RIKEN TECHNOS CORPORATION

There is a risk that geopolitical risks, including the situation in the Middle East, and changes in supply structures may cause difficulties in procuring raw materials and price increases, making business continuity difficult. The Group is addressing this as a priority risk with company-wide efforts across all divisions, while promoting the enhancement of business continuity management.

Since the main raw materials are petrochemical basic products derived from naphtha, sharp fluctuations in crude oil prices directly affect profitability. If price fluctuations caused by unforeseen factors such as war, terrorism, or speculative activity cannot be reflected in product prices in a timely manner, or if plant-derived raw materials are affected by climate change, business performance and financial condition may deteriorate.

There is a risk of compensation costs arising from market complaints, as well as loss of credibility and business opportunities. If a large-scale recall or substantial product liability compensation occurs, there is no guarantee that insurance will cover the full amount, which could have a material adverse effect on business performance and financial condition. As countermeasures, the Group is strengthening quality control systems within the production process and reinforcing measures to prevent defective products from reaching the market.

There is a risk that system outages or information leaks caused by cyberattacks or similar incidents could affect business continuity and social credibility. As priority measures, the Group is strengthening security through full-scale deployment of a common domestic and overseas group network infrastructure, and reinforcing 24/7, 365-day monitoring systems.

If unforeseen events such as serious occupational accidents or fires occur, they may lead to employee injury or absence, production stoppages, and loss of social credibility. As priority measures, the Group is promoting the identification of hazard sources and implementation of countermeasures through enhanced safety patrols, as well as strengthening safety education.

There is a risk that delayed response to environmental issues could reduce competitive advantage, as well as a risk of environmental impact on surrounding areas. The Group is implementing, as priority measures, an update of its CO₂ reduction roadmap and source-level countermeasures and mitigation measures for environmental impact events.

In overseas operations centered on the United States, Southeast Asia, and China as key markets, various risks exist, including deterioration of political and economic conditions, import/export and foreign exchange regulations, changes in tariff policy, war, terrorism, epidemics, and the outflow of talent and technology. If these risks materialize, they could adversely affect the Group's business performance and financial condition.

Since the local currency-denominated income and expenses of overseas subsidiaries are converted into yen when preparing consolidated financial statements, they are affected by exchange rate fluctuations. In addition, exchange rate fluctuations also affect the prices of products sold locally and manufacturing/procurement costs, potentially impacting competitiveness in local markets and spilling over into domestic sales prices as well.

In markets such as synthetic resin processing, it is essential to respond to rapid technological changes and shifting customer needs. If the Group fails to accurately grasp new technology trends or misjudges customer needs, existing products and services may become obsolete, potentially adversely affecting business and performance. The Group continuously strives to accurately grasp changes in technology and customer needs and market corresponding products and services, but continued provision cannot be guaranteed.

If the corporate philosophy and company policies are not thoroughly instilled, or if there is an outflow of personnel capable of executing business strategy or difficulty in securing such personnel, competitiveness and profitability may not grow as expected. There is also a risk that insufficient communication among employees could adversely affect business execution, and inadequate human rights due diligence could lead to loss of social credibility and additional costs.