Dai Nippon Printing Co.,Ltd.

As the Group handles large volumes of personal and confidential information belonging to client companies and consumers, cyberattacks, unauthorized access, or information leaks/system outages originating from contractors could significantly impact business performance and financial condition through loss of trust, response costs, and business suspension. Against the backdrop of advancing DX, expanding AI utilization, and geopolitical risk, cyberattacks are becoming more sophisticated and elaborate, making complete prevention difficult. In response, the Group is strengthening resilience through the introduction of zero trust, XDR, and cyber hygiene, establishing an incident response framework via CSIRT, and reassessing BCP with training that includes management.

If procurement of raw materials and components, including semiconductor-related materials, is disrupted due to geopolitical risk, natural disasters, logistics disruptions, or regulatory changes, this could affect business activities and social trust. Amid growing instability in global affairs and increasing demands for economic security, there is a need to shift from efficiency-focused supply chains to ones emphasizing sustainability and resilience. In response, the Group is securing multiple procurement sources, examining alternative materials, managing strategic inventory, and understanding upstream supply networks to avoid excessive dependence on specific regions and diversify its supply network.

The Group's business activities may affect the human rights of all stakeholders across the supply chain, and any human rights violations could pose a risk to social trust and business continuity. In recent years, the importance of corporate initiatives to respect human rights has grown, and inadequate response could lead to constraints on business activities and reputational damage. In response, since fiscal 2024 the Group has conducted human rights risk surveys and interviews at domestic and overseas sites, identified material human rights risks, and promoted preventive and corrective measures, while continuing written surveys and interviews with suppliers.

The manifestation of geopolitical factors and inter-state conflicts through economic means (geoeconomic risk) could affect business operations and profitability through supply chain disruptions and increased restructuring costs, restrictions on business regions and market access, and fluctuations in resource, energy prices, and exchange rates. The expansion and increasing complexity of markets and supply chains accompanying globalization is heightening uncertainty in the business environment. In response, the Group continuously reviews its business portfolio across the four categories of "Focus Businesses," "Businesses with Growth Potential," "Foundational Businesses," and "Businesses for Restructuring," aiming to optimize resource allocation.

If natural disasters such as wind and flood damage from climate change, large-scale earthquakes, volcanic eruptions, or pandemics occur, business activities could be disrupted due to damage to employees, facilities, and infrastructure, affecting a wide range of stakeholders including client companies and business partners. Increasing water risks such as drought and flooding, along with the growing frequency and severity of natural disasters, may also affect the stability of raw material procurement, production activities, and the supply chain as a whole. In response, the Group formulates and operates BCP under the BCM Promotion Committee, and promotes diversification of manufacturing sites and raw material suppliers, fire prevention, earthquake resistance, flood countermeasures, and risk transfer through various insurance policies.

The transition to nature positive, carbon neutrality, and a circular economy is accelerating globally, heightening transition risks such as changes and tightening of systems and regulations. Inadequate response could lead to increased costs and reduced competitiveness, and rising demands for stronger GHG emission reductions, transition away from petrochemical-based products, and switching to alternative materials may require raising target levels or revising product specifications. In response, the Group has set FY2030 (ending March 2031) mid-term targets under the "DNP Group Environmental Vision 2050" and is systematically promoting initiatives toward realizing a decarbonized, circular, and nature-positive society.

The rapid advancement and societal implementation of technologies such as generative AI and robotics are affecting business models and value propositions, and widening gaps in AI utilization infrastructure (skills and data) between regions and companies could become a new competitive factor. In addition, the expansion of AI utilization also carries the risk of new human rights issues emerging, such as discrimination and privacy violations. In response, the Group has formulated the "DNP Group AI Ethics Policy" and "AI Guidelines," is building an AI audit framework and operational structure, and is working to accelerate value creation and business development that integrates the real and digital domains.

Due to the effects of geopolitical risk and geoeconomic conflict, fluctuations in resource and energy prices, exchange rate instability, surging demand in emerging countries, and constraints on natural resources, the supply-demand balance for printing paper, film materials, and other materials may fluctuate significantly, affecting business performance. In the event of sharp exchange rate fluctuations, although the Group hedges through local production and forward contracts, the impact on business performance cannot be completely avoided. In response, the Group strives to secure stable supply and optimize procurement prices by procuring from multiple domestic and overseas suppliers.

If a compliance violation occurs, it could damage the company's brand image and customer trust, as well as give rise to legal liability and economic losses, potentially having a serious impact on the Group's business operations. In recent years, there has been a growing trend toward emphasizing corporate social responsibility and ethical conduct, along with tightening regulations in various countries and regions. In response, the Group has established and periodically reviews the "DNP Group Code of Conduct," conducts hierarchical training and autonomous corporate ethics training, operates a compliance evaluation system, and maintains a multilingual global internal reporting hotline.

Labor shortages are intensifying due to the declining working-age population and the progression of the declining birthrate and aging population in Japan, and inadequate response to securing and developing highly specialized and adaptable talent could affect business operations through a decline in competitive advantage. In addition, growing social concern over occupational accidents and mental health, along with tightening occupational safety regulations in various countries and regions, poses a risk of loss of corporate credibility and economic losses in the event of violations. In response, under the "Human Capital Policy" and "DNP Group Health and Safety Charter," the Group promotes health and safety activities including one-hour monthly dialogue and educational activities at all manufacturing sites, risk assessments, and reduction of chemical exposure risks.