Risk management (aligned with TCFD recommendations)

Risk Management Basic Principles

Our company has established "Risk Management Regulations" to develop a management system for preventing risks that may arise in our business activities, and to respond to risks that have materialized. Company-wide risks such as changes in the business environment, climate change, natural disasters, incidents and accidents, and information system failures have a significant impact on the sustainability of our group's business, and are therefore managed collectively by the Sustainability Promotion Committee.

Specifically, we visualize the risk items that have a high degree of impact on our group and that occur frequently using a risk map, report the results to the Board of Directors, and then consider and implement countermeasures for each high-priority risk item.

Risk Map Creation

1. Our risk items extracted by sector
   • Hazard risk
     • Natural disasters, industrial accidents, fires, accidents
   • Operational risk
     • Business risks (development, procurement, manufacturing, sales, quality, information systems), ESG risks (environment, social, and governance)
   • Strategic risks
     • Business strategy, human resources strategy, development strategy, sales strategy, real estate strategy
   • Economic risks
     • Exchange rate fluctuations, economic fluctuations, interest rate fluctuations, geopolitical risks
2. Based on the above risk items, we conducted a risk assessment (utilizing external consulting) for our full-time directors, executive officers, and all department heads, and carried out quantitative and qualitative evaluations.
3. Based on the results of the risk assessment, a risk map was created focusing on the impact and frequency of occurrence of each risk item, and priority risks requiring countermeasures were identified.