East Japan Railway Company

If a railway accident occurs, in addition to a loss of customer trust, compensation costs and business interruption could materially affect management. Changes in the environment, such as the intensification and increased frequency of natural disasters, population decline, and progress in DX, are making safety risks more complex. As countermeasures, the Company is implementing ATS-P installation, seismic reinforcement, platform door installation (completed at 345 tracks across 162 stations as of the end of FY2025), and level crossing accident measures based on the "Group Safety Plan 2028."

Natural disasters such as concentrated heavy rains, typhoons, large-scale earthquakes, tsunamis, floods, and volcanic eruptions could damage railway and related facilities, potentially leading to large-scale power outages or an inability to continue business operations. Difficulty in procuring goods due to suppliers being affected by disasters or disruption of distribution networks also poses a business continuity risk. As countermeasures, the Company is advancing seismic reinforcement of elevated bridge columns, early earthquake detection systems, the introduction of radar rainfall regulation across all lines, a train evacuation decision support system, extending the operating duration of emergency generators, and establishing a procurement system from multiple suppliers.

The outbreak of a serious infectious disease could result in restrictions on economic activity, voluntary restraint from going out, and employee infection, potentially causing a significant decrease in railway transport volume, closures of commercial facilities, and the loss of inbound demand, which could have a substantial impact on financial position and operating results. During the COVID-19 pandemic, there was in fact a significant decrease in transport volume and a major impact on business performance. As a countermeasure, the Company plans to take appropriate transportation assurance measures in cooperation with the government and local authorities based on the "Business Continuity Plan for Pandemic Influenza and Other Infectious Diseases."

In addition to intensifying competition in the transportation market due to the expansion of LCC routes, the extension of expressways, and the practical application of autonomous driving technology, transport volume may decline due to population decline, falling birthrates, an aging population, and the spread of remote work, which could affect earnings. Labor shortages due to difficulty in recruitment and concerns over material supply also pose risks to the normal operation of the business. As countermeasures, under the Group Management Vision "Yusho 2034," the Company is promoting dual-axis growth and synergy creation in mobility and lifestyle solutions, technological innovation and productivity improvement such as expanding one-man train operation and realizing autonomous driving, and strengthening recruitment activities across the Group.

If a serious failure of information systems occurs due to cyberattacks or human error, it could affect business operations, and if personal information is leaked externally or data is tampered with, it could affect financial position and operating results due to a loss of social trust. New risks specific to AI (such as unexpected behavior and leakage of confidential information) associated with recent advances in AI technology have also become apparent. As countermeasures, the Company is implementing continuous security monitoring of information systems, employee training, and establishing a personal information management system, as well as formulating a common Group AI policy and building a check system for generative AI systems.

The occurrence of crime or terrorism could threaten safety in the railway business, among others. Given the nature of railway infrastructure, where large and unspecified numbers of users gather, the social impact would be significant. As countermeasures, the Company is increasing the number of security cameras installed in trains and railway facilities and enabling centralized monitoring through networking, as well as deploying security and self-defense equipment on all Shinkansen and conventional line trains and at major stations.

If violations of relevant laws and regulations, including the Railway Business Act, or acts contrary to corporate ethics occur, this could affect financial position and operating results due to administrative sanctions or a loss of social trust. In July 2025, the Company established the "Committee of Experts for Strengthening and Improving Group-wide Governance," and announced improvement measures in March 2026; strengthening Group governance has become an urgent issue. As a countermeasure, the Company established "JR East Group's 'Determination and Commitment'" in June 2026 and is promoting improvement measures such as establishing a compliance promotion structure, creating workplaces with high psychological safety, and eradicating harassment.

Changes in domestic and overseas economic conditions, including geopolitical risk, infectious diseases, and large-scale natural disasters, as well as fluctuations in interest rates, exchange rates, and prices, could raise procurement costs and financing costs, affecting earnings. There are also risks to procurement activities from the disruption of globalized supply chains and the diversification and increasing complexity of human rights issues. As countermeasures, the Company is conducting price negotiations leveraging broad procurement and scale merit, suppressing interest rate and exchange rate fluctuation risk through leveling and extending debt redemption amounts, yen-denominated payments, and long-term fixing of interest payments, and establishing a multiple-supplier system.

In overseas business, various risks exist, including changes in political systems, changes in laws and regulations, differences in business customs, construction delays, and exchange rate fluctuations. In some projects, risks such as political upheaval or conflict have actually materialized, which could affect receivables collection as well as financial position and operating results. There are also concerns about the impact on the safety of Group employees. As countermeasures, the Company conducts detailed profit and loss management for each project, risk analysis based on advice from experts such as lawyers and consultants, and cooperation with the Japanese government as necessary.

Under the approval system for fares and charges based on the Railway Business Act, an inability to flexibly change fares in response to changes in the business environment could affect earnings. In addition, the lease fee for Shinkansen development lines is calculated in principle as a fixed amount for 30 years after opening, and there is a risk regarding the treatment after the lease ends, which is left to consultation among relevant parties, as with the Hokuriku Shinkansen (between Takasaki and Nagano), where the lease is scheduled to end in FY2027. As countermeasures, the Company implemented a fare revision in March 2026, and is requesting the government to realize a notification-based system for Shinkansen non-reserved seat fares, a flexible system to respond to inflation, and a review of the rate-of-return regulation method.