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Risks
1. Regulatory Risk: AEP operates in an industry that is highly regulated by the federal government, state governments, and other regulatory agencies. Its success is dependent on its ability to comply with the rules of these agencies and any changes in regulations could significantly impact the company's profitability.
2. Competition Risk: Due to deregulation within the industry, AEP operates within a highly competitive environment. To remain competitive, AEP must continue to provide innovative solutions and reliable service to its customers.
3. Financial Risk: AEP's debt levels may impact its ability to respond to changing market conditions. Its operation is subject to conditions in the capital market, and if it is unable to meet its financial obligations, its costs and cash flow could become constrained.
4. Environmental Risk: AEP activities, such as the burning of fossil fuels, require them to manage their environmental performance and emissions to comply with state and federal regulations. Failing to comply with such regulations could pose an environmental risk and result in expensive fines.
5. Cybersecurity Risk: AEP's exposure to cyberattacks could have a significant impact on its infrastructure and operations. Consequently, the company must take steps to protect its data and systems from external, third-party and internal threats.