Climate Change Labour Terrorist Acts Execution of Strategy Value Investing Ongoing changes to the physical climate in which we operate may have an impact on our businesses. In particular, changes in  weather patterns or extreme weather (such as floods, hurricanes and other storms) may impact hydrology and/or wind levels,  thereby influencing power generation levels or affect other of our businesses or damage our assets. Further, rising sea levels  could, in the future, affect the value of any low-lying real property that we may own or develop or result in the imposition of  new property taxes. Climate change may also give rise to changes in regulations and consumer sentiment that could impact other  areas of our operations. Climate change regulation at provincial or state, federal and international levels could have an adverse  effect on our business, financial position, results of operations or cash flows. A portion of the workforce in our operations is unionized. If we are unable to negotiate acceptable collective bargaining  agreements with any of our unions, as existing collective bargaining agreements expire we could experience a work stoppage,  which could result in significant disruption in the affected operations, higher ongoing labour costs and restrictions on our ability  to maximize the efficiency of our operations, all of which could have an adverse effect on our financial results.  In addition, we face competition in connection with the attraction and retention of qualified employees. Our ability to continue  to compete effectively in our businesses will depend upon our ability to attract new employees and retain and motivate our  existing employees. If we are unable to attract and retain qualified employees this could limit our ability to compete successfully  and achieve our business objectives, which could negatively impact our business, financial condition and results of operations. Our commercial office portfolio is concentrated in large metropolitan areas, some of which have been or may be perceived to be  threatened by terrorist attacks. Furthermore, many of our properties consist of high-rise buildings, which may also be subject to  this actual or perceived threat. The perceived threat of a terrorist attack could negatively impact our ability to lease office space  in our real estate portfolio. Renewable energy and infrastructure assets, such as roads, railways, power generation facilities and  ports, may also be targeted by terrorist organizations who seek to disrupt the backbone of Western economies. A terrorist act  affecting us could have an adverse effect on our operating results and cash flows. Any damage or business interruption costs as a  result of uninsured or underinsured acts of terrorism could result in a material cost to us and could adversely affect our business,  financial condition or results of operation. Adequate terrorism insurance may not be available at rates we believe are reasonable  in the future. All of the risks indicated in this paragraph could potentially be heightened by foreign policy decisions of the U.S.  and other influential countries or general political conditions.  Further, our information technology systems may be subject to cyber terrorism, intended to obtain unauthorized access to our  proprietary information, destroy data or disable, degrade or sabotage our systems, often through the introduction of computer  viruses, cyberattacks and other means, and could originate from a wide variety of sources, including unknown third parties  outside the firm. Although we have implemented measures to ensure system integrity, there can be no assurance that these  measures will provide adequate protection. If our information systems are compromised do not operate properly or are disabled,  we could suffer financial loss and/or a disruption in one or more of our businesses. This could have a negative impact on our  operating results and cash flows, or result in reputational damage. The successful execution of our value investment strategy is uncertain as it requires suitable opportunities, careful timing and  business judgment, as well as the resources to complete asset purchases and restructure them as required, notwithstanding  difficulties experienced in a particular industry. Our approach to investing entails adding assets to our existing businesses when the competition for assets is weakest, typically  when depressed economic conditions exist in the market relating to a particular entity or industry. However, there is no certainty  that we will be able to identify suitable or sufficient opportunities that meet our investment criteria and acquire additional  high-quality assets at attractive prices to supplement our growth. Conversely, overly favourable economic sentiment can limit  the number of attractive investment opportunities and thereby restrict our ability to increase assets under management and  avail ourselves of the related benefits. Competition from other investors may significantly increase the purchase price of target  assets or prevent us from completing an acquisition. We may be unable to finance acquisitions on favourable terms, or newly  acquired assets and businesses may fail to perform as well or as quickly as expected. Investments in companies or assets that are  experiencing significant financial or business difficulties are subject to a risk of poor performance or loss. We may fail to value  opportunities accurately or to consider all relevant facts that may be necessary or helpful in evaluating an opportunity, or we may  underestimate the costs necessary to bring an acquisition up to standards established for its intended market position or be unable  to quickly and effectively integrate new acquisitions into our existing operations. We may be required to sell a business before it  has realized our expected level of returns. If we are unable to realize the benefits we expect to achieve as a result of acquisitions,  our operating results and cash flows may be less than expected. 64 BROOKFIELD ASSET MANAGEMENT 