Business-related Risks

The Group ensures stable business management by implementing a Group-wide risk management system and working to predict and prevent potential risks, as well as by responding appropriately through measures to counter risks as required for business continuity.

Major risks

Major risks are categorized into “1. Financial risks” and “2. Risks associated with ESG materiality.” The risks and opportunities for each and their countermeasures are described below.

1. Financial risks

Financial risks are described in detail below in “[Business Risks] 1. Financial Risks” in the Annual Securities Report (Japanese only).

Financial risks Events related to financial risks
Economic trend risks Deterioration in business performance in line with economic recession
Foreign exchange and interest rate fluctuation risks Deterioration in business performance due to yen conversion of overseas
subsidiaries’ business performance and interest rate fluctuations
Geopolitical risks Outbreak of terrorism, riots, wars, conflicts, etc.
Price fluctuation risks of raw materials Deterioration in business performance due to soaring raw material prices
Procurement risks Insufficient procurement of major parts and materials due to changes in the
situation of suppliers
Accounting estimate risks Losses due to unexpected events beyond the scope of accounting estimates
Risks of seasonal fluctuations in business performance Inadequacies associated with a heavy emphasis on the second half of the year,
such as personnel allocation and capital investments
Acquisition and other investment risks Occurrence of unforeseen events in the investee companies after acquisitions
Risks of bankruptcy of business partners Unexpected bankruptcy of business partners
Funding procurement risks Credit rating downgrades or depletion of funds due to financial crises or
deterioration in business performance
Tax-related risks Cost increases in line with tax system revisions
Legal and regulatory risks Risks associated with the enactment and revision of laws and government
ordinances, and risks associated with penalties, etc.

2. Risks associated with ESG materiality

Risks associated with ESG materiality are described in detail below in the Integrated Report.

ESG themes Materiality Risk category
Manufacturing Mitigate/adapt to climate change, prevent disaster
loss through products and services
Major disaster risks
Infectious-disease risks
Quality assurance and enhancement R&D risks
Quality risks
Environment Initiatives for a decarbonized society
Water resources conservation
Waste reduction
Environmental risks
Climate change risks
People Respect for human rights
Human resource development
Promotion of diversity
Health and safety
Safety and inspection risks
Human resources risk
Management Foundation Corporate governance
Compliance risks
Information security risks
Business continuity risks