KRAFTIA CORPORATION

With rapid changes in the business environment, risks are becoming increasingly diverse and complex. The Group has established a risk management process to identify, manage, and take countermeasures against anticipated risks in advance; however, if the response to environmental changes is delayed, this may affect operating results and financial position. Through the development of a company-wide risk management system, the Group seeks to prevent the occurrence of risks and minimize losses when risks materialize.

Through discussions at meeting bodies, key risks that could affect operating results and financial position have been identified. These risks are managed with an awareness of their probability of occurrence and their potential impact on business performance, and the Group strives to avoid their occurrence and to respond appropriately and swiftly if they materialize. It should be noted, however, that the risks listed are merely examples and are not limited to those enumerated.

If a risk materializes, it may not only adversely affect operating results and financial position but also lead to a loss of social credibility. The Group regards this as a critical management issue and works to prevent damage to its credibility through the establishment of a company-wide risk management system. Building a structure in line with the risk management process serves as the foundation for maintaining credibility.

The Group is advancing the development of a company-wide risk management system; however, in the event of rapid changes in the business environment or unforeseen risks, the existing management system may prove inadequate to respond. The risk management process is continuously reviewed through discussions at meeting bodies, but if deficiencies in the system become apparent, this poses a risk of affecting operating results and financial position.