SUMITOMO CORPORATION

The Company has 327 consolidated subsidiaries and 192 equity-method affiliates, and there is a risk that changes in the business environment such as technological innovation, loss of major customers, or rises in raw material prices could prevent planned profits from being achieved, resulting in the inability to recover invested capital or additional funding burdens upon withdrawal. As countermeasures, the Company has established investment selection guidelines, deliberation by the company-wide Investment and Loan Committee, a 100-day plan support system after investment execution, and a monitoring system, and is working to optimize its portfolio.

In the mineral resource and gas development businesses conducted in various countries, the Company bears risks such as cost overruns and schedule delays in development, fluctuations in reserves, underachievement of planned production volumes and cost increases, and government-related risks such as delays in permits and licenses, changes in tax systems, and asset seizures. If these risks materialize, they could have an adverse impact on business results and financial condition, and the Company is responding through market information gathering and analysis and strengthening project management.

Through the buying and selling of various commodities including metals and energy, and the holding of mineral, crude oil, and gas resource interests, the Company bears commodity price fluctuation risk both directly and indirectly. The Company strives to mitigate risk through setting position limits and loss limits for each commodity and through hedging transactions, but there is no guarantee that hedging will sufficiently avoid the risk.

The Company conducts commercial transactions and business activities in more than 60 countries, and business delays or suspensions caused by changes in the political, economic, and social conditions of each country could adversely affect business results and financial condition. Geopolitical risks such as those related to Russia/Ukraine-related business and the Middle East situation also exist, and the Company responds through exposure ceiling management based on internal country ratings and insurance coverage for individual projects.

The Company is affected by interest rate and foreign exchange fluctuations in fundraising through borrowings from financial institutions, corporate bonds, and commercial paper, in foreign currency-denominated investments and transactions, and in the yen conversion of the financial statements of overseas consolidated companies. The Company strives to avoid risk by utilizing derivatives and other tools, but it is explicitly stated that there is no guarantee that these means will sufficiently avoid the risk.

As much of the Company's business activities depend on information systems, increasingly sophisticated cyberattacks, unauthorized access, malware intrusions, and the like could result in significant adverse effects such as information leakage, loss, or damage, or temporary suspension of business activities. The Company manages this risk based on its "Basic Policy on Information Security," centered on the IT Strategy Committee chaired by the CIO, and responds in cooperation with external specialized organizations.

The Company is subject to a wide range of laws and regulations in Japan and overseas (competition law, anti-corruption, personal information protection, human rights and environmental protection, etc.), and violations could result in serious adverse effects such as fines and other penalties, business restrictions, and loss of credibility. There has also been a case in which the subsidiary Sumisho Realty Management received a business improvement order from the Financial Services Agency in December 2025, and the Company is working to thoroughly enforce the principle of "compliance as the top priority," centered on the Chief Compliance Officer.

If business activities conducted around the world have negative impacts on human rights or the global environment, additional costs may arise from resolving or mitigating such impacts or from damage compensation, and there is a possibility of business suspension, deterioration of financial condition, or damage to credibility. The Company has established policies in the areas of climate change, natural capital, and human rights, and is advancing initiatives such as human rights due diligence, company-wide risk mapping, and a shift toward renewable energy.

If turmoil occurs in financial markets, financial institutions tighten lending, or credit ratings are significantly downgraded, the Company may be unable to raise necessary funds at the necessary time on desired terms, and funding costs may increase. The Company aims to maintain and improve financial soundness by securing sufficient liquidity through the use of cash and deposits and commitment lines, and by diversifying funding sources and means.

If exposure becomes concentrated in a specific country, field, or business partner, deterioration of the business environment or other factors could prevent the Company from achieving expected returns and result in losses. The Company responds through country-by-country exposure management under its country risk management system, discussions on the allocation of invested capital at the Investment and Loan Committee, and regular project value monitoring for upstream resource and energy projects.