SEKISUI CHEMICAL CO.,LTD.

Risk that procurement of raw materials becomes difficult due to fluctuations in the economic environment or supply-demand balance, and changes in trade policy, resulting in increased production costs or suspension of product supply. Procurement constraints and price increases due to deteriorating conditions in the Middle East are also a concern. The Company seeks to minimize the impact through diversification of procurement sources, ongoing cost reduction measures, sales price revisions, and shifting to high-value-added products.

There is a risk that yen depreciation or appreciation affects foreign currency-denominated transactions and the financial statements of overseas subsidiaries, that interest rate fluctuations affect housing demand, and that impairment risk exists for held real estate, goodwill, and other assets. As disclosed foreign exchange sensitivity, a ¥1 change in the US dollar rate impacts operating income by approximately ¥500 million, and a ¥1 change in the euro rate by approximately ¥100 million. The Company manages divergence risk through quarterly review of internal exchange rates.

The Mobility field of the High Performance Plastics Company depends on global automotive and aircraft market trends, while the Electronics field carries the risk of short-term demand contraction due to the rapid pace of technological innovation and large demand fluctuations. The Company is promoting diversification of its business foundation through entry into markets such as air mobility, strengthening of R&D centers, and exploration of M&A candidates.

The domestic Housing Business is highly susceptible to policy, tax system, interest rate trends, personal consumption, and regional economic trends, and there is a risk that failure to secure the necessary labor force will result in construction delays and rising labor costs. The Company addresses this through area-specific business strategies, production innovations such as improving in-factory logistics efficiency, and research into reducing construction man-hours.

There is a risk of business interruption, damage compensation, and information leakage caused by cyberattacks, power outages, natural disasters, and equipment or software failures. As next-generation communications become widespread, dependence on IT systems increases, which may also increase this risk. The Company addresses this through continuous monitoring by its CSIRT, distribution of data centers across multiple locations, and full duplication of critical business systems.

There is a risk that if a serious compliance violation occurs, such as a violation case caused by regulatory amendments or the introduction of unexpected new regulations, or misconduct caused by pressure to achieve performance targets, this could lead to increased response costs and loss of customer trust. The Company has established a Compliance Subcommittee under the Sustainability Committee, chaired by the President, and conducts regular global audits and corrective guidance.

There is a risk that if a serious product accident, insufficient response to safety or various regulations, or an intellectual property dispute occurs, this could result in a loss of social credibility and substantial response costs including compensation. Regarding industrial accidents as well, the Company regularly conducts risk management activities at each production site and on-site audits and corrective guidance by specialized headquarters departments to prevent occurrence.

There is a risk that business activities are affected by political turmoil such as terrorism and war, tariffs, unexpected changes in policy, laws and regulations, and tax reform, which could also lead to sharp increases in raw material prices. The Company addresses this through information gathering via regional headquarters in each area, coordination between group companies and specialized headquarters departments, and risk diversification through business diversification and globalization of operating regions.

There is a risk that entry into new business areas gives rise to new risks, and that delays occur in development and business launch. The Company manages this through strengthened prior investigation and post-execution monitoring, accelerating development speed through the fusion of internal and external technologies, and effective operation of business reviews and design reviews.

There is a risk that climate change and abnormal weather, biodiversity loss, and depletion of natural resources could make raw material procurement more difficult and increase prices, heighten demands on corporate activities regarding land development and chemical substance regulations, and reduce competitiveness due to delayed response. The Company addresses this through diversification of raw material procurement sources, expanded use of non-fossil-derived and recycled materials, recycling of waste, and industry-government-academia collaboration (participation in CPs and SusPla).