## (8) Business Restructuring Risk 

In order to enhance management efficiency and competitiveness, the JS Group may conduct business restructuring, including withdrawal from unprofitable businesses, re-alignment of subsidiaries and affiliates, manufacturing bases and sales and logistics networks, and rightsizing of the workforce. These measures could have an adverse impact on the business performance and financial positions of the JS Group. 

## (9) Regulatory Risk 

The JS Group is subject to various official regulations, including the need to obtain approvals and permits from the government or official agencies for its business and investment activities, as well as patents and other intellectual property rights, environ- mental regulations, and other requirements. Such official regulations can be expected to change over time, possibly creating obsta- cles to the JS Group’s business activities or imposing additional costs relating to com- pliance with new official regulations. These factors could have an adverse impact on the business performance and financial positions of the JS Group. 

## (10) Product Liability Risk 

There is a risk that defects will occur in products and services supplied by the JS Group, or that product recalls may be required. Major compensation claims or product recalls relating to manufacturer’s liability issues could result in substantial payments and have a negative effect on the reliability and reputation of the JS Group’s products. Such situations could have an adverse impact on the business performance and financial positions of the JS Group. 

## (11) Disaster and Accident Risk 

Natural disasters, such as earthquakes and typhoons, could cause substantial damage to the JS Group’s production, distribution, sales and information management facili- ties. Also, in the occurrence of major work- place disasters or equipment accidents, there is the possibility that business activi- ties will be discontinued or restricted. The JS Group conducts regular disaster pre- vention activities and facility inspections. However, there is no guarantee that it will 

be possible to prevent or alleviate the effects of natural disasters. In particular, the domestic production facilities of Inax Corporation, a consolidated subsidiary, are concentrated in the Tokai region of Japan, where a major earthquake could occur. While earthquake countermeasures have been implemented at these facilities, a major earthquake in the Tokai region could cause a suspension in production, delays in product deliveries and other problems. These factors could have an adverse impact on the business performance and financial positions of the JS Group. 

## (12) Environmental Preservation Risk 

The JS Group, based on the Group Environ- mental Basic Policy, engages in a wide range of activities aimed at global environ- mental preservation. However, the Group cannot guarantee that it will be able to completely prevent or mitigate any risk of environmental pollution. Should serious environmental pollution occur as a result of the Group’s business activities, it could have an adverse impact on the Group’s business performance and financial positions. 

## (13) Risk of Default on Receivables 

In order to prepare for losses due to default on receivables by business part- ners, the JS Group examines the recover- ability of general receivables based on historical default rates, and of specific doubtful accounts on a case-by-case basis, and records the amount considered to be uncollectible as allowance for doubt- ful accounts. Should the actual default level significantly exceed these assump- tions, the allowance for doubtful accounts could be insufficient. Moreover, as a result of reviewing these assumptions due to the worsening of overall economic conditions and uncertainty in the credit standing of business partners, the Group could make additional provisions to this allowance. These developments could have an adverse impact on the Group’s business performance and financial positions. 

## (14) Risk of Fixed Asset Value Reduction 

The JS Group has applied fixed asset impairment accounting. The Group will 

continue to calculate future cash flows relating to its assets, and to recognize and estimate the impairment of those assets. It is therefore possible that the business performance and financial posi- tions of the JS Group will be adversely affected if fixed asset impairment losses are shown in the accounts. 

## (15) Retirement Benefit Risk 

The employee retirement benefit obliga- tions and costs of the JS Group are calcu- lated primarily using actuarial assumptions, such as discount ratios and expected rates of return on plan assets. These actuarial assumptions must be reviewed annually. Any changes in the ratios could cause fluctuation in the business performance and financial positions of the JS Group. The Group has taken steps to minimize this effect, including the return to the gov- ernment of the substitutional portion of the pension funds that it previously adminis- tered, and the adoption of defined contri- bution pension plans and cash balance pension plans. However, the potential effect cannot be entirely eliminated. Further declines in discount ratios or deteriorating investment returns could have a negative effect on the business performance and financial positions of the JS Group. 

## (16) Risk of Personal Information Leaks 

The JS Group handles a variety of personal information, including customer informa- tion, in the course of its business opera- tions, and stringent information management is essential. Initiatives by the JS Group to strengthen personal informa- tion management include the establishment of the Personal Information Protection Promotion Project, the formulation of related rules and regulations, and the ongoing provision of appropriate training. 

However, the JS Group could suffer damage to its public reputation and incur substantial financial costs if unforeseen circumstances result in the leak of per- sonal information. Such a situation could adversely affect the business performance and financial position of the JS Group. 

