Sumitomo Rubber Industries, Ltd.

In the event of natural disasters such as earthquakes, tsunamis, typhoons, or heavy rains, the Group's globally deployed manufacturing and sales sites may suffer direct or indirect damage, potentially adversely affecting financial position and business performance. Based on experience from the Great Hanshin-Awaji Earthquake and the Great East Japan Earthquake, the Group has formulated BCPs and conducts practical drills, disaster evacuation drills, and safety confirmation drills at domestic and overseas sites to minimize damage.

In the event of cyberattacks such as computer virus infections or unauthorized access, or information system failures due to disasters or human factors, leakage of confidential information or personal data, or suspension of critical operations or manufacturing may occur, potentially leading to loss of social trust, brand image deterioration, and opportunity losses from production stoppages. As countermeasures, the Group has established and thoroughly enforced internal regulations and implemented both software and hardware security measures for information equipment.

At manufacturing sites in Japan, Asia, Europe, and elsewhere, occupational accidents such as injuries or illnesses, industrial accidents such as fires or explosions, or environmental pollution may occur, potentially resulting in loss of social trust, compensation to victims, restoration costs, opportunity losses from suspended production activities, and compensation to customers, which could adversely affect financial position and business performance. The Group is advancing planned inspections and countermeasures, regular audits including overseas manufacturing sites, development and monitoring of environmental pollution prevention equipment, and planned replacement of aging equipment.

Insufficient disclosure of non-financial information related to ESG investment or delayed response to social demands such as the SDGs may lead to loss of credibility and reputation, potentially adversely affecting financial position and business performance. The Group has established a "Sustainability Promotion Committee" chaired by the Chief Sustainability Officer, which follows up on activities through various theme-based subcommittees. In addition, since January 2025, the Group has established a "Sustainability Advisory Board" for dialogue between external stakeholders and management, aiming to appropriately address social demands.

In the event of product defects or claims, various costs such as damages, claim processing costs, and product recall or replacement costs may arise, potentially adversely affecting financial position and business performance. Although the Group carries liability insurance to prepare for damages arising from defects, costs not covered by insurance may also arise. The Group is building a system to prevent recurrence of inappropriate incidents, centered on the Quality Assurance Division, through strengthening the quality assurance system, case study training, and thorough implementation of the "Bad News First/Fast" principle.

In the event that human rights issues such as forced labor occur in the global supply chain, legal penalties, litigation, and loss of credibility and reputation may arise, potentially adversely affecting financial position and business performance. The Group has established a company-wide Human Rights Subcommittee that, with advice from external experts, conducts inspections of natural rubber plantations and domestic and overseas manufacturing sites and dialogue with workers, promoting the identification, prevention, and remediation of human rights risks.

In addition to changes in political conditions and economic environments in countries where the Group operates, since passenger car and other automotive tires account for a large share of consolidated revenue, a decline in demand due to deterioration in the automotive industry's business climate or a decrease in transactions with major customers may adversely affect financial position and business performance. There are also risks such as decreased sales and worsened cost ratios due to import restrictions or tariff increases, and increased tax costs due to changes in tax systems or transfer pricing taxation. The Group has established regional headquarters organizations for Asia & Oceania, Europe & Africa, and the Americas, and manages risk in cooperation with local experts.

Due to the declining working population associated with the falling birthrate and aging population, and intensifying competition for recruitment, the Group may be unable to sufficiently secure highly specialized personnel such as DX talent and global management talent. If key personnel leave, there are concerns about the outflow of technology and know-how and stagnation of business operations. In addition, increased recruitment costs and personnel expenses to secure talent may affect financial position and business performance. The Group has established an agile talent acquisition system through the introduction of engagement surveys, utilization of internships and job-specific recruitment, and the building of talent pools and alumni recruitment.

In the event that acts violating various domestic and overseas laws and regulations or acts contrary to corporate ethics occur in the course of global business operations, legal penalties, litigation, and loss of credibility and reputation may arise, potentially adversely affecting financial position and business performance. The Group is strengthening compliance globally through the establishment of a "Corporate Ethics Committee" chaired by the President (held four times a year), the operation of a "Compliance Consultation Office" reporting directly to the President, and the distribution and dissemination of a multilingual "Code of Conduct."

Infringement of intellectual property rights by other companies may undermine competitive advantage, potentially adversely affecting financial position and business performance. The Group strives to protect its own intellectual property through the acquisition of intellectual property rights such as patents and trademarks, while paying close attention to and thoroughly managing risks to prevent infringement of other companies' intellectual property rights.