MIZUNO CORPORATION

The Group has sales bases in Europe, North America, Asia, and other regions, and production bases in China, Thailand, Indonesia, Vietnam, Cambodia, and other countries. If unpredictable changes in laws and regulations, or political, social, or economic disruption caused by terrorism, war, riots, infectious diseases, etc. occur in these regions, business continuity may become difficult, potentially resulting in decreased sales and other impacts on business performance. The Company has established a Risk Management Committee chaired by the Representative Director and President, and has developed crisis management manuals to respond to such risks; however, unpredictable risks cannot be completely eliminated.

Since manufacturing and sales activities are conducted in various regions around the world, foreign-currency-denominated transactions at the Group's bases are affected by exchange rate fluctuations. Although hedging measures such as forward foreign exchange contracts are employed, unexpected fluctuations far exceeding forecasts could result in decreased sales, increased cost of sales, increased foreign exchange losses, and other impacts on business performance.

Products used for sports and outdoor purposes carry the risk of injuring users or third parties due to breakage exceeding the Company's assumed standards. Although the Company carries product liability insurance, there is no guarantee that such insurance will provide sufficient coverage. In the event of a recall, significant cost increases due to product recovery, replacement, or design changes, as well as damage to brand image and decreased sales, may result.

If the Group's response to climate change, such as reducing greenhouse gas emissions and transitioning to renewable energy, is deemed inadequate, or if waste, hazardous chemical substances, and water resources are not managed appropriately, this could lead to a decline in social credibility and damage to the brand. The Group has set net zero by 2050 as a long-term goal and announced its support for the TCFD recommendations in March 2022, promoting information disclosure; however, delays in response may pose a risk of affecting business performance.

The Group uses natural leather, natural resin, wood, metal, petroleum products, and other materials as raw materials, and is therefore exposed to the risk of fluctuations in resource prices. While risk is diversified for major raw materials through purchases from multiple suppliers, unexpected increases in resource prices could increase raw material costs and affect business performance.

The Group actively acquires and utilizes intellectual property rights, including patents, utility models, designs, and trademarks, both domestically and internationally. However, there is a possibility that pending patent applications may not be approved, that efforts to address unauthorized use or infringement of the Company's intellectual property may not succeed, and that the Company's own technology may be alleged to infringe upon the intellectual property rights of other companies. If the Group's intellectual property is subject to interference, this could result in increased costs to address such issues and other impacts on business performance.

The Group is subject to a wide range of laws and regulations covering product quality, transactions, the environment, labor affairs, health and safety, accounting standards, taxation, and more. Failure to comply could result in increased costs to address such issues and other impacts on business performance. In addition, changes to existing laws and regulations or the introduction of new ones could restrict business activities and require additional investment to respond. The Group promotes thorough compliance across the entire organization under the Sustainability Promotion Committee and the Risk Management Committee.

As the Group operates globally, a decline in demand due to economic downturns in the countries and regions where it sells products may affect sales. In addition, since the Group handles many products for general consumers, there is a risk of decreased sales due to fluctuations in personal consumption caused by weather changes and shifts in consumer preferences, and additional costs may arise if business structural reforms become necessary.

While the Group pays utmost attention to the management of customer information and implements defenses for its information systems, there is a risk of leakage or disclosure of customer information, including personal information, due to intentional intrusion into information systems by third parties or system outages caused by various factors. Should such an incident occur, it could result in claims for damages from customers, increased costs due to loss of credibility, and other impacts on business performance.

Recruiting, developing, and retaining excellent human resources is essential to maintaining competitiveness and achieving growth. The Group strives to create a workplace environment in which diverse personnel can fully utilize their abilities, through fair personnel systems, education and training, benefits programs, and the promotion of diversity. However, if the recruitment and development of human resources does not proceed as planned, this may adversely affect business performance and other aspects of the Group.