CREEK & RIVER Co., Ltd.

The staffing services business is subject to regulation under labor-related laws such as the Worker Dispatching Act, the Employment Security Act, and the Labor Standards Act. Changes in laws, enactment of new legislation, or changes in interpretation could constrain business operations. The Group operates its business while closely monitoring developments in relevant laws and has established a system to respond appropriately to such changes or enactments. This is classified as a "particularly important risk" in the Annual Securities Report.

In providing services, the Group manages a large volume of personal information of professionals, and there is a possibility of information leakage due to unauthorized external access or human error. Should a leak occur, it could result in loss of trust and potential legal liability. As countermeasures, the Company and its major subsidiaries have obtained the Privacy Mark and are maintaining and strengthening a management system compliant with JIS Q 15001:2017.

As dependence on communication networks such as the internet increases, system downtime caused by computer virus intrusion, power outages, natural disasters, or various system troubles could result in temporary disruption of operations or loss of information data. In addition to continuous strengthening of the security system and regular inspections based on the information management regulations, the Company aims to minimize damage through a shared emergency power generation equipment agreement at its head office building.

If a business site suffers catastrophic damage due to causes beyond the Group's control, such as earthquakes or other natural disasters, accidents, or terrorism, resulting in large-scale system failures or communication network failures, business activities could be forced to suspend. Business continuity is ensured through the establishment of crisis management regulations and disaster response manuals, the introduction of a safety confirmation system, and the securing of backup systems for servers and other equipment.

The spread of infectious disease could affect clients' business activities, causing delays in recruitment and hiring selection, revisions to hiring plans, and cancellations of various events, which could adversely affect the Group's business performance. In addition, travel and movement restrictions could delay progress in overseas businesses. The Group works to minimize such impacts through the establishment of a response headquarters, the promotion of remote work, and the construction of online platforms.

While demand for professionals remains relatively high amid growing diversification in society, the number of companies providing staffing services in the fields targeted by the Group is on an increasing trend, and intensifying competition could affect the business activities of each company. The Group has pioneered the Agency Business specializing in professional fields, and diversifies risk through the accumulation of unique know-how via composite services such as staffing, development, contracting, and intellectual property monetization, as well as expansion into diverse fields.

Continuous recruitment and development of personnel is necessary as the business expands, and if the Group is unable to secure talented personnel due to weak hiring or increased turnover, its business development could be hindered. The Group has built systems conducive to attracting talented personnel through the introduction of a personnel evaluation system, a stock option system, and a stock-based ESOP trust, while also strengthening personnel development through enhanced education systems and structures.

In the staffing business, all eligible employees are required to be enrolled in various social insurance programs, and if insurance premium rates are revised going forward, cost burdens could increase. In April 2017, the Group established its own "C&R Group Health Insurance Society," which reduces the risk of significant premium increases through appropriate management of medical costs to maintain sound finances and efficient health insurance administrative operations.

In the planning, production, management, distribution, and sale of content and related rights operations, if the Company infringes on third parties' intellectual property rights, it could face claims for damages or injunctions. There is also a risk that the Company's own intellectual property rights could be infringed by third parties. The Company conducts prior investigations utilizing its internal legal department and external specialized institutions, and performs regular management of rights infringement regarding its held intellectual property rights.

Overseas subsidiaries are subject to the legal regulations of the countries in which they operate, and changes in laws, enactment of new legislation, or changes in interpretation could restrict the business activities of overseas subsidiaries. In addition, when translating the revenue and assets of overseas subsidiaries into yen for consolidated financial statements, the yen-translated value could be affected by exchange rate fluctuations. The Group has established a system for regular information gathering in coordination with overseas subsidiaries and appropriate response to legal changes.