Table of Contents However, a breakdown in existing controls and procedures around the Company’s cybersecurity environment may prevent Arconic from detecting, reporting or responding to cyber incidents in a timely manner and could have a material adverse effect on the Company’s financial condition or the market price of its securities. Arconic may be unable to develop innovative new products or implement technology initiatives successfully. Arconic’s competitive position and future performance depends, in part, on the Company’s ability to: Arconic is working on new developments for a number of strategic projects, including advanced alloy development, engineered finishes and product design, rolling technology, and other advanced manufacturing technologies. While Arconic intends to continue to develop innovative new products and services, it may not be able to successfully differentiate its products or services from those of its competitors or match the level of research and development spending of its competitors, including those developing technology to displace Arconic’s current products. In addition, Arconic may not be able to adapt to evolving markets and technologies or achieve and maintain technological advantages. There can be no assurance that any of Arconic’s new products or services, development programs or technologies will be commercially adopted or beneficial to Arconic. Arconic could be adversely affected by reductions in defense spending. Arconic may face challenges to its intellectual property rights which could adversely affect the Company’s reputation, business and competitive position. Arconic’s products are used in a variety of military applications, including military aircraft and armored vehicles. Although many of the programs in which Arconic participates extend several years, they are subject to annual funding through congressional appropriations. Changes in military strategy and priorities, or reductions in defense spending, may affect current and future funding of these programs and could reduce the demand for Arconic’s products, which could adversely affect Arconic’s business, financial condition or results of operations. Arconic owns important intellectual property, including patents, trademarks, copyrights and trade secrets. The Company’s intellectual property plays an important role in maintaining Arconic’s competitive position in a number of the markets that the Company serves. Arconic’s competitors may develop technologies that are similar or superior to Arconic’s proprietary technologies or design around the patents Arconic owns or licenses. Despite its controls and safeguards, Arconic’s technology may be misappropriated by its employees, its competitors or other third parties. The pursuit of remedies for any misappropriation of Arconic intellectual property is expensive and the ultimate remedies may be deemed insufficient. Further, in jurisdictions where the enforcement of intellectual property rights is less robust, the risk of misappropriation of Arconic intellectual property increases, despite efforts the Company undertakes to protect it. Developments or assertions by or against Arconic relating to intellectual property rights, and any inability to protect or enforce Arconic’s rights sufficiently, could adversely affect Arconic’s business and competitive position. A decline in Arconic’s financial performance or outlook or a deterioration in its credit profile could negatively impact the Company’s access to capital markets, reduce its liquidity and increase its borrowing costs. Arconic has significant capital requirements and depends, in part, upon the issuance of debt to fund its operations and contractual commitments and pursue strategic acquisitions. A decline in the Company’s financial performance or outlook due to internal or external factors could affect the Company’s access to, and the availability or cost of, financing on acceptable terms and conditions. There can be no assurance that Arconic will have access to the global capital market on terms the Company finds acceptable. Limitations on Arconic’s ability to access the global capital markets, a reduction in the Company’s liquidity or an increase in borrowing costs could materially and adversely affect Arconic’s ability to maintain or grow its business, which in turn may adversely affect its financial condition and results of operations. A downgrade of Arconic’s credit ratings could limit Arconic’s ability to obtain future financing, increase its borrowing costs, increase the pricing of its credit facilities, adversely affect the market price of its securities, 20 • identify and evolve with emerging technological and broader industry trends in Arconic’s target end-markets; • identify and successfully execute on a strategy to remain an essential and sustainable element of its customers’ supply chains; • fund, develop, manufacture and bring innovative new products and services to market quickly and cost-effectively; • monitor disruptive technologies and understand customers’ and competitors’ abilities to deploy those disruptive technologies; and • achieve sufficient return on investment for new products based on capital expenditures and research and development spending.