Keio Corporation

If a large-scale earthquake or a major typhoon or torrential rainfall associated with climate change occurs, in addition to a decrease in sales due to service suspensions or a decline in passengers, facility restoration costs may arise, potentially affecting business performance and financial condition. As countermeasures, the Group is building a monitoring system using weather information systems, improving facilities such as through seismic reinforcement work, and continuously improving its BCP (Business Continuity Plan).

Equipment malfunctions, troubles caused by human factors, accidents caused by third parties at railway crossings, and illegal acts such as terrorism may damage facilities, potentially affecting business performance and financial condition. Positioning "safety as our greatest mission" as the highest priority, the Group promotes continuous improvement by promptly investigating causes and implementing recurrence prevention measures whenever accidents or troubles occur.

In addition to railway safety measures, as large-scale investments such as redevelopment in the Shinjuku and Hashimoto areas gather momentum, domestic interest rates continue to trend upward, and an increase in the financial burden, including higher interest-bearing debt costs, is expected. As countermeasures, the Group is promoting the reduction of interest rate fluctuation risk through long-term fixed-rate financing, appropriate management of interest-bearing debt levels, and improvement of asset and capital efficiency through the sale of cross-shareholdings and low-efficiency assets.

Labor and construction costs continue to rise due to ongoing inflation, and the deteriorating situation in the Middle East has led to increases in power and fuel costs as well as rising material prices and supply tightness, particularly for housing equipment, potentially affecting business performance and financial condition. The Group intends to continue pursuing every possible measure toward efficiency improvement and cost reduction.

Due to diversifying values and population decline, low birthrate, and aging, demand for products and services in businesses such as railway, retail, and hotels may decline. The Group aims to enhance the appeal of areas along its rail lines by concurrently promoting area-wide development along the lines, aiming for long-term value creation through the realization of "the most vibrant and potential-rich area in Japan."

As the Group utilizes numerous IT systems, cloud services, and supply chains, a serious system failure or leakage of personal information could result in restoration costs, damages, and a decline in credibility, potentially affecting business performance and financial condition. The Information Security Subcommittee takes the lead in promoting appropriate information management, and the Group strives for proper management under the Keio Group's personal information management system.

While the Group is making DX investments to secure service quality and strengthen competitiveness amid a declining working population, insufficient funds, human resources, or other resources, or an inadequate response to future technological innovation, changing customer preferences, and social conditions, could result in a decline in competitiveness. The Group is promoting digital transformation of its businesses and building a service provision system responsive to social change.

Securing and developing personnel with specialized knowledge and experience across a wide range of business fields is essential for business development, but if this becomes difficult to sustain due to labor market fluidity and other factors, competitiveness may decline. The Group is promoting initiatives in "securing human resources," "developing human resources," "engagement," "DE&I," and "organizational culture and structure," aiming to enhance the overall strength of the corporate group as one that respects diversity.

If an infectious disease outbreak occurs, each business may be significantly affected, including a decrease in the number of passengers on railways and buses and a decline in the number of customers and restrictions on operating hours at hotels and commercial facilities. As a corporate group responsible for social infrastructure, the Group continuously implements infectious disease countermeasures based on its BCP.

Each business, including the railway business, is subject to regulation under various laws and regulations, and significant regulatory changes could affect business performance and financial condition through restrictions on business activities or the incurrence of legal compliance costs. The Group promotes a compliance system across the entire Group and continuously verifies its various initiatives and considers improvement measures.