TOA CORPORATION

Although the company strives for thorough quality control in construction work, if damages arise from liability for non-conformity with contracts or product liability, this could have a material impact on business performance and social credibility. As countermeasures, the company conducts pre-construction review meetings to confirm issues in advance, patrols during construction, and internal inspections at completion, and thoroughly shares trouble case studies to prevent recurrence.

If construction profitability deteriorates due to soaring prices of construction materials and energy, this could affect business performance. In recent market conditions, surging prices of materials and energy have become chronic, becoming a factor destabilizing profitability. As countermeasures, the company is working to build a stable procurement system with awareness of the entire supply chain, strengthen relationships with suppliers, thoroughly manage accurate costs, and implement early purchasing.

Since construction work spans a long period from contract to completion and delivery, with large payments made at the time of delivery, if the client's credit risk materializes, this could affect the financial position due to inability to recover funds. Additionally, if subcontractors fall into credit difficulties, this may hinder the progress of construction work. As countermeasures, the company thoroughly operates its crisis management manual, conducts corporate research, and manages credit through daily information gathering.

Uncertainties arising from fluctuations in the value of held assets such as real estate and securities, impacts on the liability structure due to changes in the funding environment, fluctuations in interest rates and foreign exchange rates, and tax system revisions may affect financial position, business performance, and cash flow. As countermeasures, the company conducts financial management based on the balance of assets and liabilities, regularly grasps and evaluates held assets, secures stable financing methods, and appropriately manages interest rate and foreign exchange fluctuations.

Amid continuing labor shortages due to the declining birthrate, aging population, and fewer new entrants among younger generations, shortages and aging of engineers and skilled workers may lead to stagnation in skills succession, decline in on-site management capability, and increased turnover due to excessive workloads, which could affect construction quality, safety, and business continuity. As countermeasures, the company promotes planned recruitment of new graduates and mid-career hires, early development of young employees, utilization of senior employees, business efficiency improvement through DX, and regular monitoring of employee engagement.

If the company violates various laws and regulations such as the Construction Business Act, the Industrial Safety and Health Act, the Antimonopoly Act, and the Marine Pollution Prevention Act, this could have a material impact on business performance and social credibility. In addition, if human rights risks such as human rights violations and harassment in the supply chain materialize, this could lead to a decline in corporate value. As countermeasures, the company strengthens its legal compliance system and internal controls, establishes governance across the group, disseminates and educates on its basic human rights policy, and establishes consultation contact points.

Due to the sophistication of cyberterrorism, unauthorized access, and ransomware attacks, if leakage or falsification of design documents, customer information, and construction data occurs, or if systems are shut down, this could lead to disruption of business activities, damages, and decline in social credibility. The risk of information leakage caused by human error is also increasing due to the advancement of telework and ICT utilization. As countermeasures, the company thoroughly operates its information security policy, strengthens technical defenses, conducts employee education and training, and establishes an incident response system.

Natural disasters such as earthquakes, typhoons, and heavy rain, as well as outbreaks of new infectious diseases, may cause construction interruptions, delays, human casualties, and disruptions in materials procurement, which could affect business activities and performance. The intensification and increased frequency of disasters due to climate change raise further concerns about the impact on business continuity. As countermeasures, the company is advancing the formulation and revision of BCP, strengthening disaster prevention and mitigation measures, reinforcing supply chain resilience by securing multiple procurement sources, and developing infectious disease response manuals.

As the company conducts construction business in various countries around the world, changes in political conditions, economic conditions, and unexpected changes in laws and regulations in construction regions may affect business performance and operations. The company also recognizes the risk that changes in international conditions could have a chain reaction impact on domestic business. As countermeasures, the company conducts business risk assessment through local condition surveys and use of external experts before receiving orders, continuous monitoring of progress management and local conditions after receiving orders, and reviews business content and response policies as necessary.

In addition to rising construction costs due to soaring materials and energy prices and chronic labor shortages, there is a risk that rising interest rates, economic fluctuations suppressing private investment, and shifts in public investment policy could become factors causing fluctuations in order volume, destabilizing profitability. Additionally, if strategies such as business portfolio reviews and new businesses fail to adequately reflect changes in the market and competitive environment, the expected results may not be achieved. As countermeasures, the company formulates and periodically reviews its mid- to long-term business strategy based on market conditions and technological trends, and thoroughly implements a multifaceted internal review process for investment projects.