OYO Corporation

National and local government entities are the Group's major customers, and deterioration of fiscal conditions, reduced order volumes due to contraction of business scale, changes in procurement methods, and disqualification measures may affect operating results. The Group is working to reduce this risk by shifting away from a business model dependent on public works, but the public works sector remains one of its major markets.

If defects (non-conformance with contracts) occur in various survey operations or in the manufacture and sale of measuring instruments, the Group may face substantial claims for damages, which could affect its business performance. The Group seeks to reduce this risk through the introduction of a quality management system based on ISO9001, strict review processes, and enrollment in liability insurance.

If data fabrication, falsification, or reuse of past data in violation of internal rules occurs during the course of business operations, it could result in loss of trust and claims for damages, affecting business performance. The Group strives to prevent such risks from materializing through thorough compliance education, verification of business processes by the Internal Audit Office, and review of operating manuals.

System outages caused by computer viruses or unauthorized intrusion by malicious third parties, ransomware attacks, information leaks, and similar incidents could significantly affect business operations. The Group works to reduce this risk by enhancing the safety and information security of its IT systems, developing related regulations, strengthening ransomware countermeasures, and conducting regular training on suspicious emails.

Amid a declining working-age population due to the falling birthrate and aging society, failure to secure and develop highly skilled and capable personnel could affect business operations and performance. The Group seeks to reduce this risk by promoting health management, creating a comfortable working environment, improving employee engagement, enhancing education systems, and securing stable new graduate hiring as well as capable mid-career hires.

Natural disasters such as earthquakes, typhoons, heavy rain, and river flooding, as well as fires, could cause damage to or loss of production facilities and data, loss of human resources, and consequent contraction of business activities and reduced production capacity. In addition, the introduction of carbon taxes and the adoption of equipment with lower environmental impact could increase business operating costs. The Group addresses these risks through the formulation of business continuity plans (BCP), regular drills, and continuous assessment and monitoring of the impact of climate change.

The Group is subject to various domestic and international laws and regulations, including the Companies Act, the Financial Instruments and Exchange Act, tax laws, labor laws, the Antimonopoly Act, and the Construction Business Act. Changes to these laws and the introduction of new regulations in response to shifts in social conditions could affect the Group's financial position and business performance. There is also a risk that if regulatory authorities determine that transactions related to the Group violate laws or regulations, administrative penalties such as fines and loss of social credibility could result. The Group addresses this by gathering regulatory information and thoroughly implementing internal compliance education.

Because overseas group companies based in North America and Singapore conduct transactions denominated in local currencies, exchange rate fluctuations may affect the Group's financial position and business performance. The Group works to mitigate this risk by considering measures such as forward exchange contracts as needed, but the scope of exposure to exchange rate risk continues to exist as overseas business expands.

If there is a significant decline in the market price of securities held for the purpose of maintaining long-term business relationships, deterioration in the financial condition of the issuing companies, or a decline in real estate prices at domestic and overseas business locations, application of accounting standards related to impairment of fixed assets could affect the Group's financial position and business performance. The Group strives to manage this risk through continuous monitoring of the status of held assets.

In overseas businesses whose main markets are social infrastructure development projects in emerging and developing countries, involvement in international conflicts or acts of terrorism could significantly affect business operations, including suspension or cessation of business activities. The impact on the global economy continues, including surging energy and raw material prices due to the prolonged situation in Ukraine and the Middle East, and the Group works to reduce this risk by continuously gathering information related to security and economic conditions in various countries.