RISO KYOIKU GROUP CORPORATION

Securing and developing employees and instructors is essential for providing high-quality educational services and planned classroom expansion. If a rapid change in the hiring environment prevents the Company from securing the necessary personnel, this could have a high impact on business performance and financial condition. This risk is directly linked to the management strategies of thorough differentiation and strategic classroom expansion. The Company addresses this through regular, planned recruitment activities and thorough training and education.

In the classroom expansion plan involving new school openings and the expansion, relocation, and renewal of existing schools, mainly in the greater Tokyo metropolitan area, if suitable properties cannot be secured, expansion as planned will become difficult, potentially having a high impact on business performance and financial condition. This risk is closely related to the strategic expansion of school locations and the strategy of capturing customers from age one through adulthood. The Company addresses this through a business alliance with Hulic Co., Ltd. for priority introductions to prime properties near stations, as well as market research and early property acquisition prior to school openings.

Due to the nature of educational services, the Company handles large volumes of personal information of students and others. Should an information leak occur, the resulting loss of trust could have a high impact on business performance and financial condition. While the likelihood of occurrence is assessed as low, the degree of impact is high. The Company addresses this through thorough database management based on its privacy policy and regular personal information protection training for all employees.

In the domestic education service market, changes in economic conditions and prices, the progression of the declining birthrate, and reforms to the education system and university entrance examinations may affect operating results and financial condition. In particular, there is no prospect of the declining birthrate being resolved, and it constitutes a factor for medium- to long-term market contraction. As countermeasures, the Company differentiates itself from competitors in terms of quality and implements exam preparation and instruction aligned with the reforms.

With major business locations concentrated in the greater Tokyo metropolitan area, if natural disasters such as earthquakes, typhoons, or floods, or the spread of infectious disease, make it difficult to conduct classes over a prolonged period, this could have a material impact on financial condition and operating results. The likelihood of occurrence is assessed as medium, and occurrence within one year is also anticipated. The Company addresses this by stockpiling disaster supplies, building a system to gather information on employees affected by disasters, and implementing infectious disease countermeasures as needed.

If circumstances arise that violate laws and regulations, corporate activities may be restricted, and increased management costs associated with responding to legal regulations could affect business performance and financial condition. Both likelihood of occurrence and degree of impact are assessed as medium. The Company addresses this by striving to improve compliance and conducting business activities with full attention to laws and regulations.

If a lawsuit seeking damages or other relief is filed by a third party, including shareholders, this could hinder business operations and affect business performance and financial condition. While the likelihood of occurrence is assessed as low, the degree of impact is assessed as medium. The Company addresses this by establishing a system for timely consultation with external experts such as lawyers in the event of litigation or other legal proceedings.