SWCC Corporation

Risk that stable business operations become difficult due to disruptions in the supply of raw materials and energy resources caused by prolonged regional conflicts, as well as disruptions in international logistics. While the company is working to reduce this risk by diversifying procurement sources, promoting multiple sourcing, and securing substitute materials, there remains a possibility of significant impact on business performance and financial condition should supply disruptions materialize. Amid the escalating situation in the Middle East, uncertainty in the supply chain continues; while the company currently does not expect a material impact, it states that it will promptly disclose any changes should the situation evolve.

Risks recognized include loss of sales opportunities due to labor shortages, impact on business continuity from difficulties in transferring manufacturing skills, deterioration in product and service quality, and impact on achievement of business performance targets due to lost growth opportunities. The company is promoting alumni recruitment and referral-based hiring, expanding tiered training and self-directed learning programs, and implementing engagement-enhancing measures such as feedback interviews; however, residual risks remain regarding material impact on business performance due to organizational structural constraints and lost business opportunities.

Risk that fluctuations in the price of copper, a key raw material, and petrochemical products such as polyethylene, may raise material unit costs and outsourced product costs, thereby deteriorating product profitability. The company is working to revise product unit prices in line with exchange rate movements and to appropriately pass on cost increases through pricing; however, it anticipates certain cases where passing on costs to already-contracted volumes is difficult, and has factored the resulting impact into its business performance forecasts to a certain extent.

Risk that profitability of overseas sales may decline due to the progression of yen appreciation. The company is addressing this by revising product unit prices in response to exchange rate fluctuations; however, the impact of declining profitability remains in the event of a sharp yen appreciation. As overseas business expands, the importance of foreign exchange risk may continue to increase.

The main risk recognized is the suspension of operations at manufacturing sites and paralysis of logistics functions due to large-scale natural disasters such as earthquakes, typhoons, and floods. The company works to ensure effectiveness through company-wide dissemination of its Business Continuity Plan (BCP) and regular training exercises; however, if power shortages, logistics disruptions, or similar issues become prolonged due to a natural disaster exceeding expectations, significant restrictions on planned production activities may occur, and the risk of material impact on business performance remains.

The main risks recognized are the loss of intellectual property, customer information, and other confidential information, as well as reputational damage, resulting from cyberattacks, information leaks, or system failures. The company addresses these risks through the operation and monitoring of its CSIRT, biannual training exercises to verify information communication systems in the event of an incident, and cybersecurity insurance coverage; however, the risk remains of loss of confidential information, reputational damage, and losses not covered by insurance in the event of exposure to unknown attacks.