WEATHERNEWS INC.

Extreme weather events such as heavy rain, typhoons, heavy snowfall, and drought are intensifying worldwide, and the impact of weather and climate on society is expanding year by year. If the Group fails to appropriately respond to changes in climate change risk, it could lead to customer attrition or loss of confidence as an investment target. As countermeasures, the Group has endorsed the TCFD recommendations (June 2022) and is promoting information disclosure and initiatives through the establishment of four materialities.

There is an operational risk that the head office or major sites could be damaged by natural disasters such as large earthquakes, tsunamis, typhoons, and cold waves, or by social disruption caused by war, terrorism, or conflict, paralyzing management and operational functions. Since the Group provides services closely tied to social infrastructure, the social impact of service disruption is significant. The Group has formulated a BCP across the entire group and is implementing remote operation systems, infrastructure reinforcement, and disaster drills, but states that complete elimination of all risk is not possible.

The Group holds personal information and confidential business partner information, and bears legal obligations under laws such as the Act on the Protection of Personal Information and the EU General Data Protection Regulation (GDPR). If a cyberattack destroys, tampers with, or leaks important data, causes system outages, or if an information leakage incident occurs, it could result in a significant decline in operational efficiency, damages liability, and a decline in social credibility and brand image. The Group has implemented measures such as strengthening management of outsourcing partners, developing information management regulations, thorough internal training, and establishing remote work guidelines, but states that complete elimination of the risk is difficult.

The Group operates services across a wide range of industries and regions both in Japan and overseas, and is subject to the influence of diverse external factors such as tax systems, various regulations, political and economic trends in each country, and climate change. In particular, the Group is subject to public regulation under the meteorological services laws of each country, and unforeseen major regulatory changes could have a material impact on the business. As these factors can change significantly for reasons beyond the Group's control, they are recognized as a material risk.

Weather and environmental services are subject to regulation under the meteorological services laws and related laws of each country, and if the Group fails to meet certification standards and has its certification revoked, this could have a material impact on its financial position and business results. As the scope of business and area of activity expand, operations are increasingly managed in a decentralized manner, making it increasingly difficult to ensure that all employees comply with laws and internal regulations. The Group has established and published the "Tenki.jp Charter" and the "Weathernews Group Code of Conduct," and conducts evaluations and countermeasure deliberations at the Risk Management Committee, along with developing and operating internal controls.

The Group operates services through establishments in various countries around the world, and is inherently exposed to complex risks such as unexpected changes in public regulations in each country, terrorism, war, political and economic changes, natural disasters, and inadequate understanding of regulations and sanctions in each country. Developments in joint ventures and alliance businesses, as well as foreign exchange controls, confiscation of international assets, and trade restrictions, could also affect business results and financial condition. The Group seeks to respond appropriately through information gathering from local embassies and chambers of commerce and collaboration with external consultants at each site.

As the Group conducts business activities in diverse environments globally, it is required to respect the human rights of all people affected by its business activities. If a human rights issue arises in the course of business activities, it could adversely affect business activities through a decline in social credibility and brand image. In July 2024, the Group established a "Human Rights Basic Policy" supporting the United Nations "Guiding Principles on Business and Human Rights," and is working on early detection, prevention, remediation, and relief of negative impacts through human rights due diligence.

The Group provides services closely tied to social infrastructure such as logistics, public transportation, and broadcasting businesses, and if a system failure or service outage occurs, it could have a significant impact on customers and users. Since weather forecasting inherently involves unknowable elements, the Group has implemented risk communication with customers and contractual risk limitation measures in its BtoB business, but there remains a possibility of damages liability and significant damage to social credibility and brand image. The Group is working on formulating a BCP, establishing an immediate response system, and continuously improving forecast accuracy and system quality.

Under its "information democracy" policy, the Group discloses information as much as possible, while also treating the protection of its own intellectual property rights from competitors and third parties as an important issue. In recent years, due to an increase in similar businesses, there is a risk of receiving damages claims alleging that proprietary technology developed by the Group infringes on the intellectual property rights of other companies, which could affect financial position and business results. The Group states that the probability of this risk materializing is not high, but recognizes that it is not zero.

The Sea Domain provides pay-per-use services for each voyage of vessels to shipping companies and others around the world, and if the number of service recipients increases dramatically in the future, there is a risk that transactions whose authenticity cannot be confirmed may occur, depending on the method used to track service provision. As the scope of business expands and operations are increasingly managed in a decentralized manner, appropriate management of all transactions is becoming more difficult. The Group is addressing this through comprehensive risk assessment and countermeasure deliberation at the Risk Management Committee and thorough development and operation of internal controls.