2016 Annual Report for Norwegian Cruiseline Holdings - 21

Breaches in data security or other disturbances to our information technology and other networks could impair our operations and have a material
adverse impact on our business, financial condition and results of operations.
The integrity and reliability of our information technology systems and other networks are crucial to our business operations. Disruptions to these
networks could impair our operations and have an adverse impact on our financial results and negatively affect our reputation and customer demand. In
addition, certain networks are dependent on third-party technologies, systems and service providers for which there is no certainty of uninterrupted
availability. Among other things, actual or threatened natural disasters (e.g., hurricanes, earthquakes, tornadoes, fires, floods) or similar events,
information systems failures, computer viruses, denial of service attacks and other cyber-attacks may cause disruptions to our information technology,
telecommunications and other networks. While we have and continue to invest in business continuity, disaster recovery, data restoration plans and data
and information technology security, we cannot completely insulate ourselves from disruptions that could result in adverse effects on our operations and
financial results. We carry limited business interruption insurance for certain shoreside operations, subject to limitations, exclusions and deductibles.
We have also made significant investments in our information technology systems to optimize booking procedures, enhance the marketing power of our
websites and control costs. Any unauthorized use of our information systems to gain access to sensitive information, corrupt data or create general
disturbances in our operations systems could impair our ability to conduct business and damage our reputation. If our security systems were breached,
we could be exposed to cyber-related risks and malware, and credit card and other sensitive data could be at risk. For example, in the processing of our
guest transactions and as part of our ordinary business operations, we and certain of our third-party service providers collect, process, transmit and store
a large volume of personally identifiable information, including email addresses and home addresses and financial data such as credit card information.
The security of the systems and network where we and our service providers store this data is a critical element of our business, and these systems and
our network may be vulnerable to computer viruses, hackers and other security issues. We cannot assure you that the precautions we have taken to avoid
an unauthorized incursion of our information systems are either adequate or implemented properly to prevent a data breach and its adverse financial and
reputational consequences to our business. We are also subject to laws relating to privacy of personal data. The compromise of our information systems
resulting in the loss, disclosure, misappropriation of or access to the personally identifiable information of our guests, prospective guests or employees
could result in governmental investigation, civil liability or regulatory penalties under laws protecting the privacy of personal information, any or all of
which could disrupt our operations and materially adversely affect our business. Additionally, any material failure by us or our service providers to
maintain compliance with the Payment Card Industry security requirements or to rectify a data security issue may result in fines and restrictions on our
ability to accept credit cards as a form of payment.
In the event of a data security breach of our systems and/or third-party systems, we may incur costs associated with the following: breach response,
notification, forensics, regulatory investigations, public relations, consultants, credit identity monitoring, credit freezes, fraud alert, credit identity
restoration, credit card cancellation, credit card reissuance or replacement, regulatory fines and penalties, vendor fines and penalties, legal fees and
damages. Denial of service attacks may result in costs associated with, among other things, the following: response, forensics, public relations,
consultants, data restoration, legal fees and settlement. In addition, data security breaches or denial of service attacks may cause business interruption,
information technology disruption, disruptions as a result of regulatory investigation, digital asset loss related to corrupted or destroyed data, damage to
our reputation, damages to intangible property and other intangible damages, such as loss of consumer confidence, all of which could impair our
operations and have an adverse impact on our financial results.
Epidemics and viral outbreaks could have an adverse effect on our business, financial condition and results of operations.
Public perception about the safety of travel and adverse publicity related to passenger or crew illness, such as incidents of viral illnesses, stomach flu or
other contagious diseases, may impact demand for cruises and result in cruise cancellations and employee absenteeism. If any wide-ranging health scare
should occur, our business, financial condition and results of operations would likely be adversely affected.
Adverse incidents involving cruise ships may adversely affect our business, financial condition and results of operations.
The operation of cruise ships carries an inherent risk of loss caused by adverse weather conditions and maritime disasters, including, but not limited to,
oil spills and other environmental mishaps, fire, mechanical failure, collisions, human error, war, terrorism, piracy, political action, civil unrest and
insurrection in various countries and other circumstances or events. Any such event may result in loss of life or property, loss of revenue or increased
costs. The operation of cruise ships also involves the risk of other incidents at sea or while in port, including missing guests, inappropriate crew or
passenger behavior and onboard crimes, which may bring into question passenger safety, may adversely affect future industry performance and may lead
to litigation against us. Although we place passenger safety as the highest priority in the design and operation of our fleet, we have experienced
accidents and other incidents involving our cruise ships and there can be no assurance that similar events will not occur in the future. It is possible that
we could be forced to cancel a cruise or a series of cruises due to these factors or incur increased port-related and other costs resulting from such adverse
events. Any such event involving our cruise ships or other passenger cruise ships may adversely affect guests' perceptions of safety or result in increased
governmental or other regulatory oversight. An adverse judgment or settlement in respect of any of the ongoing claims against us may also lead to
negative publicity about us. Anything that damages our reputation (whether or not justified), including adverse publicity about passenger safety, could
have an adverse impact on demand, which could lead to price discounting and a reduction in our sales and could adversely affect our business, financial
condition and results of operations. If there is a significant accident, mechanical failure or similar problem involving a ship, we may have to place a ship
in an extended Dry-dock period for repairs. This could result in material lost revenue and/or expenditures.
Changes in fuel prices and/or other cruise operating costs would impact the cost of our cruise ship operations.
Fuel expense is a significant cost for our Company. Future increases in the cost of fuel globally or regulatory requirements which require us to use more
expensive types of fuel would increase the cost of our cruise ship operations. In addition, we could experience increases in other cruise operating costs
due to market forces and economic or political instability beyond our control. Despite any fuel hedges we are currently a party to, or may enter into in
the future, increases in fuel prices or other cruise operating costs could have a material adverse effect on our business, financial condition and results of
operations if we are unable to recover these increased costs through price increases charged to our guests.
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Table of Contents for the Digital Edition of 2016 Annual Report for Norwegian Cruiseline Holdings
