COMPUTER ENGINEERING & CONSULTING LTD.

As business expansion drives larger and more complex projects, the risk of delivery delays, unforeseen recovery costs, and deteriorating profitability is increasing. External factors such as regulatory changes and shifts in social conditions may also impede project progress. In response, the Group conducts pre-order estimate review meetings, monitors budget-to-actual variances, confirms progress through project audit meetings, and monitors these matters at Board of Directors and management meetings.

Securing and developing personnel with advanced technical skills and expertise is a critical element of business execution, but intensifying competition for talent and changes in the employment environment may prevent this from proceeding as planned. Talent shortages could affect business performance and financial position. In response, the Group conducts employee engagement surveys, clarifies its talent portfolio, strengthens its recruitment structure, enhances internal and external educational opportunities, and promotes health-oriented management.

In handling confidential customer information and personal data, the sophistication and increasing complexity of cyberattacks, along with the expanding use of generative AI, heighten the risk of unauthorized access, ransomware infection, information leaks, and business disruption. Should such incidents occur, they could affect business performance and financial position through damage claims or loss of social trust. In response, the Group has obtained ISO/IEC 27001 certification and the Privacy Mark, maintains 24/7/365 monitoring through CEC-SIRT including its in-house SOC, employs multi-layered defenses utilizing EDR and other tools, and manages usage based on its generative AI usage guidelines.

Accelerating technological advancement, intensifying competition, and uncertainty over the scope of rights in cutting-edge technology fields create the risk that the Group's intellectual property rights could be infringed by third parties, or that the Group could unintentionally infringe on third-party rights. The rapid evolution of AI technology may also erode the competitive advantage of existing intellectual property, potentially requiring additional R&D investment. In response, the Group conducts regular surveys of rights information and provides training and awareness programs led by external patent attorneys.

Unintentional legal violations, misconduct by employees, and labor-related issues such as excessive working hours or harassment could adversely affect business performance and financial position through damage claims or loss of credibility. In response, the Group thoroughly enforces corporate ethics based on the "CEC Group Code of Conduct and Behavioral Standards," collaborates with retained attorneys and labor and social security attorneys, provides compliance training for all employees by rank, has established internal and external whistleblowing hotlines, and verifies effectiveness through the Audit and Supervisory Committee and the Audit Department.

The top 10 customers account for approximately 40% of net sales, reflecting a structure with high dependence on specific customers and industries. Changes in customers' business environments due to shifts in economic conditions could affect business performance and financial position. In response, the Group aims to establish a stable revenue structure by proposing a wide range of solutions through cross-organizational sales activities, strengthening its end-to-end service delivery structure across the entire company, and promoting recurring revenue-based business.

The Group actively pursues various investments, including capital expenditures, new businesses, development of advanced technology solutions, and M&A, but if expected investment returns are not achieved due to changes in social conditions, worsening economic trends, or delays in realizing synergies with investees, this could lead to reduced profitability or additional cost burdens. In response, the Group thoroughly conducts prior effectiveness verification and risk assessment, has established a review and decision-making framework for investment projects, and conducts careful deliberation at management meetings and elsewhere.

If a large-scale disaster such as an earthquake or a pandemic occurs and disrupts business continuity, this could have a material impact on business performance and financial position. In response, the Group is reviewing its Business Continuity Plan (BCP), rebuilding its initial disaster response structure and manuals, securing disaster stockpiles, conducting disaster drills, and formulating action plans for the early restoration of critical operations.

The Group outsources part of its system development and other operations to external companies, but rising outsourcing costs, delivery delays or quality deterioration caused by outsourcing partners, and information leak incidents due to human error at outsourcing partners could affect business performance and financial position. In response, the Group complies with relevant laws such as the Act on Promoting Fair Subcontracting Transactions for Small and Medium-sized Enterprises, selects outsourcing partners using a shared procurement platform, and has established information security guidelines.

Excessive working hours and information leaks or privacy violations arising from the use of AI technology could have negative impacts on human rights, and insufficient consideration of human rights could affect business operations and performance through legal risk or loss of social trust. In response, the Group continuously conducts human rights due diligence based on the "CEC Human Rights Policy" and "Generative AI Usage Guidelines," along with education and awareness activities, engagement surveys, and the establishment of consultation hotlines.