TIS Inc.

With technological innovation such as AI and the decline in the working population, there is a risk that shortages of highly skilled engineers, management personnel, global talent, and AI-capable personnel, as well as delays in reskilling, could impede business growth. The Group is advancing human capital KPI monitoring, compensation base-up, and talent development measures such as AI education systems, reskilling, and qualification acquisition support, working to prevent talent attrition and secure excellent personnel.

If the Group is slow to adapt to the rapid evolution of IT technologies, including generative AI, and to sudden changes in the business environment, there is a risk that declining competitiveness and delayed responses to customer needs could adversely affect business performance. As countermeasures, the Group is implementing improved accuracy of market environment analysis through ERM restructuring, AI talent development, periodic review of technology strategy and selection of core technologies, and innovation of service processes.

In M&A of domestic and overseas companies and investments in large-scale IT facilities such as data centers, software, and human capital, there is a risk that failure to achieve plans, failed deals, or misconduct could negatively impact business results. The Group has established a management framework including prior screening by the Board of Directors, the CVC Investment Committee, and the Investment Committee, regular monitoring of business plan progress after investment execution, and status grasp through the dispatch of officers.

There is a risk that diverse factors including the departure of key personnel at overseas subsidiaries, declining local revenue, cash shortages, shortages of management personnel, and inadequate group governance, as well as global economic conditions, foreign exchange, legal regulations, and business customs, could affect overseas operations. The Group is strengthening controls through the establishment of extreme lending limits, monthly monitoring, the establishment of a specialized overseas governance organization, and an overseas management talent development program.

If leakage or falsification of customers' personal information and confidential information handled during system development and operations occurs, or if incidents caused by cyberattacks or unauthorized access occur, there is a risk that damage claims and loss of trust could have a material impact on business and performance. The Group has established ISMS and Privacy Mark certification based on the Group Information Security Policy, introduced Zero Trust, and set up an incident response framework through TIS-CSIRT.

Cyberattacks, malware, vulnerabilities in customer systems, and information leaks through outsourcing partners pose significant risks to business continuity and social trust. The Group has defined a group-wide CSIRT framework, shares information at the Group Security Promotion Council, conducts communication monitoring, emergency response, and external coordination through TIS-CSIRT, and formulates and regularly trains on IT-BCP.

As system development becomes more advanced, complex, and subject to shorter delivery times, there is a risk that difficulty in ensuring planned quality or completing projects within the timeframe could result in additional costs or damage claims from customers, impacting business performance. The Group is deploying quality enhancement measures including a proprietary quality management system based on ISO9001, proposal screening and process reviews by a dedicated organization, and the Group Quality Executive Council.

Regarding securities such as shares held for the purpose of maintaining partnerships and cooperative relationships with business partners, there is a risk that significant fluctuations in market value or deterioration in the issuer's business condition could impact performance through accounting losses. The Group's basic policy is to regularly check the issuer's financial condition, business performance trends, and credit rating status, verify the rationality of continued holding, and reduce shareholdings with limited holding significance.

Foreign exchange fluctuations related to loans and transactions with overseas subsidiaries, as well as additional taxation risks from transfer pricing taxation or donation taxation, pose a risk of loss. The Group implements hedging through currency swaps and forward exchange contracts, regular verification based on derivative management rules, and comprehensive identification and countermeasures for tax risks including responses to BEPS2.0.

There is a risk that the increasing frequency and scale of natural disasters such as floods due to progressing global warming, as well as significant fluctuations in renewable energy costs and delays in transition, could affect the outsourcing and cloud services businesses that utilize data centers. The Group is responding through assessments based on TNFD, consolidation into state-of-the-art data centers equipped with seismic isolation structures and emergency backup generators, formulation and operation of the DC-BCP basic plan, endorsement of TCFD, and ongoing assessment implementation.