O-WELL CORPORATION

The risk that foreign exchange fluctuations in foreign currency-denominated transactions may directly affect the business performance of the Group. Both impact and likelihood of occurrence are assessed as "high," making this the risk item with the highest probability of materialization among all risk items. As a countermeasure, the Group implements hedging transactions such as forward exchange contracts.

The risk that unforeseen information leakage or system failures may result in damages claims from customers and business partners, system recovery costs, loss of social credibility, and disruption of business activities. Both impact and likelihood of occurrence are assessed as "high," placing this risk alongside foreign exchange fluctuation risk as a top priority. The Group addresses this through the establishment and dissemination of internal regulations on information management and education, and the development of an information security environment.

The risk that demand for the Group's delivered products may decline due to changes in economic conditions, supply-demand environment, or changes in customers' purchasing policies, thereby affecting business performance. Impact is assessed as "high" and likelihood of occurrence as "medium." The Group intends to address this through new demand creation activities in line with the medium-term management plan "MAP24-26."

The risk that, in the event it becomes difficult to maintain agreements or continue supply with suppliers with whom agency agreements etc. have been concluded, securing alternatives will take time and affect business performance; in addition, the risk that demand may decline due to changes in production and sales trends or the supply-demand environment in the automotive industry, which accounts for a large proportion of net sales. Impact is assessed as "high" and likelihood of occurrence as "medium." The high degree of dependence on specific suppliers and industries constitutes a structural vulnerability.

The risk that own funds earmarked for capital expenditure, loans to subsidiaries, working capital, and repayment of borrowings may be diverted to purposes other than planned due to the failure to achieve expected investment returns or sudden changes in the external environment. Impact is assessed as "high" and likelihood of occurrence as "medium." The Group intends to address this through the implementation of capital efficiency improvement measures in line with the medium-term management plan "MAP24-26."

The risk that the Group may be unable to secure necessary human capital due to labor market fluidization and intensified competition, or that a decline in engagement may lead to reduced organizational productivity and the loss of talented personnel, thereby impeding the maintenance and succession of know-how necessary for business execution. Impact is assessed as "high" and likelihood of occurrence as "medium." The Group addresses this through the development of a human resource portfolio and the establishment and operation of a new personnel system.

The risk that inadequate management and oversight functions stemming from deficiencies in governance and compliance systems at Group companies may result in fraud or legal violations, leading to a loss of social credibility and deterioration of business performance. Impact is assessed as "high" and likelihood of occurrence as "medium." The Group addresses this by strengthening management oversight functions through the dispatch of officers from the parent company to subsidiaries and by building a Group-wide monitoring system.

The risk that natural disasters occurring in countries or regions where business activities are conducted may degrade social infrastructure functions, forcing the suspension of operations and affecting business operations and performance. Impact is assessed as "high" and likelihood of occurrence as "low." The Group addresses this through the establishment of a management system based on emergency response guidelines and countermeasure manuals.

The risk that, amid the policy of expanding overseas operations in line with customers' global expansion, business operations and performance may be affected by relocation or closure of customers' manufacturing sites, or by sudden changes in the political, economic, or social conditions in the countries of operation. Impact is assessed as "medium" and likelihood of occurrence as "low." The Group addresses this by strengthening relationships with customers and building an information-gathering system utilizing local overseas consultants.

The risk that, in conducting business both domestically and internationally, the Group is subject to various laws and regulations, and that changes in or tightening of regulations may result in compliance costs, or that legal violations may lead to the suspension, revocation, or non-renewal of licenses and permits. Impact is assessed as "medium" and likelihood of occurrence as "low." The Group addresses this through comprehensive monitoring of regulatory trends using specialized monitoring tools and the utilization of local overseas consultants.