Canadian Pacific Kansas City (CP) risk factors, FY2025 10-K

Business and Operational Risks

1. 01As a common carrier, the Company is required by law to transport dangerous goods and hazardous materials, which could expose the Company to significant costs and claims
2. 02The Company faces competition from other transportation providers and failure to compete effectively could adversely affect financial results
3. 03The operations of carriers with which the Company interchanges may adversely affect operations
4. 04The Company may be affected by acts of terrorism, war, or risk of war
5. 05The Company is affected by fluctuating fuel prices
6. 06The Company relies on technology and technological improvements to operate its business

Human Capital Risks

1. 07The availability of qualified personnel could adversely affect the Company's operations
2. 08Strikes or work stoppages adversely affect the Company's operations

Legal and Regulatory Risks

1. 09The Company is subject to significant governmental legislation and regulation across different jurisdictions over commercial, operating and environmental, climate, sustainability and other matters. The requirements and expectations of regulators and stakeholders continue to evolve and diverge, and our ability to meet these requirements and expectations may have a material adverse impact on our results of operations
2. 10The Company is subject to environmental laws and regulations that may result in significant costs
3. 11The Company is subject to claims and litigation that could result in significant expenditures

Supply Chain Risks

1. 12Disruptions within the supply chain could negatively affect the Company's operational efficiencies and increase costs
2. 13The Company is dependent on certain key suppliers of core railway equipment and materials that could result in increased price volatility or significant shortages of materials, which could adversely affect results of operations, financial condition, and liquidity

Risks Related to the Kansas City Southern Transaction

1. 14The Company may fail to realize the anticipated cost savings, growth opportunities and synergies, and other benefits anticipated from the acquisition of KCS and is subject to continuing obligations under the STB’s final decision, which could adversely affect the Company’s business

Risks Related to Operations in Mexico

1. 15The Concession granted to CPKCM from the Mexican government is subject to revocation or termination in certain circumstances, which would prevent CPKCM from conducting rail operations under the Concession and would have a material adverse effect on the Company’s results of operations
2. 16The Company’s ownership of CPKCM and operations in Mexico subject it to Mexican economic and political risks30% rewritten
3. 17Downturns in the United States economy or in trade between the United States and Asia or Mexico and fluctuations in the peso-dollar exchange rates could have material adverse effects on the Company’s results of operations

Physical Risks

1. 18Changing climate conditions, extreme weather events or natural disasters could result in significant business interruptions and costs to the Company76% rewritten

Reputational Risks

1. 19The Company has established a GHG emissions reduction target, and may establish updated or new targets in the future to guide the implementation of the Company's carbon reduction efforts. The Company's inability to achieve our sustainability goals, including the current GHG emissions reduction target or any future targets we may establish could negatively impact the Company, including both our reputation and financial results33% rewritten

Policy and Regulatory Risks

1. 20An escalating price on carbon emissions could materially increase direct costs related to energy purchases and indirect expenses related to purchased goods and materials, required to operate our business64% rewritten

Market Risks

1. 21A number of the sectors the Company serves have the potential to be significantly impacted by climate-related transitional risks, including increased regulations, technology changes, and shifts in consumer preferences25% rewritten

Global Risks

1. 22Changes in global economic conditions, international trade policies, and public health conditions could negatively affect demand for commodities and other freight transported by the Company37% rewritten

Liquidity Risks

1. 23The state of capital markets could adversely affect the Company's liquidity
2. 24The Company's indebtedness may pose risks and/or intensify existing risks35% rewritten