Uchida Yoko Co.,Ltd.

The Group's business is heavily dependent on the domestic market, and there is a risk that deterioration in corporate earnings leading to reduced capital investment, or worsening finances at national and local government levels leading to cuts in public investment, could directly affect business performance. Since domestic economic trends influence the investment appetite of the Group's key customer segments—private companies and public institutions—an economic downturn could adversely affect both revenue and profit. No specific countermeasures are described.

Given the nature of the business, which involves handling personal and confidential information of customers and business partners, there is a risk that an information leak could result in reputational damage and liability for damages. Although the Group is pursuing multiple measures, including establishing internal management systems and providing security education for employees, it is explicitly stated that there is no guarantee leaks can be completely prevented. Should a leak occur, it could adversely affect both business performance and financial condition.

The Group's products and services are used in applications requiring high reliability, such as customers' core business operations, and there is a risk that defects could cause serious losses for customers. In addition to potential liability claims for damages arising from defects, a decline in social reputation could also reduce customers' purchasing intent. While the Group states that it exercises sufficient care in quality control, it is not stated that the risk can be completely eliminated.

The Group is subject to a wide range of laws and regulations, including those relating to fair trade, the environment, recycling, taxation, antimonopoly rules, business licensing, and import/export controls, and there is a risk that failure to comply could result in sanctions such as revocation of business licenses or suspension from bidding. In particular, given the business structure's high dependence on public tenders, a bidding suspension could have a direct impact on revenue. No specific countermeasures are described.

The Group's business is built on relationships with numerous business partners and alliance partners, and significant changes in these relationships could adversely affect business performance and financial condition. Where dependence on a specific business partner or alliance partner is high, termination of the relationship or changes in terms could pose a material risk to business continuity. No specific countermeasures or details of the degree of dependence are described.

Rapid technological innovation in areas such as AI, cloud computing, and IoT is causing significant short-term shifts in customer needs and the competitive landscape, creating a risk that the Group's products and services could become obsolete. Although the Group strives to monitor technology trends and introduce new technologies, it is explicitly stated that a delayed response could lead to a significant decline in revenue and adversely affect business performance and financial condition. Amid continued intensifying competition in the ICT sector, the priority and speed of execution of technology investment are key to competitiveness.

The Group's growth and profitability are highly dependent on human resources, and if it becomes difficult to recruit and develop the necessary talent, or if employee attrition cannot be prevented, growth and profitability could be affected. The occurrence of serious labor issues is also cited as a factor that could adversely affect business performance, underscoring the importance of establishing an environment in which employees can continue working. Against the backdrop of intensifying competition in the labor market due to the declining birthrate and aging population, the importance of human resource risk is increasing.

There is a risk that natural disasters such as earthquakes and storm/flood damage could cause harm to offices, facilities, employees, and their families, disrupting business continuity. Although measures such as formulating a BCP, conducting disaster drills, and establishing employee safety confirmation systems are in place, it is explicitly stated that damage cannot be completely avoided, and there is a possibility of adverse effects on business performance and financial condition. Given Japan's geographic characteristics, risks from large-scale earthquakes and typhoons are constantly present.

If costs related to global environmental conservation toward a decarbonized society increase due to the strengthening of environment-related laws and regulations, business performance and financial condition could be affected. It is also pointed out that if the Group's response to the growing demand for the transition to a decarbonized society is delayed, there is a risk of a decline in corporate value due to lost sales opportunities and other factors. While addressing climate change is positioned as an important issue, specific numerical targets and details of countermeasures are not described.

There is a risk that the Group's products and technologies could be deemed to infringe upon the intellectual property rights of other companies, as well as a risk of being subject to certain restrictions when using third parties' software and other intellectual property. If an infringement of intellectual property rights is determined, business activities could be restricted through damages claims or injunctions, potentially adversely affecting business performance and financial condition. Against the backdrop of increasing complexity of intellectual property rights in the ICT and software fields, the importance of risk management is growing.