JBCC Holdings Inc.

Rapid advances in generative AI and other advanced technologies are significantly changing the competitive environment in the IT services industry. If the Company Group falls behind in responding to technological innovation, this could lead to a decline in the competitiveness of existing services and the loss of new business opportunities. As a countermeasure, the Company is promoting the redesign of internal business processes and work styles premised on AI, and is advancing initiatives to leverage the resulting insights toward the creation of new service models.

In handling customers' personal information and system-related confidential information, there is a risk that increasingly sophisticated cyberattacks, unauthorized access, or human error could result in information leakage, damaging the trust in the Company Group and adversely affecting its business results. The risk of information leakage associated with the expanded use of generative AI in business operations is also recognized as an important issue. As countermeasures, the Company has established a multi-layered security management system, including the formulation and auditing of the JBCC Group Information Security Policy, generative AI usage guidelines, acquisition of the Privacy Mark, and the establishment of an incident response framework.

In system development contract work, there is a risk that increasingly sophisticated and complex customer requirements, or requirement changes after development has begun, could result in labor hours and additional costs exceeding initial estimates, leading to unprofitable projects. In the previous consolidated fiscal year, delays actually occurred in some projects, and the Company is strengthening its project management framework and reviewing standardization of the estimation and requirements definition phases. In addition, the Company is working to maintain medium- to long-term competitiveness through the continued evolution of its AI-driven development methodology (JB Agile) and strategic investment in the AI domain.

If large-scale natural disasters such as earthquakes or floods, or serious infectious disease outbreaks occur in the regions where the Company Group operates, and its business sites, employees, or partners are affected, this could impact its business results. As countermeasures, the Company has formulated a business continuity plan (BCP), introduced a safety confirmation system, and conducts disaster prevention drills. In addition, data centers are dispersed across multiple locations to strengthen resilience against business continuity risks in the event of a disaster.

Amid the requirement to comply with domestic and international laws and regulations, including labor-related laws, any occurrence of legal violations or changes in laws and regulations could impact the Company Group's business results. As countermeasures, the Company is thoroughly ensuring legal compliance through strengthening its governance framework via the Management Quality Improvement Committee, establishing and enforcing the JBCC Group Code of Conduct, and conducting compliance training.

Competition for talent in advanced technology fields such as AI is intensifying across the entire market, and if the Company is unable to secure, develop, and retain the necessary personnel as planned, this could lead to a decline in service delivery capability and competitiveness, as well as adversely affect project quality and productivity. In recruiting, the Company utilizes proactive recruiting and a recruiter system, while in development, it promotes the acquisition of specialized skills and reskilling in areas such as AI, cloud, and security through the "JBCC Academy." In terms of retention, the Company aims to improve the engagement of talented personnel through flexible working arrangements under "Style J" and benefits under "J-Care."