FUJITSU LIMITED

In addition to the increasing sophistication of cyberattacks, the emergence of new attack methods exploiting generative AI and AI agents is heightening the risk of operational shutdowns and information leaks affecting customer systems and internal networks. Should an information leak occur, the Company may face fines and sanctions under the Personal Information Protection Act and GDPR, damage to corporate brand value, and loss of business opportunities. As countermeasures, the Company is promoting the construction of an authentication and authorization infrastructure premised on zero trust, the establishment of a company-wide security risk management scheme, and measures to strengthen supply chain security.

In contracted system development and the operation and maintenance of products and services, increasingly sophisticated customer requirements and system complexity raise development difficulty, creating risks of defects, flaws, delivery delays, and unprofitable projects. If these risks materialize, product recall and repair costs, customer compensation, and lost opportunities may arise, affecting sales and profit/loss, and inappropriate conduct during the response process could damage corporate reputation. As countermeasures, the Company has established the Fujitsu Global Quality Policy and a Quality Management System, and continues quality improvement activities through a company-wide quality management organization reporting directly to the President.

The increasing frequency and impact of natural disasters due to climate change, the occurrence of a major earthquake directly beneath the Tokyo metropolitan area or along the Nankai Trough, or an infectious disease pandemic could cause business site functions and IDCs to stop and disrupt the supply chain, potentially halting service provision, including cloud services, and product shipments. The Company is strengthening business continuity management (BCM) through the organization of a company-wide disaster prevention structure and continuous implementation of various drills, formulation and review of business continuity plans (BCP), and e-learning education for all employees globally.

In the course of global business expansion, violations of domestic and international laws and regulations such as competition law, anti-bribery law, and export control law could result in substantial fines, damage claims, suspension of customer designation, and loss of business opportunities due to suspension of transactions by business partners. Should improper accounting occur, this could lead to inability to file or the need to correct securities reports, a decline in stock price, and shareholder damage claims, significantly undermining social credibility. The Company addresses this risk under the framework of the Global Compliance Program, through the establishment of internal rules and regulations, compliance education for officers and employees, and operation of an internal whistleblowing system.

There is a trend toward tightening regulations and restrictions on global corporate activities due to economic security policies in various countries and regions, such as tariff measures by the United States, which could affect target business markets and supply chains, increase response costs, and result in lost business opportunities. In the provision of solutions in areas susceptible to public regulation, such as telecommunications, healthcare, and personal information handling, regulatory trends may also affect business activities. The Company has established a communication framework with government officials in major countries and continuously monitors regulatory and policy trends through information gathering and analysis from relevant ministries and industry associations.

In the ICT industry, the pace of technological progress is rapid, and changes in market conditions, intensified competition, and technological innovation could cause product and service prices to decline; if sufficient cost reductions or sales expansion cannot be achieved, this would affect sales and profit/loss. Failure to maintain a competitive advantage in technology development competition carries the risk of a decline in market share and profit margins. The Company strives to secure technological and service advantages through regular analysis of market and competitive environments, expansion of a competitive product and service lineup, and continuous R&D investment in advanced technologies.

In global business operations, sharp fluctuations in foreign exchange rates could reduce the price competitiveness of overseas products and services and increase procurement costs, significantly affecting the sales and profit/loss of overseas businesses. Rising interest rates could increase interest payments and financing costs on interest-bearing debt, while a downturn in the stock market could lead to valuation losses on held shares and increased corporate burden due to the erosion of pension assets. The Company seeks to minimize such impacts through hedging measures such as forward foreign exchange contracts, continuous monitoring and analysis of financial market conditions, and regular information sharing within the Group.

The growth and profits of the Company Group are highly dependent on human resources; failure to recruit and develop necessary personnel such as executives and highly skilled specialists, failure to prevent attrition, or the occurrence of serious labor issues could affect growth and profits. The Company is promoting the securing of excellent talent and the development of an environment where they can thrive, through the introduction of a job-based personnel system, individualized treatment for highly skilled specialists, expansion of internal posting systems and reskilling programs, and the use of flexible working arrangements based primarily on telework.

In the procurement of non-general-purpose parts and rare raw materials, natural disasters, infectious diseases, and international instability could make stable procurement difficult, potentially causing delays in the provision of products and services and lost opportunities. Rising procurement prices due to exchange rate movements or supply-demand tightness could lead to deteriorating profit margins and declining sales of products and services. The Company is strengthening supply chain resilience through multi-sourcing of procurement, securing appropriate inventory levels, encouraging and supporting BCM among business partners, and rolling out the Fujitsu Group Sustainable Procurement Guidelines.

As human rights due diligence obligations advance, particularly in Europe, the manifestation of human rights risks within the Company itself and its supply chain (such as working conditions and conflict minerals) could lead to talent attrition, loss of business opportunities, and loss of social credibility due to administrative penalties. Should human rights violations occur in businesses utilizing rapidly proliferating AI technology, this could lead to economic losses such as damage claims and fines, as well as loss of social credibility. The Company addresses this risk through the establishment and dissemination of the Fujitsu Group Human Rights Statement, the establishment of company-wide rules for AI ethics review and AI risk management based on the AI Commitment, and the regular convening of an external AI Ethics Advisory Committee comprising outside experts.