PERSOL HOLDINGS CO.,LTD.

The Group holds large volumes of personal information on registered staff, job seekers, client companies, and others, and is constantly exposed to the risk of information leakage due to cyberattacks, unauthorized access, or employee negligence. In addition, as business operations become increasingly dependent on IT, system failures could significantly undermine reliability through delays or suspension of operations. As countermeasures, the Group has established PERSOL-SIRT, implemented vulnerability management through ASM, and conducts security education and training.

The Group positions M&A as a pillar of its growth strategy, and goodwill balance stood at ¥94,019 million at the end of the fiscal year under review. Due to constraints inherent in due diligence, if contingent liabilities are overlooked or actual results diverge from earnings plans, there is a risk of substantial additional funding requirements or goodwill impairment. Under IFRS, goodwill is not amortized, but impairment losses may need to be recognized early and in large amounts. The Group addresses this through the establishment of an investment committee and enhanced monitoring.

Laws and regulations such as the Act on the Protection of Personal Information, the Employment Security Act, and the Worker Dispatching Act are becoming increasingly sophisticated, and given the significant room for interpretation, there is a risk that the Group's operations may be unintentionally deemed inappropriate. If fairness and transparency are not adequately ensured in AI-based profiling or the use of generative AI, this could lead to business suspension orders from regulators, litigation, or brand damage. The Group addresses this through the establishment of a Group Privacy Governance Council, mandatory privacy review processes, and the establishment of an AI Governance Council.

As the Group conducts business across multiple countries in Japan and the APAC region, social demands regarding "business and human rights" are increasing, and if human rights violations occur, this could result in administrative penalties, brand image damage, and financial impacts. The Group established the "PERSOL Group Human Rights Policy" in December 2022, began operating human rights due diligence from April 2023, and conducts training for Group officers and employees. Going forward, the Group plans to expand and enhance human rights due diligence and build remedy mechanisms.

In the event of emergencies such as earthquakes, typhoons, pandemics, wars, or terrorism, ensuring the safety of employees and dispatched staff and maintaining business continuity becomes difficult. Given the nature of staffing services, confirming the safety of dispatched staff and coordinating contracts with client companies places a heavy operational burden. The emergence of scandals or compliance issues is also recognized as a business continuity risk. The Group addresses this through the establishment of a crisis management coordination department, formulation of a BCP that treats salary payment operations as the highest priority, and automatic collection of safety confirmation information via IT tools.

The staffing services business is highly susceptible to economic fluctuations, and the recruitment placement and job advertising businesses in particular are highly sensitive to economic conditions; during recessions, a decline in the number of successful job placements or a decrease in advertising volume directly worsens sales and profitability. If an unforeseen economic contraction similar to the 2008 global financial crisis or COVID-19 were to recur, it could have a significant impact on the Group's overall financial position and business performance. The Group addresses this through cost management that prepares for economic downturn scenarios from the beginning of the fiscal period, and by continuing to provide added value using AI and IT while continuing investment in growth areas.

The Group supports the final recommendations of the TCFD and conducts scenario analysis based on 4°C and 1.5–2°C scenarios, recognizing the risk that intensifying natural disasters and stricter decarbonization regulations could affect business operations. Delays in climate change initiatives or violations of laws and regulations could result in reduced trust and impacts on financial position. The Group has set concrete reduction targets through 2035 and net-zero by 2050, and manages these as sustainability materiality issues.

The rapid advancement of AI creates a risk that disruptors could emerge to replace clerical staffing, outsourcing/contracting, and recruitment placement businesses. In addition, if transparency and safety cannot be adequately ensured in AI implementation, this could lead to human rights violations through the promotion of bias or discriminatory expressions, and damage to social credibility. If the Group fails to secure and develop highly specialized IT talent as planned, there are also concerns about a loss of competitiveness due to delays in technology implementation.

The staffing business operates under licenses based on the Worker Dispatching Act, while the recruitment placement and job advertising businesses operate under the Employment Security Act; if violations occur, this could result in license revocation or business suspension, disrupting the entire core business. Labor-related laws and regulations are repeatedly amended in response to changes in the working environment, and there are concerns about the impact on business operations if major operational changes are required. The Group addresses this through the establishment of a compliance oversight department, formulation of a code of conduct, and development of an internal whistleblowing system.

In the staffing, recruitment placement, and outsourcing/contracting businesses in the APAC, European, and North American regions, if the Group is unable to establish a competitive advantage due to sudden changes in political and social conditions, regulatory amendments, or foreign exchange fluctuations, this could impact its financial position and business performance. There is also a risk of reduced ability to attract customers and competitiveness if domestic and overseas competitors popularize low-cost services or business models that do not involve human intermediaries, or if platform companies such as search engines establish a dominant position in the job advertising market. The Group addresses this through strengthening its support structure and management functions, and through continued investment in service sophistication.