Funai Soken Holdings Incorporated

The management consulting business is the core business, accounting for 73.4% of net sales (¥24,471 million) and 95.0% of operating profit (¥8,369 million) in FY2025 (ending December 2025). A deterioration in the performance of this business would have a direct and substantial impact on consolidated results. While the Group pursues a policy of concentrating management resources in this business and related businesses, this high degree of concentration itself constitutes a risk factor. Fostering the Logistics business and the Digital Solutions business to achieve diversification remains a challenge.

The management consulting business is a labor-intensive business that depends on the knowledge, ability, and know-how of individual consultants, and expanding the business requires increasing the number of high-caliber consultants. Highly capable consultants tend to have a strong inclination toward independence, and if key personnel resign, this could temporarily affect performance. As countermeasures, the Group has established in-house training programs, promotes know-how sharing through a team-based system, has introduced a performance-linked compensation structure, and has established programs to support women's career advancement, among other measures.

In the course of its operations, the Group holds large volumes of customers' personal information and confidential management information. If an unforeseen event results in the leakage of information, system outages, or data tampering, this could damage the Group's reputation and lead to compensation claims, thereby affecting performance. As countermeasures, the Group has established a basic information security policy, implemented system improvements such as cloud migration, email encryption, and measures to prevent misdirected emails, and conducts officer and employee training using e-learning; since 2020 it has also renewed its methods for safeguarding customer information assets.

The management consulting industry does not require any special qualifications for entry, and competition is expected to intensify further going forward. Polarization among companies is likely to progress depending on their ability to respond to new customer needs such as DX, and industry consolidation, including mergers and alliances, may advance. If the Group moves in a direction that does not align with customer needs, there is a risk that revenue growth could be limited.

The Group has subsidiaries and sub-subsidiaries in Shanghai, China, Bengaluru, India, and Singapore, through which it conducts overseas consulting operations. In China, risks include the impact of anti-Japanese sentiment on Japanese products, frequent changes to tax and legal systems, sudden shifts in the political and economic situation, and the effects of environmental issues such as air pollution on employee health; in India and Singapore, there are risks specific to overseas operations, such as foreign exchange risk. Should these country risks materialize, they could temporarily affect the Group's performance.

The digital-related industry in which the Digital Solutions business operates is characterized by rapid technological innovation and intense competition from numerous rivals ranging from major corporations to startups. In FY2025 (ending December 2025), the business posted an operating loss of ¥96 million, and if the Group falls behind in responding to constantly changing and increasingly complex customer needs, this could further affect the Group's performance. In the HR Solutions business as well, maintaining a competitive advantage amid numerous competitors in the staffing industry remains a challenge.

The "Funai Consulting" (Funai Soken) brand, built by founder Yukio Funai, is an indispensable asset for expanding the Group's business foundation; however, a decline in consultant quality or a divergence between services and customer needs could weaken the brand's strength. In addition, if legal, compliance, or corporate governance issues arise at any company bearing the "Funai Consulting" or "Funai Soken" trademarks, this could damage the brand and affect operating results.

In the logistics BPO operations within the Logistics business, unforeseen operational accidents may occur, such as forklift accidents, in-warehouse accidents, cargo accidents, vehicle accidents, and warehouse fires. There are also risks such as quality defects in joint purchasing operations, and should such incidents occur, the Group's performance could be affected depending on the response measures taken. In addition, the Group faces pressure to promptly develop environmentally conscious solutions across the entire supply chain from an ESG perspective.

If performance does not progress as planned and future cash flows decline significantly, or if the performance of investees deteriorates or they become insolvent, impairment losses may need to be recognized on the Group's tangible fixed assets, intangible fixed assets, securities, and other assets, potentially affecting performance. As a countermeasure, the Board of Directors and other bodies thoroughly review new investments and monitor progress after investment, working to prevent risks and detect them at an early stage.

If damage to social infrastructure from a large-scale disaster or a pandemic such as COVID-19 adversely affects the global economy, this could affect the Group's performance. As countermeasures, the Group has established a crisis management manual and conducts safety confirmation drills at least once a year; as part of its BCP measures, it relocated its Tokyo head office to Tokyo Midtown Yaesu in April 2024 and relocated its Osaka head office to Innogate Osaka in January 2026.