SOHGO SECURITY SERVICES CO.,LTD.

Price fluctuations and supply shortages may arise due to rising production costs such as wage increases, the impact of US trade policy, and trends in financial markets, potentially affecting business performance. As countermeasures, the Company pursues mutual coexistence and prosperity with business partners, including price revisions to address cost increases, appropriate inventory management based on supply and demand forecasts, expansion of procurement sources, and promotion of reuse.

While customer expectations are rising against the backdrop of natural disasters and aging infrastructure, failure to meet these expectations could lead to a loss of customer trust and deterioration in business performance. The Company aims for sustainable business growth by expanding BCP solutions and comprehensive infrastructure management services, promoting the visualization and standardization of operations through AI utilization, and shifting to labor-saving operation models.

Failure to appropriately respond to rapid technological innovation such as drones, AI, and 5G may make it difficult to meet safety and security needs, potentially affecting business performance. The Company strives to avoid this risk by continuously developing new products and services through monitoring the latest technology trends and promoting DX.

Amid the continuing decline in Japan's working-age population, difficulty in securing high-quality personnel across a wide range of business areas including Security, FM, Nursing Care, and Overseas Business could hinder business operations and management, potentially affecting business performance. The Company addresses this through base pay increases, introduction of a scholarship repayment agency system, provision of diverse working styles, a long-term active engagement system for retirees, and labor-saving through digitalization.

As the Company holds a large amount of personal and confidential information, an information leak caused by malicious third-party attacks or carelessness or misconduct by related parties could hinder business continuity, damage social credibility, and result in damages or legal penalties, potentially having a material impact on business performance. The Company has built an information asset management system through company-wide application of its Basic Policy on Information Security, establishment of ALSOK-CSIRT, and implementation of training for responding to major incidents.

Delays in progress on development outsourced to external vendors, troubles following the introduction of core systems, or communication failures and line outages could affect service provision, business performance, and internal controls. The Company strives for stable operations through close progress management with contractors, phased system migration, redundant network equipment, and securing remote backup servers.

If employees or facilities are affected by a large-scale disaster or infectious disease outbreak, or if network functions are disrupted or material procurement is impeded due to a prolonged power outage, business operations and service provision could be affected. The Company addresses this by establishing data centers and material warehouses at two locations in eastern and western Japan, developing business continuity plans and response manuals, and formulating contingency plans.

Amendments, abolitions, or introduction of new legal regulations affecting the various businesses of Security, FM, Nursing Care, etc., such as the Security Services Act, the Long-Term Care Insurance Act, and the Act on the Protection of Personal Information, could affect business performance. The Company has established a system for each business division and group company to monitor and report on regulatory trends, aiming to avoid change risk through regular reporting to the Legal Affairs Office and timely responses.

If the performance of an acquired company significantly deviates from the business plan at the time of acquisition, or if organizational restructuring is undertaken, impairment losses on intangible fixed assets such as goodwill and customer-related assets, as well as tangible fixed assets, could occur and affect business performance. The Company has established a system to continuously monitor the performance of acquired companies and report regularly to the Board of Directors, and promptly formulates and implements countermeasures if deviations from the plan are identified.

In its Overseas Business, centered on Southeast Asia, the materialization of country risks such as geopolitical developments, conflicts, price fluctuations, tariffs, legal systems, and large-scale disasters could affect business performance. The Company addresses this through the establishment of a dedicated overseas business department, timely information gathering from overseas subsidiaries and representative offices, regular meetings attended by directors and presidents of overseas subsidiaries, and the establishment of a 24-hour response headquarters in the event of a terrorist attack.