ADVANTAGE Risk Management Co., Ltd.

The Group handles large volumes of sensitive personal information, such as stress check results and counseling information, and if a leakage or violation of the Act on the Protection of Personal Information were to occur, it could have a material impact on the business. As countermeasures, the Group has obtained JIS Q 15001 and ISO/IEC27001 (ISMS) certification and has established a compliance system in cooperation with its retained legal counsel.

The Employment Support for Persons with Disabilities Business, Risk Financing Business, and Small-Amount Short-Term Insurance Business are subject to multiple laws and regulations, including the Insurance Business Act, the Financial Instruments and Exchange Act, and the Act on Provision of Financial Services. If any of these businesses is found to be in violation of applicable laws, it could be subject to administrative sanctions such as revocation of registration, which could materially affect the continuity of the business itself. The Group has established a compliance framework by appointing a dedicated compliance officer within the company and compliance personnel in each department.

The stress-check-compliance products sold in the Mentality Management Business must conform to the requirements set forth under the Industrial Safety and Health Act. If a legal amendment causes existing products to no longer comply, this could affect the business. The Group continuously conducts product content reviews with its retained legal counsel and responsible departments to address regulatory changes.

Each business actively utilizes systems in providing its services. If network disconnections or equipment failures occur due to natural disasters, fires, computer viruses, unauthorized external intrusion, or other causes, this could significantly affect the business. The Group addresses this risk through continuous system investment to improve fault tolerance and the use of external specialized services.

In the Risk Financing Business, sales attributable to Aflac Life Insurance Japan Ltd. account for a large proportion of revenue. If Aflac's financial condition were to deteriorate, if it were to become insolvent, or if it became unable to continue its existing insurance policies, this could affect the Group's business and operating results. The Group has entered into agency agreements with multiple non-life and life insurance companies and has built a system for continuous service provision, thereby diversifying this risk.

In the Mentality Management Business, the Employment Support for Persons with Disabilities Business, and the Small-Amount Short-Term Insurance Business, new market entrants and competitors are increasing their expertise and engaging in price competition. If the Group's competitive advantage is lost, this could affect the Group's business and operating results. The Group addresses this through product development that responds to market and customer needs, improvements in service levels, and differentiation achieved by combining its proprietary product development capabilities with its customer base.

The Small-Amount Short-Term Insurance Business underwrites individual medical and death insurance products. If insurance claim payments were to surge due to a large-scale natural disaster, an epidemic, or similar event, underwriting profit could deteriorate, affecting operating results. In addition to managing income and expenses and underwriting risk for each product, the Group diversifies and transfers risk through the use of reinsurance.

The Group actively pursues M&A, capital and business alliances, and CVC investments to expand its business. If changes in the business environment cause a significant decline in the excess earning power underlying goodwill, an impairment loss could be recognized, resulting in greater volatility in financial results. The Board of Directors carefully deliberates on the appropriateness and rationality of each deal, and the Group has established a system to properly manage the progress of business plans following investment.

The Group actively invests in software to differentiate itself from competitors and strengthen its market competitiveness. If the recovery of such investments does not proceed as planned due to development delays, cost increases, or downward revisions to revenue plans, an impairment loss could be recognized, affecting operating results. The Group appropriately manages its investment projects through deliberation by the Investment Committee and progress reporting to the Board of Directors.

Shinji Torigoe, the founder and Representative Director and President, plays a key role in determining management policy and strategy and in building relationships with business partners. If a situation arose in which he were unable to make decisions or perform his duties, this could affect the Group's business, operating results, and business development. The Group is working to build a management structure that eliminates excessive dependence on any single individual by securing highly capable talent from outside the company and promoting internal advancement and delegation of authority.