Nisshinbo Holdings Inc.

Increases in raw material procurement and manufacturing costs due to carbon taxation, rising energy costs stemming from customer requests for greenhouse gas emission reductions, and physical damage and business interruption losses from flooding may affect business performance. In response, the Group conducts climate change scenario analysis in line with the TCFD recommendations, and promotes greenhouse gas emission reductions and energy conservation to avoid carbon taxes and reduce energy costs.

Changes in the supply-demand balance of product markets due to economic fluctuations, sharp swings in raw material prices, foreign exchange fluctuations, and changes in laws and regulations in each country affect business performance. The Group mitigates the impact of sudden changes in the external environment through diversified business operations with varying characteristics, and minimizes risk by building trusted relationships with multiple suppliers and using forward foreign exchange contracts.

Leakage of personal information, customer information, or trade secrets, as well as unauthorized access, data destruction, tampering, or loss caused by cyberattacks or other incidents, could have a material impact on business continuity. In response, the Group conducts continuous employee education and internal audits every year, and implements cybersecurity measures centered on multilayered defense.

Rapid changes in existing markets due to technological innovation, or delays in the progress of technology and product development plans, may lead to a decline in competitiveness. Management addresses this by regularly reviewing R&D projects and making timely decisions on whether to continue or discontinue them.

Violations of laws and regulations, including bribery and antitrust law violations, or corporate conduct that deviates from social norms, could lead to a loss of trust and impairment of corporate value. The Group works to prevent recurrence through continuous compliance education and strict disciplinary action against misconduct.

There are concerns about adverse effects on management from failed M&A transactions and about declining management efficiency due to overlapping functions across businesses. The Group addresses this by formulating and sharing M&A procedure manuals, and by promoting efficiency through group-wide organizational restructuring and outsourcing.

Talent shortages due to a declining working-age population, decreased motivation and talent attrition due to job mismatches, and stagnation in business promotion due to an unbalanced age composition of personnel, could affect business continuity. The Group addresses this by strengthening career-track hiring, retaining talent through internal job posting systems and career support, and developing human resources through enhanced training systems and expanded e-learning.

Geopolitical risks may affect business activities, and there are concerns about the impact on business performance if country risk materializes, particularly for the Group given its overseas business locations. The Group determines appropriate investment levels by country and region through risk information gathering by business locations in each country and region and feedback to management.

Quality issues or defects in products or services could lead to a loss of trust, damage claims, or recalls, resulting in significant impacts on both financial results and brand value. The Group utilizes a risk management system to minimize the probability and impact of such risks, and has established a Quality Assurance Group within the company to comprehensively manage quality assurance and product safety activities across group companies.

Fluctuations in the fair value of cross-shareholdings and real estate holdings pose a risk to the Group's financial condition. The Group continues to reduce its cross-shareholdings based on its Corporate Governance Policy, and reduces holding risk related to real estate through planned lot sales.