entities within and outside the U.S., including the U.S. Federal Government and state and  local entities. Some of the company’s agreements with these customers may be subject to periodic funding approval.  Funding reductions or delays could adversely impact public sector demand for our products and services. Also, some  agreements may contain provisions allowing the customer to terminate without cause and providing for higher  liability limits for certain losses. In addition, the company could be suspended or debarred as a governmental  contractor and could incur civil and criminal fines and penalties, which could negatively impact the company’s  results of operations, financial results and reputation. The Company’s Reliance on Third Party Distribution Channels and Ecosystems Could Impact Its Business: The  company offers its products directly and through a variety of third party distributors, resellers and ecosystem  partners. Changes in the business condition (financial or otherwise) of these distributors, resellers and ecosystem  partners could subject the company to losses and affect its ability to bring its products to market. As the company  moves into new areas, distributors, resellers and ecosystem partners may be unable to keep up with changes in  technology and offerings, and the company may be unable to recruit and enable appropriate partners to achieve  growth objectives. In addition, the failure of third party distributors, resellers and ecosystem partners to comply with  all applicable laws and regulations may prevent the company from working with them and could subject the company  to losses and affect its ability to bring products to market. Cybersecurity and Privacy Considerations Could Impact the Company’s Business: There are numerous and  evolving risks to cybersecurity and privacy, including risks originating from intentional acts of criminal hackers,  hacktivists, nation states and competitors; from intentional and unintentional acts of customers, contractors,  business partners, vendors, employees and other third parties; and from errors in processes or technologies, as well  as the risks associated with an increase in the number of customers, contractors, business partners, vendors,  employees and other third parties working remotely as a result of the COVID-19 pandemic. Computer hackers and  others routinely attack the security of technology products, services, systems and networks using a wide variety of  methods, including ransomware  7 Risks Related to Cybersecurity and Data Privacy