HIRATA Corporation

If information leakage or ransomware damage occurs due to malware intrusion or cyberattacks, it may affect business performance and financial condition through damage to systems and factory equipment, deterioration of corporate image, production delays, etc. As countermeasures, the Company has introduced unauthorized access prevention systems, established a management structure through the Information Security Committee, and conducted training exercises assuming cyberattack scenarios.

If a defect occurs in the Company's equipment and causes damage to customers, this may result in liability claims or litigation, leading to substantial costs and deterioration of corporate image. The Company addresses this through production based on ISO quality management standards, compliance with safety standards such as CE marking and UL508A, and enrollment in comprehensive liability insurance; however, there remains a possibility that damages cannot be fully compensated.

In the course of overseas business development, the Company may be affected by sudden changes in the political situation of host countries, geopolitical factors, unexpected regulatory changes, terrorism/conflict, and social disruption caused by infectious diseases, among other factors. The Group focuses on the early identification of and response to changes in the surrounding environment through regular and as-needed information exchange among domestic and overseas subsidiaries.

If customers' capital expenditure conditions in EV, Automotive-related, Semiconductor-related, and other fields change due to changes in domestic and overseas economic trends or a downturn in the life cycle of customers' products, this may affect order intake. As a countermeasure, the Company avoids concentrating capital in specific business fields and promotes multiple businesses in parallel, thereby reducing the management impact of life cycle fluctuations in any particular field.

If production plan delays occur due to shortages in the supply of raw materials, increases in resource and raw material prices, or rising labor costs due to workforce shortages, this may affect the Group's business performance and financial condition. The basic policy is diversified response through the parallel promotion of multiple businesses, but specific hedging measures against individual cost increase risks are not explicitly disclosed in the Annual Securities Report.

If the Company fails to appropriately respond to rapid technological innovation beyond expectations, securing orders may become difficult, affecting business performance and financial condition. As countermeasures, the Company has established various intellectual property education programs and reward systems, including rewards for filing/registration, excellent invention awards, and license income rewards, to enhance engineers' motivation for invention and promote the development of high value-added products.

In the event of a large-scale disaster at any business site, business activities may be forced to halt due to damage to factory equipment and information devices, disruption of infrastructure such as electricity and water supply, and severance of logistics networks. The Company has established a BCP (Business Continuity Plan), regularly conducts various drills, inspections, and education during normal times, and has built a structure to revise manuals promptly according to circumstances.

If the securing and development of necessary human resources does not proceed as planned due to a worsening recruitment environment or a decline in the working population, it may become difficult to maintain and improve technological capability and competitiveness, affecting business performance and financial condition. The Company promotes diversity, supports the advancement of women, strengthens recruitment through internships, enhances education by rank and theme, and pursues improvement measures based on employee engagement surveys.