HORAI Co.,Ltd.

If natural disasters such as earthquakes or typhoons, or sudden incidents/accidents such as fires or terrorism, occur at the Company's business sites, prolonged business suspension could materially affect business results and financial condition. In particular, since the Company owns numerous outdoor facilities such as Senbonmatsu Farm and golf courses, the risk of physical damage is high. As countermeasures, the Company has established "Handling Guidelines for Emergency Situations," and implements early establishment of an emergency response headquarters, development of communication systems, and large-scale disaster response drills.

There is a risk that unforeseen events such as power outages, disasters, system equipment failures, computer virus infections, or unauthorized access could cause information system outages or the loss, leakage, or falsification of personal information and internal information. Such events could lead to a loss of social credibility and suspension of business activities, potentially affecting business results and financial condition. As countermeasures, the Company implements backups of critical data, strengthened vulnerability response, employee training, and drills for responding to targeted attack emails.

There is an increasing risk that progressing climate change, including rising average temperatures and an increasing number of extremely hot days, will affect business activities. In particular, in the Senbonmatsu Farm business and Golf Business, which are built on the natural environment as their business foundation, damage to the beautiful natural environment directly impacts business value. Ensuring the safety of visitors during the busy summer season and preventing heat stroke among employees are also challenges. As countermeasures, the Company implements temperature management within facilities, installation of misting equipment, cautionary announcements, and enhanced heat stroke prevention measures, followed up at the company-wide level.

If important information such as customer information is leaked due to human error or internal fraud, compensation to affected customers would be required, and the resulting decline in the Company's credibility could adversely affect business operations, business results, and financial condition. As the Insurance Business handles large volumes of personal information, the scope of impact of this risk is broad. As countermeasures, the Company has established policies and regulations on information management, and implements employee training and strengthened internal inspection systems.

If misconduct or a scandal involving officers or employees occurs, compensation to customers and loss of credibility could adversely affect business operations and financial condition. As the Company operates diverse business formats across multiple businesses, there is a latent risk in areas where management oversight is difficult to reach. As countermeasures, the Company has established and disseminated its "Management Philosophy," "Code of Conduct," and "Compliance Regulations," conducts regular training, and has established internal inspections and an internal reporting hotline to build a system for prevention and early detection.

If a substance that could affect health is found to be mixed into products in the dairy products manufacturing division of the Senbonmatsu Farm business, this could adversely affect business results due to product disposal, recall costs, factory operation suspension, and loss of customer trust. In addition, an outbreak of food poisoning in the food and beverage/sales divisions could result in business suspension and reputational damage risks. As countermeasures, the Company has introduced the HACCP method, implements hygiene management of production equipment, has established and practices food hygiene management rules, and receives guidance from external experts.

If unforeseen accidents or malfunctions or natural disasters occur due to the aging of facilities at the Senbonmatsu Farm business, amusement equipment, and real estate held in Tokyo, resulting in customers being involved in serious accidents or business suspension due to damage to facilities/equipment, this could adversely affect business results through compensation issues and reputational damage. In the Real Estate Business as well, there is a risk that a decline in building grade due to aging could affect vacancy rates and rents, significantly pressuring business earnings. As countermeasures, the Company strives to maintain and improve the quality of each facility through medium- to long-term repair plans and diligent regular maintenance.

If the Company becomes unable to continuously recruit and retain capable talent due to changes in demographics and the employment environment, it could fall into a situation where business must be abandoned or becomes difficult to continue due to labor shortages, potentially affecting the Company's business and financial condition. As the Company operates multiple labor-intensive businesses such as Senbonmatsu Farm and the Golf Business, securing human resources is particularly important. As countermeasures, the Company promotes talent development through training, workplace environment improvement, enhanced engagement through employee benefits, and diversification of recruitment.

In addition to the contraction of the insurance market due to changes in the social environment such as the declining birthrate and aging population and economic conditions, there is a risk that agency income could be pressured by the expansion of bank window sales and the reorganization of insurance companies. In addition, compliance issues such as personal information leakage incidents or violations of the Insurance Business Act could lead to a loss of credibility and a decline in business results. As countermeasures, the Company strives to build a management system through the pursuit of improved business quality, in-department inspections, monthly checks, and employee education and training.

If credit risk, reputational issues, quality control problems, or internal management issues involving business partners or outsourcing contractors become apparent, the continuity of the Company's business could be threatened, potentially affecting business and financial condition. As the Company transacts with a wide variety of third parties across multiple businesses, the scope of management targets is broad and the pathways through which risk can spread are diverse. As countermeasures, the Company strives to improve its risk management process through verification at the start of transactions with third parties and enhanced ongoing monitoring after they are engaged.