JAPAN RELIANCE SERVICE CORPORATION

Amid uncertainty in the domestic economy and a slowdown in the global economy, there is a risk that price competition with other companies in the same industry will intensify in the Comprehensive Building Management Service Business and the Human Resources Service Business. In times of economic downturn, requests for price reductions from customers may increase, potentially adversely affecting the profitability of the Group. The securities report does not describe specific countermeasures, indicating a structure that is highly dependent on the external environment.

The operation of Security Guard Services business requires certification from the Public Safety Commission of each prefecture, and the business is subject to multiple laws and regulations including the Security Services Act, the Building Maintenance and Sanitation Act, the Construction Business Act, and the Worker Dispatching Act. If these laws and regulations are violated, administrative dispositions including revocation of certification may be imposed, posing a risk of significant disruption to business continuity. In addition, additional costs incurred in responding to legal amendments may also affect business performance.

In the course of performing Comprehensive Building Management Service and Human Resources Service business operations, there are opportunities to handle customers' confidential information and personal privacy information, and if an information leak occurs, it could cause substantial damage to customers and lead to a loss of trust in the Group. Direct impact on business performance is also anticipated through claims for damages and similar actions. As a countermeasure, the Group has established a guidance system for information management and privacy protection through group training and on-the-job training (OJT).

If a large-scale earthquake or other natural disaster occurs, there is a possibility that customer facilities in the Comprehensive Building Management Service Business (particularly buildings built under the old seismic standards) could suffer significant damage, making it difficult to continue providing services. In addition, the spread of infectious diseases such as COVID-19 is recognized as a risk that may affect the Group's business operations. The securities report does not describe specific countermeasures such as a business continuity plan (BCP).

RSC Chubu Co., Ltd. and RSC Security Co., Ltd. are subject to regulation under the Security Services Act, Clean Force Co., Ltd. is subject to regulation under the Building Maintenance and Sanitation Act, and Yuwa Shoko Co., Ltd. is subject to regulation under the Construction Business Act, meaning the Group as a whole is exposed to a wide range of legal regulatory risks. If a violation of laws or regulations occurs at any of these subsidiaries, it could have repercussions on the credibility and business performance of the entire Group. Establishing and maintaining a compliance system at each subsidiary remains an ongoing challenge.