Managements Discussion and Analysis | For the three months ended December 31, 2023 and
2022
The Company and certain of its clients, contractors, business partners, vendors and other third parties use open-source
services, which can entail risk to end-user security. These open source projects are often created and maintained by volunteers, who do not always have adequate resources and employees for incident response
and proactive maintenance even as their projects are critical to the internet economy. Vulnerabilities discovered in these open source services can be exploited by attackers, which could compromise our system infrastructure and/or lead to a loss or
breach of personal and/or proprietary information, financial loss, and other irreversible harm.
While our liability insurance policy covers cyber risks, there is no
assurance that such insurance coverage will be sufficient in type or amount to cover the costs, damages, liabilities or losses that can result from security breaches, cyber-attacks and other related breaches. As the cyber threat landscape evolves,
and CGI and our clients increase our digital footprint, we may find it necessary to make additional significant investments to protect data and infrastructure. Occurrence of any of the aforementioned security threats could expose the Company, our
clients or other third parties to potential liability, litigation, and regulatory action, in addition to loss of client confidence, loss of existing or potential clients, loss of sensitive government contracts, damage to brand and reputation, and
other financial loss.
Damage to our reputation may harm our ability to obtain new clients and retain our existing clients.
CGIs reputation as a capable and trustworthy service provider and long-term business partner is key to our ability to compete effectively in the market for IT
services. The nature of our operations exposes us to the potential loss, unauthorized access to, or destruction of our clients information, as well as temporary service interruptions. Depending on the nature of the information or services,
such events may have a negative impact on how the Company is perceived in the marketplace. Under such circumstances, our ability to obtain new clients and retain existing clients could suffer with a resulting impact on our revenue and net earnings.
Our inability to meet regulatory requirements and/or stakeholders expectations of disclosure, management and implementation of ESG initiatives and standards,
could have an adverse effect on our business.
Perceptions with respect to environmental, social and governance approaches have changed and certain
shareholders, investors, clients, employees and other stakeholders agree that these issues have become a current and imminent concern. As such, perceptions of our operations held by our stakeholders may depend, in part, on the environmental, social
and governance (ESG) initiatives and standards that we have chosen to implement, and whether or not we meet them.
We are subject to evolving regulatory
requirements and have set a number of ambitious ESG commitments and targets to monitor our ESG performance and align our strategic imperatives, including without limitation, our commitment to net-zero carbon
emissions by 2030 as defined under Scope 1, 2, and the business travel of Scope 3 of the greenhouse gas protocol. Our ability to meet these requirements and to achieve these commitments and targets depends on many factors and is subject to many
risks that could cause our assumptions or estimates to be inaccurate and cause actual results or events to differ materially from those expressed in, or implied by, these commitments and targets. Failure to effectively manage and sufficiently report
ESG matters could lead to negative business, financial, legal and regulatory consequences for the Company.
Our revenue and profitability may decline and the
accuracy of our financial reporting may be impaired if we fail to design, implement, monitor and maintain effective internal controls.
Due to the inherent
limitations of internal controls including the circumvention or overriding of controls, or fraud, there can only be reasonable assurance that the Companys internal controls will detect and prevent a misstatement. If the Company is unable to
design, implement, monitor and maintain effective internal controls throughout its different business environments, the efficiency of our operations might suffer, resulting in a decline in revenue and profitability, and the accuracy of our financial
reporting could be impaired.
Future funding requirements may affect our business and growth opportunities and we may not have access to favourable financing
opportunities in the future.
The Companys future growth is contingent on the execution of its business strategy, which, in turn, is dependent on its
ability to grow the business organically as well as through business acquisitions. In the event we would need to raise additional funds