ASKUL Corporation

In addition to the risk of workplace accidents and heat-related illness at logistics centers and delivery sites, if health hazards, foreign material contamination, or labeling errors occur with private-brand products, business performance may be affected due to human losses, response costs, and loss of customer trust. As countermeasures, the Group implements thorough safety education, temperature control and rest environment improvements, establishment of a product quality control department, and information consolidation through a customer service center.

If a natural disaster exceeding assumptions, such as a Nankai Trough earthquake or widespread infectious disease outbreak, occurs, simultaneous damage to multiple business sites and supply chain disruption may cause serious impediments to business continuity. Based on lessons learned from the 2017 fire at "ASKUL Logi Park Shutoken," the Group has diversified its order-receiving and logistics center locations across multiple sites, continuously reviews its business continuity plan, and conducts regular inspections of fire prevention equipment; however, the risk of geographic concentration of head office functions remains.

As the supply chain expands both domestically and internationally, country risks such as regional conflicts, wars, and economic sanctions, as well as shifts in exchange rates, tariffs, and trade policy, may result in surging raw material prices or difficulty in securing stable procurement. In addition, there is a risk that stagnant consumption due to macroeconomic deterioration could reduce customers' purchasing power and willingness to spend, affecting business performance. As a countermeasure, the Group is reviewing its supply chain, including global optimization of product manufacturing locations.

Since the majority of orders are received via the internet and the entire supply chain is built on IT systems, if the information systems were to stop functioning due to core system failure, unauthorized access, virus intrusion, or a sudden surge in access, this could result in serious consequences such as loss of social credibility, damages liability, and prolonged business suspension. The Group has implemented server capacity expansion, distribution, and modernization, duplication of core systems, establishment of a real-time backup system, and strengthening of network security.

In large-scale capital investment in information systems development and logistics infrastructure, if unexpected troubles cause significant schedule delays or abandonment of projects, there is a risk of unrecovered investment costs, substantial additional expenses, and loss of social trust. In addition, business performance may be affected by temporary residual depreciation if the usable period of software and other assets is shortened due to accelerating IT advancement, and by recognition of impairment losses on fixed assets if the return on investment is insufficient.

The Group holds confidential and personal information of customers and business partners as well as internal confidential information, and if destruction, falsification, external leakage, or improper provision to competitors occurs due to actions by officers, employees, or employees of outsourcing partners, business performance may be affected by loss of credibility, substantial expenses such as damages, and business suspension. The Group has obtained JIS Q 27001 (Information Security Management System) certification, established a management system including outsourcing partners, and provides education to officers and employees.

If violations occur of a wide range of laws and regulations such as the Consumer Contract Act, the Act on Specified Commercial Transactions, the Personal Information Protection Act, and the Pharmaceuticals and Medical Devices Act, or if misconduct or fraudulent acts by officers or employees occur, insufficient response to social demands such as the SDGs, or material weaknesses in internal controls occur, business performance may be affected by substantial fines, damages, loss of social credibility, and delays in financial results announcements. The Group has established the "ASKUL CODE OF CONDUCT," built a compliance framework, formulated the "ASKUL Sustainable Procurement Policy," and developed an internal control system.

In addition to labor-intensive operations such as work inside logistics centers and delivery operations, the Group needs to continuously secure engineering and management personnel. Amid intensifying competition for talent due to worsening labor shortages in Japan, failure to secure personnel or a significant increase in labor costs may lead to deterioration in service levels and loss of competitive advantage. There are also concerns that business performance could be affected if reskilling efforts fail to keep pace with rapid changes in the business environment. The Group addresses this through new graduate and mid-career hiring, development of various education and personnel evaluation systems, and promotion of diversity.

Excessive dependence on the current business model may delay business transformation, and insufficient response to the evolving services of competitors may result in loss of market advantage and customer attrition. In addition, insufficient response to legal and regulatory changes, or failure to realize expected synergies from M&A or new business initiatives, could pose risks of deteriorating profit structure and reduced competitiveness. The Group addresses this through personnel development to promote innovation and transformation, organizational updates, and strengthened collaboration with external partners.

Amid the rapid advancement of AI technologies including generative AI, if the Group lags behind competitors in AI utilization or fails to adequately secure and develop AI talent, this may result in reduced competitiveness. In addition, insufficient response to changes in customer purchasing behavior and decision-making driven by AI utilization could lead to reduced customer satisfaction and lost sales opportunities, and there is also a risk that the spread of false or misleading information generated by AI could damage the corporate brand. The Group views the utilization of AI as an opportunity to enhance competitiveness and advance services, and is actively promoting its use.