SECOM CO., LTD.

The Secom Group, which has Japan as its primary market, may be adversely affected in terms of new contract acquisition and existing contracts due to domestic economic downturns or interest rate fluctuations. In addition, there is a risk that parts supply disruptions caused by raw material shortages could make it difficult to sell and provide security systems and services as planned. As countermeasures, the Group continues to develop and sell cutting-edge systems that incorporate market needs, and implements planned logistics management based on supply chain trends.

The Secom Group, which operates in 18 countries and regions, is exposed to a variety of risks that differ from those in Japan, including changes in local political, economic, and social conditions, changes in laws and regulations such as foreign investment restrictions, and the occurrence of terrorism or conflict. In addition, the consolidated financial statements are affected by exchange rate fluctuations when translated into yen. The Group addresses these risks by thoroughly examining various risks prior to overseas expansion, and by continuously gathering local information and promptly implementing countermeasures after expansion.

If natural disasters caused by climate change become more frequent and severe, or if large-scale earthquakes, fires, large-scale power outages, wide-area line failures, pandemics, or other events occur, there is a possibility that information systems could be disrupted, electronic data could be lost, and the provision of services and conduct of business could be hindered. The Secom Group has implemented countermeasures such as developing manuals, stockpiling response supplies, building agile response systems, and conducting regular drills.

The Secom Group is required to comply with strict and detailed laws and regulations, including the Security Business Act, and when such laws and regulations change, prompt responses are required, which may result in a significant burden. Given the Group's business characteristics centered on

In the business fields in which the Secom Group operates, rapid advances in new technologies and major changes in the technological environment may require swift and large-scale development and investment. Delays in responding to technological changes pose a risk of declining competitiveness and loss of market share. In addition to promoting research and development centered on specialized organizations, the Group makes broad use of cutting-edge technologies through collaboration and partnerships with other companies, striving to create optimal services and systems.

As the declining birthrate progresses, if the Group is unable to secure the human resources necessary for each business, it may become difficult to maintain its service delivery structure, hindering business operations. Since the security business is labor-intensive, the impact of labor shortages is particularly significant. The Group addresses this through continued investment in human resources such as salary revisions and improved working conditions, Group-wide recruitment activities, and improved operational efficiency and productivity through the use of advanced technology.

The Secom Group handles a vast amount of customer information and confidential information, and if information were to leak externally, there is a risk of loss of trust and claims for damages. In addition to measures against unauthorized network intrusion from outside, the Group thoroughly enforces the development of rules and manuals and employee training to prevent information leakage from within, continuously strengthening information leakage countermeasures on both the software and hardware fronts.

Holding securities that are subject to price fluctuation risk may result in valuation losses if their value declines. In addition, if strategic investments such as M&A or capital and business alliances fail to achieve the initially expected synergies, impairment losses on goodwill and other items may occur. The Group reduces these risks by making investment and divestment decisions based on strict investment efficiency reviews and comprehensive management judgment, and by carefully conducting various forms of due diligence using specialized institutions for M&A and other transactions.

The Secom Group operates in a variety of fields centered on the security services business, with each Group company independently driving its business activities. Errors in management or investment decisions by Group companies, or inappropriate internal conduct, could affect the management of the Group as a whole. The Group strengthens Group governance through audits by the internal audit department, sharing of information and management philosophy through regular Group management meetings, and utilization of an internal whistleblowing system.

In the medical services business, the Group provides loans and debt guarantees to medical institutions, and may be affected by changes in the business environment resulting from medical system reforms, such as reductions in medical treatment fees. In the insurance business, there is a risk that insurance payouts could increase due to natural disasters such as earthquakes and wind and flood damage, or major accidents. In the medical business, the Group strives for appropriate risk control through continuous monitoring of the financial condition of medical institutions and support for management improvement, while in the insurance business, it does so through reinsurance coverage and the accumulation of reserves for extraordinary risks.