Bandai Namco Holdings Inc.

Intensifying competition in the IP business and rapid changes in markets and customers create a risk that dependence on specific IPs could destabilize earnings. In addition, increased investment in IP creation, acquisition, and protection could become a financial burden. In response, the Group is strengthening the creation and cultivation of new IPs, establishing a diverse IP portfolio, and promoting collaboration with external partners.

There is a risk that the value of IPs held by the Group could be eroded by the circulation of counterfeit goods and infringement of intellectual property. Quality defects in products and services that utilize IP could also adversely affect customer trust and brand value. The Group addresses this through appropriate use and protection of intellectual property, including the elimination of counterfeit goods, and through awareness-raising activities both internally and externally.

Information leaks and impacts on business systems due to cyberattacks and similar incidents are recognized as significant risks, along with concerns over delayed responses to technological evolution and legal changes, and declining information literacy within the company. Based on the Group Information Security Management Regulations, the Group is strengthening monitoring and vulnerability countermeasures, expanding its information security department, and enhancing employee training.

In the Digital unit, there is a risk that lengthening game development periods and rising investment amounts could pressure profitability. Responding to the diversification of platforms and rapid technological evolution is also an additional cost factor. The Group addresses this by strengthening and streamlining a quality-focused development structure, collaborating with external studios, and building an optimal title portfolio.

Responding to changes in policies, laws, regulations, and industry rules in each region is required, and there is a risk that delayed responses or violations could affect business continuity. Failure to adapt to the culture, customer preferences, and distribution practices of each region could also lead to reduced competitiveness. The Group addresses this by strengthening the collection and sharing of up-to-date information in each region, enhancing overseas governance structures, and promoting a

Competition to secure specialized talent to drive the IP-axis strategy is intensifying, and a shortage of corporate talent supporting the business foundation is also a challenge. Competition is also intensifying in building relationships with external creative talent and external partner companies. The Group addresses this by introducing systems that enable diverse talent to thrive, securing and developing global and corporate talent, and conducting engagement surveys.

The Bandai Namco Group, which operates globally, faces the risk that sales and profits could be affected by foreign exchange fluctuations. Fluctuations in stock prices could also affect the valuation of held securities and capital policy. The Group addresses this by strengthening its risk management structure and through timely and appropriate information disclosure, among other measures.

In the Toys & Hobby unit, there is a risk that rising prices of raw materials and fuel, as well as difficulty procuring raw materials, could push up manufacturing costs and worsen profitability. Stricter regulations on plastic use are also a factor that could increase costs over the medium to long term. The Group addresses this by expanding and streamlining its production structure, diversifying production sites, and reducing the use of petroleum-derived plastics through research and development of new materials, among other measures.

There is a risk that the Group's production, sales, and service provision could be disrupted by natural disasters such as earthquakes, the spread of infectious diseases, changes in political conditions, and similar events. In particular, geographic concentration of production sites could lead to expanded damage. The Group addresses this by promoting and continuously reviewing training based on BCP/BCM, diversifying production sites, and responding in accordance with government requests in each country and region.

If legal or compliance violations occur at Group companies in Japan or overseas, there is a risk that this could lead to a decline in corporate credibility and financial losses such as litigation and fines. Centered on the Group Compliance Committee, the Group addresses this through ongoing compliance education and awareness-raising activities, compliance awareness surveys, and the establishment of an internal whistleblowing system.