TSUZUKI DENKI CO., LTD.

If systems, communication infrastructure, or other assets provided to numerous customers are damaged by cyberattacks such as ransomware, this may result in claims for damages and the burden of repair costs, thereby impacting business performance. In response, the Group has established a response structure centered on the Tsuzuki CSIRT team, and takes risk reduction measures such as establishing security countermeasure directives, conducting employee training, and regularly performing incident response drills.

The Group records software developed in-house for various services, including cloud services, as intangible fixed assets. If the initially expected profitability is not achieved due to changes in the business environment, technological innovation, intensifying competition, or other factors, this may impact business performance and financial position through the recognition of impairment losses, among other effects. In response, the Group continuously monitors and analyzes market conditions, customer needs, and technology trends, and comprehensively reviews significant software investment decisions and value assessments at the Budget Committee.

In the event of a natural disaster such as a major earthquake or an outbreak of infectious disease, this may impact business performance through physical and human damage, as well as disruption to social infrastructure, supply chain interruptions, and delays in service provision. In response, the Group has formulated a BCP that anticipates a wide range of crisis scenarios, and is advancing the introduction of safety confirmation systems and the development of environments for remote work and distributed work arrangements.

In the course of handling customers' confidential information and personal data, if information is lost, damaged, or leaked due to cyberattacks such as ransomware or unauthorized access, this may impact business performance through claims for damages and loss of social credibility. In response, the Group has established a management structure centered on the Chief Information Security Officer, and conducts regular training for all employees, self-inspections, and internal audits, in addition to implementing virus countermeasures, resolving vulnerabilities, and working to formulate IT-BCP.

If the competitiveness of the Group's technologies and know-how declines due to the accelerating evolution of information and communication technology, including the spread of generative AI, and rising security risks, this may impact business performance. In response, the Group is working to enhance its competitive advantage through monitoring and analyzing the latest technology trends, focusing on growth areas, actively investing in human capital, and collaborating with partner companies.

The Group is dependent on an important contract with Fujitsu Limited, its main supplier, and if Fujitsu changes its management policy or procurement terms, this may impact business performance. In response, in addition to strengthening cooperation with Fujitsu, the Group is working to reduce its dependence on specific business partners by expanding its own proprietary services in growth areas such as AI, IoT, and cloud-based contact centers, and through collaboration with external partners.

If a business partner's financial condition deteriorates or it goes bankrupt, this may impact business performance through the inability to collect accounts receivable, among other effects. In response, based on its credit management regulations, the Group sets collection terms and credit limits for each business partner, regularly investigates corporate trends, and, in the event of delayed collection or credit concerns, implements individual receivables protection measures based on its receivables collection management standards.

If the Group is unable to secure the necessary personnel due to increasing difficulty in recruitment amid a worsening labor shortage or employee attrition resulting from greater fluidity in the labor market, this may impact business performance. In response, the Group is working to improve employee engagement through a comprehensive overhaul of its recruitment methods, promotion of referral-based hiring, talent development centered on career autonomy, transformation toward more attractive personnel systems, and initiatives such as health-conscious management, work-style reform, and the promotion of diversity.

In orders received for projects such as system development and network construction, unforeseen events such as inadequate specification finalization, issues with project structure, or insufficient technical verification may make it difficult to execute within the planned scope, budget, delivery schedule, or quality, potentially leading to increased additional costs. In response, the Group clarifies risks and ensures thorough quality control through the holding of deal review meetings and quotation review meetings, enables early problem detection through regular project meetings, and has established a risk assessment and advisory structure staffed by an independent department.