RICOH LEASING COMPANY,LTD.

Unpredictable events such as volcanic eruptions (impact level 5, likelihood level 2), large-scale earthquakes and tsunamis (impact level 4, likelihood level 2), and infectious diseases could cause damage to employees, business locations, and business partners, potentially resulting in unforeseen economic losses. In addition to preparing disaster stockpiles, conducting regular drills, and establishing safety confirmation systems, the company has consolidated information-related equipment into earthquake-resistant facilities, made communication methods redundant, and developed telework environments. Under a Disaster Response Headquarters headed by the Representative Director, President and Executive Officer, the company has established a system for rapid execution of its BCP.

In the Lease & Finance Business, since credit is extended over relatively long periods, sudden changes in economic conditions or business fluctuations could result in delinquencies or bankruptcies, potentially increasing the burden of bad debt losses or provisions for doubtful accounts. The average contract value per contract is approximately ¥2.01 million, which is lower than the industry average, achieving diversification of credit risk. The company works to reduce bad debt losses by improving the accuracy of its proprietary scoring system, which leverages transaction history with approximately 400,000 small and medium-sized enterprises, and through means such as the sale of leased assets and secondary leasing.

If subjected to a cyberattack, there is a possibility of significant impact on management due to system outages, damages payable to customers, and loss of credibility. Given the nature of the leasing business, which relies on information systems to process a large volume of small transactions, the impact of a system outage could be extensive. The company has organized a CSIRT (Computer Security Incident Response Team) and has implemented human and technical measures, including security education and training, establishment of response procedures, and introduction of security software.

If a credit rating agency downgrades the company's rating, or if financial markets experience turmoil or deterioration, there is a liquidity risk that securing necessary funds could become difficult. Significant increases in funding interest rates could also affect business performance. Current ratings are AA-/J-1+ from JCR, A+/a-1 from R&I, and BBB/A-2 from S&P, and the company is working to maintain and improve its ratings through agile execution of financial strategy via the ALM Committee.

Stable operation of information systems is essential for processing a large volume of small transactions, and if a failure or system destruction occurs, the resulting shutdown of systems related to screening and payment/receipt processing could have a significant impact on management. The company is working to reduce the impact and likelihood of such risks through system maintenance, establishment of backup systems, and development of initial response measures for emergencies.

While lease fees are fixed at a set rate based on interest rate levels at the time of contract, interest-bearing debt includes funding at variable interest rates, so fluctuations in market interest rates could affect business performance. Due to the nature of the leasing business, the ratio of interest-bearing debt to total assets is high, and in a rising interest rate environment, there is a risk that increased funding costs will squeeze profits. The company has established an ALM Committee that regularly manages the ratio of fixed to variable rate funding and conducts comprehensive asset-liability management.

The company has made corporate acquisitions and investments, including through the ESG investment framework established in 2020, but changes in economic conditions or other factors could negatively affect the businesses of investee companies, potentially resulting in failure to achieve expected outcomes or losses such as impairment due to a decline in corporate value. The company has established an Investment Committee composed of management personnel, which deliberates on investments and monitors the business and financial conditions of investee companies to identify and analyze signs of impairment risk, working to reduce risk by swiftly implementing necessary countermeasures.

If deficiencies or delays occur in ESG initiatives such as sustainability-related information disclosure, this could affect management through reputational decline among stakeholders or divestment by institutional investors. The company has established a Sustainability Committee and identified four materiality issues, including "Creating a Clean Global Environment," setting non-financial targets for each materiality issue with the aim of achieving both the resolution of social issues and sustainable growth.