CE Holdings Co.,Ltd.

The Group provides medical institutions with its proprietary electronic medical record system combined with multiple departmental systems (such as medical accounting systems) procured from other companies. As a result, quality issues arising in either the Group's own products or those of other companies could generate response costs. In addition, there is a risk that competitiveness could decline due to deterioration in system quality or delays in functional enhancement. In response, the Group is conducting continuous education on quality maintenance and improvement, maintaining and strengthening its quality assurance and management systems, and promoting the acquisition of certifications and compliance with guidelines for each business and product.

There is a risk that securing and developing personnel may not proceed as planned, causing the Group's personnel structure to fail to keep pace with market growth. Furthermore, delays in responding to advances in ICT technology or in acquiring specialized knowledge of customers and industries could lead to a relative decline in skills and competitiveness. In response, the Group is actively recruiting excellent talent both domestically and internationally, providing an attractive work environment, strengthening collaboration with specialized personnel, and conducting continuous education.

There is a risk that damage such as leakage of important data or unauthorized alteration of programs could occur due to computer virus intrusion, errors by officers and employees, natural disasters, or sudden concentration of network access. In particular, cyberattack damage such as ransomware targeting medical institutions is increasing, and if infection occurs due to the Company's work, it could bear liability for damages. In response, the Group conducts information security education, obtains certifications and ensures proper operation at each subsidiary, strengthens the security of access networks to medical institutions, and proposes measures to minimize damage such as backup and restoration.

There is a risk that response costs could arise from modifying systems or procedures and developing organizational structures in order to comply with new laws, regulations, guidelines, or industry standards imposed on electronic medical record systems related to new specifications or standards. The Group strives to minimize impact by considering necessary measures as appropriate through information gathering from government agencies and industry associations, and by responding efficiently and promptly.

There is a risk of lost business opportunities due to infringement of the Group's intellectual property rights by third parties, as well as a risk that third parties may assert that the Group has infringed their intellectual property rights and bring litigation or other actions. In response, the Group conducts education on intellectual property and is working to establish countermeasures through patent acquisition and trademark registration of intellectual property rights generated from its business activities.

There is a risk that a significant change in the business environment of domestic medical institutions, which are the Group's main customers (such as revisions to medical service fees or the spread of infectious diseases), could reduce the transaction amount and number of transactions with the Group. In response, the Group works to diversify risk by diversifying its businesses, customers, and regions (including both domestic and overseas).

There is a risk that intensifying competition with competitors could reduce sales and profit margins, and a risk that the market could be lost to new entrants offering new products, services, or sales channels. In addition, if officers or employees become involved in violations of laws such as bid-rigging, bribery, or abuse of a dominant bargaining position, this could result in suspension of transactions, loss of orders due to reputational damage, and losses due to fines. In response, the Group is promoting cost reduction and productivity improvement through the use of AI, launching new products and services with speed and quality equal to or exceeding that of competitors, and promoting compliance education as well as the development and dissemination of Group regulations.

Regarding "Doctor Connect," a smartphone service being promoted as a new business (a service that allows patients to manage their own conditions and share information with their attending physicians), there is a possibility that adoption may not progress as expected, making it impossible to recover the investment. In response, the Group has established a policy of early identification of the situation and implementation of countermeasures through progress management, as well as setting withdrawal rules to minimize losses through early withdrawal if recovery is not expected.

The Group is actively working to expand its businesses and business domains through business alliances and M&A, but there is a risk that progress could be delayed. In addition, if the profitability of a business at an affiliated company or investee significantly declines, or if its financial condition significantly deteriorates, there is a risk that impairment losses on goodwill or valuation losses on shares could occur. In response, the Group is enhancing its business planning function to improve its capabilities in information gathering, planning, and execution, monitoring the management conditions of affiliated companies and providing management support as necessary, and, with respect to investees, conducting investment return and market value analysis considering the cost of capital and implementing measures including divestiture as needed.

There is a risk that receivables may become uncollectible if a business partner files for bankruptcy proceedings or a similar event occurs. In response, the Group strives to identify risks at an early stage by conducting rigorous credit investigations of new business partners, as well as annual investigations into the financial condition of existing business partners.