Oriental Shiraishi Corporation

Most of the Group's business depends on public works ordered by national and local governments and expressway companies. If public works spending is reduced beyond expectations, the Group may be unable to secure targeted orders, and the resulting decline in sales could affect business performance. As a countermeasure, the head office holds weekly sales strategy meetings to share information on order status, confirm order-taking activities at each branch, and provide instructions on priority business areas.

If material prices and labor costs rise to levels that are difficult to reflect in contract amounts, construction costs will increase, reducing profit and potentially affecting business performance. The Group checks price trends by collecting quotations at the time of bidding, and for material price surges during construction, shares information with the client and negotiates reflecting the increase in the contract amount.

If the materialization of geopolitical risk or supply chain disruption causes delays or difficulties in procuring key construction materials and equipment, this could extend construction periods, generate additional costs, and damage trust with clients, potentially having a material impact on business performance and business development. The Group considers this a particularly important risk and is strengthening its management of procurement risk.

If a large-scale accident occurs, loss of public trust, administrative sanctions such as suspension of designation by clients, and damage compensation could result in a significant impact, including loss of order opportunities, reduced profit, and increased financial burden. The Group prioritizes safety above all else and works to prevent accidents, but given the nature of construction sites, it is difficult to completely eliminate such risk.

If significant liability for contract non-conformity or product liability arises in the manufacturing and construction of products, this could affect business performance through substantial repair costs, construction delays, and reduced order opportunities due to loss of credibility. The Group pays close attention to quality control and takes every precaution, but it is difficult to completely eliminate such risk.

In private contracted construction work, if a business partner falls into financial distress before payment for construction work is received, this could affect business performance and financial position through recording of bad debt losses that reduce profit and deterioration of cash flow due to the inability to collect receivables. The Group takes measures such as credit management, information gathering, and receivables management, but sudden changes in a business partner's financial condition may be difficult to address.

If current interest rates rise more than expected, the increase in fund-raising costs could affect business performance and financial position. The Group strives to maintain and strengthen its financial soundness, primarily through intra-group fund management, and works to reduce interest burdens by reviewing borrowing periods from financial institutions.

The Group is subject to legal regulations such as the Construction Business Act, and in the event of any violation of laws, administrative or criminal sanctions and damages from litigation could arise, potentially affecting business performance and financial position through reduced order opportunities and increased financial burden. The Group treats legal compliance as a top priority and works to instill awareness through compliance education.

In handling information on construction projects, management, technology, intellectual property, and personal information, if information is leaked or lost due to external cyberattacks or employee negligence, this could affect business performance through reputational damage, damages, and recovery costs. In addition to establishing information security regulations and providing employee training, the Group has taken measures such as strengthening endpoint security and introducing managed security services.

Based on the TCFD framework, the Group identifies risks by classifying them into transition risks and physical risks. Transition risks include price surges in energy, materials, and equipment associated with CO2 reduction and tightening of regulations, while physical risks include the inability to work on-site due to weather and environmental changes, disasters, and health impacts on workers. These risks could have wide-ranging effects on construction costs, construction periods, and order opportunities in the construction business.