Of the factors affecting the business and accounting conditions covered in the TOPPAN Group’s securities report, those that could have a material influence on decisions made by investors are presented below. Statements regarding the future contained herein comprise the TOPPAN Group's (TOPPAN Holdings and its consolidated subsidiaries) assessment as of the end of the consolidated accounting year.

Overview
The impact of climate change’s worsening year by year is significant and could affect the performance of the TOPPAN Group should we be unable to respond appropriately to transition risks or physical risks. Transition risks include the tightening of environmental regulations and the need to engage in low-carbon business activities or use alternative materials, while physical risks include damage to operational sites caused by flooding or other serious disasters or difficulties in procurement caused by disruption of supply chains.

In the area of biodiversity, businesses are expected to aim for a society in harmony with nature, balancing conservation of nature with socioeconomic activities, and are therefore required to collaborate across the supply chain and with local communities to drive efforts addressing environmental issues.

Main countermeasures
The Sustainability Promotion Committee is responsible for coordinating countermeasures to climate change risks in the TOPPAN Group. To address transition risks, we have set SBT-approved targets for the reduction of greenhouse gas emissions beyond levels required by environment-related legislation and implement the PDCA cycle with regard to energy saving initiatives and the introduction of renewable energy. For physical risks, BCP measures include preparation for the impact of disasters, measures to mitigate damage (windproofing, waterproofing), and maintenance of supply capabilities through the creation of backup structures for manufacturing and procurement. We are analyzing climate change risks and advancing countermeasures from a long-term perspective.

In terms of countermeasures to biodiversity risk, in conducting our business activities we confirm legality in the procurement of raw materials of paper, contribute to the conservation of areas in which society lives in harmony with nature, both inside and outside the Group, and drive efforts to preserve natural capital while considering procurement across the entire supply chain.

Overview
The TOPPAN Group uses certain hazardous substances in its manufacturing processes and research and development and has to manage waste disposal. We are extremely careful to comply with applicable regulations. However, we cannot eliminate all risk of accidental pollution or discharge, or the damage resulting from such occurrences. In the event of an accident occurring, it could impact the surrounding area and other external parties or have an adverse effect on the TOPPAN Group's business operations, including its employees.

Treatment of waste paper, waste plastic, and other waste derived from our business activities is outsourced to waste treatment contractors, but if a contractor were to dispose of waste illegally or fail to treat waste appropriately, the name and other information of the TOPPAN Group could be published as the business producing the waste, the names of customer products printed or produced by the TOPPAN Group could be disseminated over social media or other channels, and the social trust enjoyed by customers could be damaged, potentially causing a loss of social credibility and affecting the business activities of the TOPPAN Group.

Main countermeasures
We manage and maintain hazardous substance storage tanks that could potentially be the source of accidental pollution and discharge. In addition to comprehensive day-to-day management and equipment inspections, we perform diagnosis of degradation in accordance with years of use and replace equipment systematically based on our own management guidelines. In recognition of the possibility of accidental pollution or discharge when pumping or otherwise handling chemical substances, we have established emergency procedures and conduct regular drills to confirm their effectiveness.

As countermeasures to the risk of illegal disposal or improper treatment of waste by a contractor, the TOPPAN Group manages manifests stringently, assesses appropriate treatment by waste treatment contractors via our own assessment sheet, and conducts onsite inspections.

In addition to the appropriate disposal of waste, we set and manage environmental targets for final landfill waste volume and waste plastic material recycling rate to strive to reduce waste emissions from business activities and drive reuse and recycling of discharged waste as we strengthen efforts to address marine plastic pollution and the creation of a circular economy, issues which are currently the focus of considerable attention.

Overview
Should a natural disaster, such as an earthquake or typhoon, or the spread of an infectious disease occur, equipment and employees of the TOPPAN Group’s operational sites could be severely damaged or injured, partially or entirely interrupting operations and delaying both production and shipment. Repairing damaged equipment and the like could require significant expenditure, which in turn could adversely affect the TOPPAN Group's business operations, performance, and financial condition.

Main countermeasures
The TOPPAN Group has formulated a Business Continuity Plan (BCP) to ensure the safety of employees and minimize impact on business activities in the event of a disaster. We set out a Companywide structure and response procedures in the Basic Plan for Countermeasures Against Disasters, which is reviewed every year. The BCP promotion team in the Head Office’s Legal Division plays the central role in driving business continuity management (BCM) efforts and conducts activities in collaboration with the business continuity planning staff appointed in each Head Office division and business divisions throughout Japan. In light of the importance of supply chains in business continuity planning, our efforts to strengthen them include holding annual supplier workshops conducted by external experts. We respond to the trust of customers in our security-related businesses by acquiring ISO 22301 certification.

Overview
The TOPPAN Group conducts business activities based on the tenet of “respect for human beings” and views human rights to be of the utmost importance in driving its business and sustainability activities.

However, if a human rights problem arises, such as sexual harassment or power harassment, in addition to negatively affecting the workplace environment, it could lead to workers’ compensation or loss of brand value and also affect the performance of the TOPPAN Group.

Main countermeasures
In addition to establishing a Human Rights Policy in October 2021, the TOPPAN Group stipulates respect for human rights in its code of conduct, the Conduct Guidelines, with provisions on respecting people’s personal qualities and individuality and prohibiting discrimination, harassment, child labor, and forced labor, among others. We also advance human rights efforts across our supply chains, with the TOPPAN Group Sustainable Procurement Guidelines also containing explicit stipulations on human rights. In addition, we drive efforts to mitigate and rectify human rights risks through surveys and dialogue with the TOPPAN Group’s stakeholders, including group companies and suppliers in Japan and overseas. We also properly disclose our activities and implement a series of human rights due diligence processes.

As a body under the Sustainability Promotion Committee, which is chaired by the president & representative director, the Corporate ESG Project’s Human Rights Working Group leads human rights efforts and activities to advance them across the Group and is tasked with establishing a foundation for handling every kind of human rights risk.

The prohibition of harassment is stipulated in the TOPPAN Group Conduct Guidelines, and training and other measures are implemented to ensure compliance. We also conduct educational activities in each workplace through general affairs departments, drive efforts led by Conduct Guidelines Promotion Leaders to firmly entrench awareness in day-to-day operations, implement training for managerial staff, and monitor the situation via questionnaires. We have established functions at individual sites for consultation regarding all forms of harassment and operate the TOPPAN Group Helpline as an internal reporting system that can be used by employees to ensure that any cases of harassment are identified promptly and dealt with appropriately.

Labor and management recognize the problem of harassment and cooperate to prevent such conduct. An agreement on the handling of harassment prevention has been concluded between the two parties to ensure comfortable, harassment-free workplaces.

Overview
We recognize that implementing effective control throughout the TOPPAN Group is vital because the Group includes a large number of companies both in Japan and overseas. Based on our basic policy on the establishment of systems of internal control, we have therefore established and operate internal control systems, including those related to financial reporting. However, if a management decision made by a group company results in violations of laws or significant losses, the TOPPAN Group’s social credibility could be damaged, and its performance could be affected.

Main countermeasures
While respecting the independence and autonomy of group companies for the operation of their businesses, the TOPPAN Group has set out procedures for reporting on each management item in the Related Company Administration Regulations and receives reports accordingly in order to ensure the appropriateness of the execution of duties by directors of group companies.

The TOPPAN Group has established the TOPPAN Group Conduct Guidelines as a set of fundamental rules for compliance and ensures the legality of the execution of duties by employees by making sure that they are fully informed of the Conduct Guidelines. To achieve this, the Compliance Department in the Head Office’s Legal Division leads efforts in collaboration with the legal and other relevant departments of group companies to ensure legal compliance and the observance of corporate ethics throughout the Group. Activities to ensure that employees at each workplace are kept informed are conducted under the Conduct Guidelines Promotion Leader system.

Internal audit departments regularly audit the execution of operations at business divisions and group companies. The results of such audits are reported directly to the representative directors, directors, and audit & supervisory board members and to the directors and other officers of group companies.

Overview
The TOPPAN Group is subject to a wide range of legislation and regulations on account of the fact that it has multiple bases in Japan and overseas and deals with a large number of customers in diverse industries. In conducting business activities, the TOPPAN Group must comply with laws including company laws, financial instrument laws, tax laws, anti-monopoly laws, sub-contracting laws, and bribery-related laws and must also obtain permission or licenses or make filings related to certain aspects of operations. If there is a case of misconduct involving serious improper or inappropriate conduct on the part of an employee, or if there is a compliance violation, the TOPPAN Group could not only be subject to legal penalties or claims for compensation for damages, but could lose social credibility and customers or suppliers, affecting the Group’s performance and financial condition.

Main countermeasures
The TOPPAN Group has established the TOPPAN Group Conduct Guidelines, which set out behavioral norms to be observed by every employee based on legal compliance and corporate ethics. We believe that the thorough implementation of the Conduct Guidelines ensures that compliance is put into practice. We have introduced a Conduct Guidelines Promotion Leader system, under which Leaders in each workplace lead activities to ensure that the Conduct Guidelines are understood and observed in day-to-day operations.

To prevent bid-rigging, cartels, violations of subcontracting laws, bribery, and other misconduct, we implement measures such as training and audits to raise the compliance awareness of employees.

The TOPPAN Group has established the TOPPAN Group Helpline, an internal reporting system for the entire Group, to enable the prompt detection and appropriate handling of legal violations.

Overview
In addition to factors such as the globalization of society, innovation in the field of information technology, and advances in the area of networks, increased needs for a sustainable society, including issues such as environmental conservation and human rights, are bringing significant change to the market environment for the TOPPAN Group. Should the TOPPAN Group fail to implement sufficient measures to respond to these changes, the Group's performance could be affected.

Main countermeasures
With demand in the traditional printing business declining, we are driving portfolio transformation that focuses on three growth businesses: digital transformation (DX) business (Erhoeht-X); sustainable transformation (SX) in Japan and Living & Industry business overseas; and new businesses. Specifically, in the DX (Erhoeht-X) business, we are aiming to drive digital marketing that contributes to client companies’ business transformation (BX), roll out a hybrid-BPO business that fuses digital technologies with advanced operational know-how, and expand the security business overseas. In the area of SX in Japan and Living & Industry business overseas, we will leverage barrier films to expand the sustainable packaging business globally and contribute to reduction of CO₂ emissions and plastic consumption through such efforts as development and sales expansion of SX products and participation in pilot testing for plastic recycling schemes. In new businesses, we will drive commercialization in such areas as healthcare, the metaverse, and sensors, with a focus on technologies and business models with a competitive edge.

Overview
The TOPPAN Group owns marketable securities. Therefore, fluctuations in equity markets, interest rates, and the like could influence the current value of securities and affect the performance and financial position of the TOPPAN Group.

Main countermeasures
We have adopted a policy of reducing shareholdings held for strategic purposes in order to enhance asset efficiency and have set targets for reduction of such shareholdings in the Medium Term Plan. We regularly examine the rationale of such shareholdings based on comprehensive analysis in terms of business and value as an investment asset. We also endeavor to reduce risk by monitoring the financial condition of the entities in which we hold shares.

The status of such shareholdings is reported to the board of directors, where decisions are made to reduce shareholdings that have decreased in relevance through divestment.

Overview
The TOPPAN Group has been expanding into overseas markets as the domestic printing market matures in Japan. Revenue and expense items for overseas subsidiaries that are denominated in local currencies are converted into yen to facilitate calculations when preparing the Group's consolidated financial statements and could be affected by fluctuations in exchange rates at the time of exchange.

Fluctuations in exchange rates can be expected to affect the prices of locally sold TOPPAN Group products, the production and procurement costs of locally produced products, and selling prices in Japan. Accordingly, they could also affect the TOPPAN Group's performance.

Main countermeasures
The TOPPAN Group works to reduce foreign exchange risk throughout the entire Group by establishing risk management guidelines pertaining to exchange rate fluctuations. We endeavor to absorb exchange rate fluctuation risk occurring in the course of business within transactions themselves as far as possible and to minimize the risk by using hedging methods, such as forward exchange contracts, when appropriate.

Overview
The TOPPAN Group engages in many activities through strategic partnerships, joint ventures, and investments, and may acquire other companies in the future. These activities are important for acquiring new technologies, launching new products, and entering new markets. However, should we be unable to maintain these partnerships or achieve the anticipated results for any variety of reasons, the TOPPAN Group's performance could be affected.

Main countermeasures
For investments, decisions are made following formal approval processes involving decision-making bodies such as the Small-scale Investment Review Council, Investment & Legal Review Council, and Management Committee. Once investments have been made, they are regularly monitored. In the case of investments in start-up companies or overseas companies in particular, the investment is executed only after sufficient due diligence has been conducted, using external research organizations when necessary. If it is determined that the initially expected results (investment recovery) cannot be achieved, an improvement plan is devised, and measures are taken to accelerate recovery of the investment based on a careful examination of risks and other factors. However, if it is subsequently deemed that results can still not be achieved, we may have to sell shares or liquidate assets. Such cases provide valuable opportunities to acquire insight and know-how that can be leveraged through detailed review and analysis of contributing factors to reduce risk and enhance the probability of success in future investment projects.

Overview
The TOPPAN Group invests in the development of new products in each of its business fields and in research and development to lower costs and reduce quality loss and errors. We also invest in research and development in collaboration with other companies, public sector organizations, and academic institutions to create new businesses that will be core revenue sources in the medium to long term. However, if we are unable to achieve sufficient results from research and development investment due to changes in the market that exceed expectations, the worsening of the performance of alliance partners or companies in which we have invested, or delays in the timing of commercialization or sales launch, the performance of the TOPPAN Group could be affected.

Main countermeasures
To enhance the accuracy of new business creation driven by the Group’s research and development activities, the R&D Strategy Office advances the effective use of management resources by setting priorities and making decisions on the necessity of additional investment in accordance with the probability of commercialization as well as enhancing and facilitating use of the information and assets that the Group possesses. We regularly confirm the progress of research and development projects selected for additional investment and strive to optimize the allocation of development resources based on any issues identified. Under a medium-to-long-term schedule for research projects, the TOPPAN Technical Research Institute implements measures such as detailed confirmation of progress, decisions on advancing research to further stages, and identification of risks to prevent delays in executing projects. We also regularly conduct research and analysis on matters such as market conditions, technology trends, and the patents of competitors. This facilitates appropriate decisions on whether there is a need to alter the direction of or discontinue any research and development project.

Overview
The TOPPAN Group recognizes the importance of improving the quality of existing products and developing new products and services through the introduction of advanced new technologies to achieve continuous growth in the future. For this purpose, exceptional human resources with advanced technical and planning abilities are essential. The TOPPAN Group focuses on systematic recruitment and training to develop personnel, but should we be unable to secure or train outstanding human resources, the Group may be unable to continue growing in the future.

Main countermeasures
The TOPPAN Group strives to form a population of human resources with an interest in the Group through effective recruitment advertising and recruits a wide range of human resources by creating various channels for both recruitment of recent graduates and that of mid-career personnel. Measures include the introduction of working internships, course-specific recruitment, and recruitment by referral. We regularly update in-house human resource development programs and provide opportunities for comprehensive learning, ranging from basic capabilities to practical skills, to foster human resources that will lead business efforts. We also work to enhance employee engagement though personnel systems and changes in work style. In addition, we are strengthening our business foundations in terms of personnel by rotating and shifting human resources to growth businesses.

Overview
The TOPPAN Group considers business investment and capital investment to be necessary for expanding business and responding to rapid technological innovation. We secure financing for such investments from external sources in accordance with our business plans, but there may be times when we are unable to sufficiently secure necessary additional financing under fair conditions for reasons such as substantial changes in interest rate conditions.

In addition, if market prices drop significantly due to such factors as decreases in demand caused by changes in market conditions or if inventory assets degrade due to aging, appraisal loss on inventory assets could affect the performance of the TOPPAN Group.

The TOPPAN Group also deals with customers in diverse industries. Should the collection of receivables of significant value become difficult due to factors such as financial concerns at customers caused by worsening operating conditions in certain industries, the TOPPAN Group’s performance could be affected.

Main countermeasures
To enable smooth procurement of financing based on business plans, the TOPPAN Group appropriately diversifies the means and timings of financing. To ensure that it is possible to procure necessary financing for business continuity even in the case of an emergency, we strive to maintain and reinforce a sound financial standing that contributes to the maintenance of ratings. We also review financial plans when necessary, based on the latest information on financial market trends and analysis of the business environment.

We work to avoid the risk of non-performing or long-term retained inventory assets by making sure that sales, manufacturing, and administration departments work together to improve turnover efficiency through sales promotion activities and ensure that quality is maintained through regular checks of inventory quality and management status.

Based on a credit management policy, the TOPPAN Group sets credit limits for each company it deals with and reviews credit regularly. We also work to avoid the risk of bad debt by taking prompt action to preserve receivables in the case of delays in collection or credit impairment.

Overview
The TOPPAN Group collects, stores, and operates confidential information and personal information received from customers as part of its operations. In the BPO business in particular, the volume of information handled is increasing due to our catering to outsourcing demand from the private sector and national and local governments. In the DX business that the TOPPAN Group is advancing, the business model is based on providing products and services through data collection and analysis, and personal and other information is used.

Main countermeasures
We manage confidential information, personal information, and other important information under a stringent information security management system. Specifically, under the TOPPAN Group Basic Policy on Information Security, the TOPPAN Group has established rules based on the laws, regulations, and information-security-related standards of Japan and countries overseas. Such rules are revised as required in line with revisions of laws and regulations, and we evaluate the degree of maturity of security measures at each TOPPAN Group company and give guidance for improvements as necessary. We also strive to keep employees fully informed of relevant rules through regular training and confirm observance of rules and provide instructions for improvements via internal audits and audits of subcontractors.

To combat information leaks and system outages caused by cyberattacks by external parties, we take technological countermeasures such as detection of suspicious behavior on devices, blocking of devices attempting unauthorized access, network monitoring, and cloud infrastructure controls. We also conduct training for all employees and for specific job-types and ranks. This includes training on responding to targeted email attacks and other incidents and training to strengthen the ability of staff in specific departments, such as development and manufacturing, to respond to threats. Capabilities are reinforced through a cycle of training, drills/practical exercises, analysis, and further training.

We also practically implement measures to prevent leaks by restricting physical access to areas in which important information is handled and monitoring operations conducted in such areas. These measures are reinforced and optimized, as necessary. In addition to monitoring vulnerabilities in the Group’s services and creating an operational structure for gathering, assessing, and analyzing cyber threat information and reflecting it in countermeasures, we have enhanced the structure of our Computer Security Incident Response Teams (CSIRT), TOPPAN-CERT (Groupwide) and TOPPAN Edge CSIRT (for the TOPPAN Edge group), to enable them to respond globally and work to reduce cyber risks in coordination with other relevant organizations.

Overview
In the manufacturing and provision of all our products and digital services, the TOPPAN Group implements measures to prevent product-related incidents or claims by taking sufficient care with regard to quality control. However, a quality-related incident arising in the future could affect the Group’s performance. If a product whose safety has been compromised were to be released into the market, we would have to coordinate with the customer selling such product and implement a self-imposed recall. Such an event could entail significant costs for the recall of products or payment of compensation for damages and could also have a negative impact on the TOPPAN Group’s reputation and business activities. In the area of digital services, we cannot eliminate the possibility of a sudden interruption of a customer’s business or production line caused by, for example, an IT system not functioning, a device failure, or human error. If such a situation were to arise, in addition to giving rise to significant expenses for compensation, it could negatively impact the level of trust that the TOPPAN Group enjoys from society or affect the Group’s business activities.

Main countermeasures
Based on basic policies on product safety management and service quality, the TOPPAN Group establishes quality management systems based on international standards in its businesses, implements thorough quality control and continuous improvements, and works to prevent quality incidents related to products and digital services. If a serious quality incident occurs in relation to a product, the Quality Assurance Center of our Manufacturing Management Division leads efforts to prevent recurrence by identifying the cause and disseminating instructions on countermeasures throughout the entire Group.

Food-related and healthcare-related businesses require particularly high-level quality assurance with respect to safety and hygiene. We work to prevent quality incidents by adopting a system under which manufacturing sites are certified to handle such operations only after passing audits based on our own quality assurance guidelines and quality audit check sheets. For digital services, our Service Quality Management Office leads efforts to formulate service quality rules and manage quality and risk throughout the entire life cycle of services as well as driving continuous improvement activities throughout the Group.

Overview
The TOPPAN Group procures raw materials used for its business, such as paper, ink, and glass, as well as energy, from outside suppliers. We also collaborate with and outsource operations to partner companies in various industries to provide products and services.

Securing an adequate and stable supply of raw materials and energy at a fair price is critical to maintain the Group's business. However, should we be unable to secure a sufficient supply due to supply being interrupted, volume supplied being substantially reduced, deliveries being delayed, transactions being halted, or any other such reason, due to geopolitical developments, damage from disasters, bankruptcy, or accidents at the supplier, human rights issues or violation of environmental laws and regulations in the supply chain including the TOPPAN Group, or any other factors, the provision of products and services could be delayed. Steep rises in raw material or energy prices could also impact the earnings of the TOPPAN Group.

Main countermeasures
The TOPPAN Group advances sustainable procurement efforts and we have formulated the TOPPAN Group Sustainable Procurement Guidelines to drive stable and sustainable procurement in light of international standards and the expectations of society. We advance sustainable procurement by working closely with suppliers and subcontractors to disseminate the guidelines throughout supply chains and by regularly confirming the status of efforts for business continuity in the event of a large-scale disaster as well as activities focused on human rights, labor, the environment, and corruption prevention.

With respect to energy procurement, we are strengthening initiatives for the introduction of solar power, wind power, and other forms of renewable energy, and dispersing risk through such measures as securing multiple energy suppliers.

We work to build relationships of trust and ensure stable procurement by enhancing transparency and fairness in our dealings with suppliers and subcontractors and strengthening relationships with them by monitoring issues through dialogue. We have also established the Supplier Hotline on our corporate website as a channel for consultation, raise awareness through education inside and outside the Company, and conduct internal and external audits to facilitate assessments and corrective measures.

Overview
The TOPPAN Group values its employees as precious “human assets.” Based on a philosophy that “a company is its people,” we believe that it is essential that every employee fulfills their potential by approaching work with motivation, vitality, and commitment. We implement a range of labor-related measures to ensure that this is the case, based on trends in government policy and legal systems and in consultation with the labor union.

The TOPPAN Group has established a Basic Policy on Safety, Health, and Fire Protection, which stipulates that safety comes first in all aspects of business activities. Management and the labor union cooperate to advance activities for health, safety, and fire protection.

However, if we were to be subject to administrative penalties from authorities due to violations of labor-related laws, or if management of labor, health and safety, or fire protection is inadequate, it could negatively affect the public esteem of the TOPPAN Group.

In addition, if a fire or industrial accident occurs, there is a possibility that employees could be seriously injured, or operational site equipment could be severely damaged, interrupting part or all of the operation of equipment and causing delays in production and delivery. Significant costs could also be incurred for the repair of damaged equipment, resulting in an impact on the TOPPAN Group’s business activities, performance, and financial condition.

Main countermeasures
To advance work-life balance, labor-management relations at each operational site involve driving continuous measures to reduce working hours and analyze overtime, and exploring the introduction and use of new work systems. We are creating structures and systems that enable routine monitoring of working hours and the use of leave at each company, aiming to enhance productivity and reduce working hours across the Group, and creating structures to ensure legal compliance. We continue to implement a work style based on the “remote work” system that became firmly established during the COVID-19 pandemic and have put in place environments that enable employees to work autonomously and efficiently. We are also working to prevent labor disputes by establishing channels for labor-related consultation at each site and entrusting the handling of harassment issues to staff with specific qualifications related to consultation on harassment.

For health, safety, and fire protection, safety masters, safety personnel, employees in charge of engineering and safety, and other safety experts are deployed to TOPPAN Group sites across Japan. We promote safety awareness by holding safety workshops on topics such as risk assessment and convening safety subcommittees that discuss each of the various manufacturing processes across the Group. We have established safety training facilities called Anzen Dojo at core manufacturing sites in Japan and overseas. These training facilities provide simulated experiences of workplace hazards such as fires, explosions, and the dangers of presses and rollers in order to enhance safety awareness and the ability to perceive danger. We also conduct rank-based training, with a focus on forepersons.

We use virtual reality technologies to roll out safety training activities at group companies in Japan and overseas based on digital content that simulates accidents through virtual images and audio accompanied by commentary in multiple languages.

Overview
The TOPPAN Group is bringing its business strategy and intellectual property strategy closer together through market orientation and research and development activities. We are working to build a strategic intellectual property portfolio and securing, maintaining, and strengthening business competitiveness through the intellectual property established.

However, there is a possibility that, due to a difference of opinion, technologies or other intellectual property of the TOPPAN Group could be deemed to have infringed the intellectual property rights of other parties, or that the TOPPAN Group could become involved in lawsuits. It is also possible that the TOPPAN Group could be unable to prevent unauthorized use of its intellectual property by other parties or that measures taken to prevent infringement are not successful.

In addition, the TOPPAN Group routinely handles copyrighted materials in the course of making proposals for printed matter and product package designs. Therefore, based on the rights attached to the copyrighted materials handled, the TOPPAN Group could be deemed to have infringed the copyright of another party or could be involved in a lawsuit due to such reasons as not being able to sufficiently confirm in advance how a copyright has been handled.

Main countermeasures
In research and development of new businesses, products, and technologies, the TOPPAN Group takes a global perspective in working to prevent the risk of infringing the intellectual property rights of other parties by continuing to research and monitor such intellectual property rights. The TOPPAN Group avoids the risk of other parties infringing its own intellectual property rights by acquiring rights in accordance with the countries and regions in which it conducts business and establishing a robust intellectual property portfolio.

The TOPPAN Group holds regular rank-based internal training on intellectual property and makes employees thoroughly aware of the importance of respecting the intellectual property rights of other parties. We also conduct regular training on copyrights for internal staff and external designers to whom work is outsourced and ensure that copyrights are handled properly in advance to prevent the risk of infringing the copyrights of other parties.

Overview
The TOPPAN Group conducts business globally and continues to drive business expansion in overseas markets as a strategic priority. The TOPPAN Group’s business activities and performance could be affected by political or economic instability, epidemics, large-scale disasters, labor disputes, conflicts, or other factors in the countries and regions in which we operate. The performance of the TOPPAN Group could, due to insufficient governance or inadequate internal management at overseas subsidiaries, also be affected by such issues as legal or regulatory violations, misconduct in the form of bribery of public officials of foreign countries or international cartels, misappropriation by local employees, improper accounting, changes to tax laws, or inappropriate tax filings.

In terms of geopolitical risk, international conflicts and changes of government are leading to growing uncertainly in the international situation and increased risk. In addition, the resulting tightening of import and export regulations, restrictions on fund transfers, and other factors are also having an effect on the TOPPAN Group’s business. Suspension, withdrawal, or other interruptions of business caused by prolonged conflict, escalation thereof, or new fighting or conflicts could have a further impact.

Main countermeasures
To reduce the level of risk associated with overseas business, we believe that it is important to establish governance structures at each overseas subsidiary and ensure their effective implementation. The TOPPAN Group has therefore set out guidelines for elements of governance such as overall management, compliance, information security, personnel management, health and safety, accounting, tax, quality, the environment, and procurement. Based on the guidelines, we work in close collaboration with overseas subsidiaries to advance the establishment, observance, operation, and practical implementation of structures and schemes at each company. We strive to create even more effective governance structures by conducting internal, accounting, and other audits and providing guidance for improvements based on the findings and recommendations of such audits.

In addition, we are strengthening our efforts by using systems provided by third-party organizations to conduct business environment risk assessment before commencing businesses overseas, and implementing training on safety and risk/crisis management for employees before they set out on business trips or overseas assignments.

As an emerging risk, new risk countermeasures and efforts are considered to be necessary for geopolitical risk. We continue to monitor changes in circumstances while analyzing and assessing impact on the TOPPAN Group and devising detailed business continuity plans and other countermeasures for particularly important overseas regions. We also periodically monitor elements of country risk and related information and are making preparations for the establishment of an organizational structure that can respond more flexibly to changes in risks.

If an unforeseen circumstance arises, we will place first priority on ensuring the health and safety of all employees, work to minimize the impact on supply chains by taking measures to maintain optimal operating conditions throughout the Group, and continue to improve and review such measures.