Nishi-Nippon Railroad Co.,Ltd.

There is a risk that natural disasters and extreme weather events such as earthquakes, heavy rain, and typhoons could cause damage to employees and others, destruction of facilities and equipment, and business interruption or suspension due to delays in the delivery of raw materials and equipment. In addition, increased costs are anticipated due to the introduction or strengthening of decarbonization taxes and tightening of energy-saving regulations. As countermeasures, the Group conducts training based on emergency response manuals, performs regular facility patrol inspections, secures alternative supply sources and multiple transportation routes, and promotes initiatives based on a roadmap aimed at achieving carbon neutrality by 2050.

There is a risk that the declaration of a state of emergency or the occurrence of city lockdowns could lead to business interruption or suspension, as well as health impacts due to infection among employees and other stakeholders. For the Nishitetsu Group, which operates a wide range of businesses, there are concerns about simultaneous impacts across a broad range of business areas. The Group addresses this through thorough infection prevention measures, dissemination of business continuity plans (BCP), and securing multiple transportation routes.

There is a risk that the occurrence of war or international conflict overseas could result in loss of life or damage to property of employees and others, business interruption or suspension, and delays in the delivery of raw materials and equipment. In addition, a decline in the number of inbound visitors to Japan due to political instability, resulting in decreased sales and profits, as well as the occurrence of response costs and deterioration of brand image due to changes in laws, regulations, and policies in the countries or regions where the Group operates, are also anticipated. The Group addresses this through collaboration with local experts overseas, avoidance of dependence on specific countries or regions, and continuous business monitoring through management meetings and other forums.

There is a risk that a large-scale transportation accident could result in a business suspension order, large compensation payments to injured or deceased parties, and deterioration of brand image. In addition, damage to facilities and equipment and business interruption or suspension due to equipment accidents or fire/explosion accidents are also anticipated. The Group addresses this through education and training to instill a safety-first mindset, dissemination and operation of emergency accident response manuals, and capital investment based on daily inspections and long-term repair and maintenance plans.

There is a risk that defects in owned assets and products/services, or inadequacies in operations, could result in customer damage and large compensation and litigation costs. Loss of social trust and deterioration of brand image due to management deficiencies are also of concern. The Group addresses this by establishing a multi-person checking system, appropriately implementing hygiene management based on relevant laws and regulations, and fostering employees' quality management awareness through the sharing of past cases.

There is a risk that ransomware attacks could halt core systems, leak confidential information or personal data externally, and cause business interruption or suspension due to data loss. In addition, a decline in competitiveness and loss of business opportunities due to delays in leveraging digital technology are also anticipated. The Group addresses this through the development and operation of ICT governance by the "Nishitetsu Group ICT Management Committee," strengthening of cybersecurity, implementation of information literacy education, and the promotion of business reform through the cross-departmental "Productivity Innovation Project."

There is a risk that compliance violations could lead to loss of trust and business interruption or suspension, and that legal violations could result in business suspension orders, large compensation payments, and deterioration of brand image. Large compensation and litigation costs arising from employees' inappropriate conduct in violation of ethical and social norms are also anticipated. The Group addresses this through regular compliance training, verification and improvement of the compliance system through internal audits and other means, and the development and appropriate operation of various rules and regulations.

There is a risk that sharp foreign exchange fluctuations could result in large foreign exchange losses, and that sharp interest rate fluctuations could make it difficult to secure low-interest, stable funding, resulting in decreased profits. In addition, a decline in real estate sale prices and reduced purchasing willingness among investors due to interest rate fluctuations are also of concern. The Group addresses this by considering diverse fundraising methods, continuously scrutinizing cash and deposit levels, and strengthening relationships with existing customers while developing new customers.

There is a risk that sharp increases or decreases in prices such as land prices, material costs, and fuel oil could cause significant divergence in costs and revenues, impact business plans and asset values, and lead to business interruption or suspension. For the Nishitetsu Group, which operates a wide range of businesses, there are concerns about the impact on management of simultaneous cost increases across multiple business areas. The Group addresses this by securing alternative supply sources, securing multiple transportation routes, considering and implementing higher value-added products/services and price pass-through, and formulating and executing preventive maintenance and equipment renewal plans.

There is a risk that insufficient recruitment and development of human resources could cause delays in operations and deterioration of management efficiency, and that failure to properly pass on skills and techniques could lead to an increase in workplace accidents and a decline in the quality of products and services. In Japan, where the declining birthrate and aging population continue to progress, securing human resources is a medium- to long-term challenge for the Nishitetsu Group, which operates a wide range of businesses. The Group addresses this through strengthened recruitment activities, improved treatment and engagement enhancement measures, operational efficiency and productivity improvements utilizing DX and other means, and human resource development initiatives aimed at passing on skills and techniques.