In an age of uncertainty, risks surrounding a business continue to grow more diverse and complex. The most pressing risks include shifts in the world’s political and economic landscapes, numerous international conflicts, environmental shifts brought by climate change, the growing sophistication of cyber-attacks with the advance of digital transformation, and human rights issues such as forced labor.

As a group of companies engaged in manifold businesses around the world, the TOPPAN Group views accurate detection, appropriate management, and steady prevention of critical, high-impact risks to be of paramount importance. The TOPPAN Group has therefore established a framework for ensuring appropriate management structures and procedures within the Group, with specific divisions (corporate function divisions of TOPPAN Holdings) designated as the second line of defense responsible for each of the most relevant risks. We comprehensively confirm risks of high importance across the entire Group through annual risk assessments by the first line of defense (operating companies) and the second line. After confirming the results of the risk assessment by the first line of defense, the divisions in the second line give directions and instructions as appropriate as part of a PDCA cycle for risk management.

The recently established Risk Management Implementation Committee and Risk Management Committee will share information on material risks so that it can be applied in management of the Group. This information includes important trends in external conditions, the status of risk management within the Group, and the status of measures to prevent reoccurrence of risks that have been realized. Risk-related issues (discussion topics) that the entire Group should address on a priority basis are clarified, and the Risk Management Implementation Committee takes the lead in examining and monitoring inherent risks and risk countermeasures.

When a risk actually arises, we immediately collect the necessary information and take comprehensive and strategic countermeasures under our risk management framework to minimize losses, ensure business continuity, and maintain the trust of society.

We have established a Groupwide risk management structure based on three lines of defense. As part of efforts to reinforce the structure, we appointed a new Chief Risk Officer (CRO) in April 2024 and established a division responsible for overseeing Groupwide risk management (GRC Division). The Risk Management Working Group under the Sustainability Promotion Committee previously functioned as the body responsible for risk management. In October 2024, this body was upgraded and reorganized to form two higher level committees for risk management with more important roles. At the executive level, the Risk Management Implementation Committee is responsible for examining risks and implementing and monitoring countermeasures. At the supervisory level, the Risk Management Committee has been established to ensure adequate control functions.

(1) Risk Management Committee

The Risk Management Committee is composed of all of the members of the Board of Directors and is dedicated to deliberating risks for the TOPPAN Group. In addition to fulfilling an oversight and control function (instructing and advising) for the Risk Management Implementation Committee, it discusses significant risks related to Group management and functions as a forum for sharing the latest trends and information on risks and risk management. The committee holds regular meetings twice a year and convenes for extraordinary sessions whenever necessary.

(2) Risk Management Implementation Committee

The Risk Management Implementation Committee is composed of officers from the first and second lines of defense. It is tasked with deliberating significant risks related to management of the Group, setting out the policy for managing such risks, and monitoring the status of countermeasures. It holds regular meetings twice a year and convenes for extraordinary sessions whenever necessary. Like the Risk Management Committee, it is also a forum for sharing information on significant risks related to the Group as well as on the latest trends and changes in external conditions.

(3) First Line of Defense: Operating Companies

Our operating companies include subsidiaries with business divisions and subsidiaries that do not employ a business division system. All of these companies operate by implementing risk countermeasures based on plans formulated by the corporate function divisions of TOPPAN Holdings. Responsibility for risk management rests with the president of each subsidiary or with the heads of business divisions at subsidiaries with a business division system. As subsidiaries’ administrative departments (business strategy, accounting, legal, and general affairs) generally also support the work of the first line of defense, we describe them as Line 1.5 in our risk management framework.

(4) Second Line of Defense: Corporate Function Divisions of TOPPAN Holdings

The corporate function divisions are administrative divisions of TOPPAN Holdings responsible for functions such as corporate planning, finance, legal affairs, and personnel & labor relations. These divisions instruct operating companies to conduct annual assessments of their routine risk management regimes and monitor the status of progress. The corporate function divisions also identify the main risk items for the Group each year as “Business and Other Risks,” develop management plans, and monitor risk control across the Group. The risks selected are reported to the Board of Directors for approval.

When an operating company reports an incident, the relevant divisions in charge of risk management in the second line direct the response or directly handle the issue. The Crisis Management Committee is convened if the impact is considered significant.

(5) Third Line of Defense: Management Audit Office

The Management Audit Office, the body in charge of internal audits, analyzes and evaluates whether the first and second lines are functioning adequately. This office conducts operational audits on both lines to check their compliance with relevant laws, regulations, and in-house rules, and to review the mechanisms they employ to prevent misconduct. The office also carries out management audits every year to verify and evaluate alignment with management objectives and assess whether sufficient and adequate risk control is implemented from a procedural standpoint. Audit results are reported to the president & representative director, the Board of Directors, and the Audit & Supervisory Board.

The TOPPAN Group has established a framework and procedures for dealing with risks that actually arise. In addition to developing a communication matrix within the Group, we have assigned responsibility for each risk item to specific divisions in the second line of defense and established structures for risk response led by those divisions. When a risk actually arises, relevant divisions in the second line coordinate with the operating company concerned to minimize negative impacts on business, take action to remedy the situation, and consider measures to prevent recurrence. In the case of serious incidents, personnel from relevant divisions assemble to discuss the matter in more detail and report to the Board of Directors. When emergency response actions are needed, the president or vice president is responsible for forming an emergency taskforce to properly handle the issue. The taskforce is composed of officers in charge of the relevant divisions in the second line of defense, audit & supervisory board members, legal consultants, and other outside experts.

Personnel from the divisions in the second line of defense assemble on a regular basis to share information and strengthen coordination at the Crisis Management Meeting.

(1) Process for Selecting “Business and Other Risks”

We continue to select “Business and Other Risks” (previously referred to as “Significant Risks”) each year by identifying the main risks that impact the TOPPAN Group through discussion with relevant divisions, taking into account changes in external conditions and elevated risks. After the annual review is complete, the “Business and Other Risks” selected are presented to the Board of Directors for approval.

Discussions with the relevant divisions involve assessing and analyzing emerging risks and external conditions and identifying any risks that have increased significantly from the previous year under each item of the “Risk Categorization” (an internal document for risk management that provides a comprehensive list of risks related to the TOPPAN Group). Through these processes, the “Business and Other Risks” selected in the previous year are reviewed and those for the current year are selected.

The following table presents the risk items (“Business and Other Risks”) and their correlation with the priority measures of the Medium Term Plan.

Please see the relevant sections of “5. Business and Other Risks” below for the overview of each risk and main countermeasures.

(2) Risk Management Procedures of the First and Second Lines of Defense

Until now, the following procedures have constituted the primary process carried out during the fiscal year, and the first and second lines of defense have coordinated to ensure appropriate management of “Business and Other Risks” related to the TOPPAN Group. Activities undertaken have been reported to the Board of Directors.

• Risk assessment focusing on the first line of defense (annual).

• The second line of defense determines which of its divisions is responsible for each risk item under “Business and Other Risks.” The relevant divisions plan and implement management policy and frameworks for the risks for which they are responsible (annual).

In addition to the above, we are implementing the following measures from fiscal 2025 to reinforce our routine risk management structure.

1) We will further clarify procedures for the PDCA cycle by which the second line of defense analyzes, monitors, and provides instruction and advice regarding the risk assessment performed by the first line of defense.

2) As the department overseeing risk management, the GRC Division will have an oversight and control function (PDCA procedure) regarding the second line of defense’s planning and performance management for each item of the “Business and Other Risks.”

3) After clarifying risk-related issues that need to be addressed on a priority basis across the Group, we will continuously monitor how they are being managed (for details, see (3) Deliberation by the Risk Management Implementation Committee and Risk Management Committee).

4) Risk trends and management status (including 1) and 2) above) will be reported to the risk management committees at the supervisory and executive levels.

(3) Deliberation by the Risk Management Implementation Committee and Risk Management Committee

From fiscal 2025, we are clarifying the risk-related issues (discussion topics) that should be addressed on a priority basis across the Group, and the Risk Management Implementation Committee will lead deliberation and monitoring of their inherent risks and relevant countermeasures. Members of the Risk Management Implementation Committee are designated as risk owners for each discussion topic. The risk owners are responsible for leading efforts to analyze and assess the risks inherent to their respective topic, examining countermeasures to mitigate or resolve risks based on the assessment, and reporting the status of progress at subsequent committee meetings. The Risk Management Committee, meanwhile, receives reports on the issues discussed by the Risk Management Implementation Committee and exercises its oversight and control function as appropriate.

The GRC Division (division overseeing risk management) selects discussion topics in consultation with the second line of defense after gathering and analyzing information by a total of four methods, combining the following two approaches (top-down approach and bottom-up approach).

(1) Top-down approach

• Interviews with directors and executive officers

• Analysis of inherent risks and risk countermeasures for the key initiatives of each operating company

(2) Bottom-up approach

• Risk assessment analysis results for first line of defense

• Risk assessment analysis results for second line of defense

Nineteen items have been selected as “Business and Other Risks” for Fiscal 2025. We have amended “19. Risks associated with overseas business (legal and regulatory violations, geopolitical risk, legal action, labor disputes, international taxation, and other items not included in preceding paragraphs,” one of the risks identified for fiscal 2024. It now more specifically stipulates “Geopolitical risks, such as wars, conflicts and disputes between countries.”

The background to this change is the TOPPAN Group’s globalization, in particular our ongoing expansion to the Global South with a focus on countries in Africa. This is considered to increase the potential impact that circumstances in each country (wars, conflicts, and disputes between countries) can have on the management of the TOPPAN Group.

1. Risks related to climate change and loss of biodiversity

a. 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 business 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. Depletion of water as a natural resource could impact procurement of raw materials, the production activities of sites, and local communities. Businesses are therefore required to collaborate across the supply chain and with local communities to drive efforts addressing environmental issues.

b. 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 and implement the PDCA cycle with regard to the introduction of renewable energy and energy saving initiatives leveraging an internal carbon pricing (ICP) system. 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, implement activities for water efficiency at business sites, and drive efforts to preserve natural capital while considering procurement across the entire supply chain.

2. Risks related to environmental pollution (leakage of harmful substances, illegal dumping of waste, etc.)

a. Overview
The TOPPAN Group uses certain hazardous substances in its manufacturing processes and research and development and has to manage discharge to the environment and 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 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 printed customer products could be disseminated over social media or other channels, and the social credibility enjoyed by customers could be damaged, potentially affecting the business activities of the TOPPAN Group.

b. 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 waste treatment contractor, the TOPPAN Group confirms waste treatment stringently, assesses appropriate treatment by waste treatment contractors via an assessment sheet, and conducts onsite inspections.
In the case of hazardous waste, our sites in Japan and overseas work to reduce discharge volume, ensure appropriate treatment, and drive recycling.

3. Risks related to earthquakes, storms, flooding, other natural disasters, or pandemics

a. 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 business 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.

b. 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 and working to continuously maintain and reinforce the structures in place.

4. Human rights risks

a. 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.

b. 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 conduct regular training programs to ensure that employees observe these important Group policies and codes. 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 Capital 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 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 have concluded an agreement on harassment prevention and recognize the problem of harassment. In addition to working to prevent such conduct, we strive to prevent labor-related problems through measures such as establishing labor consultation desks at each site, with consultation provided by qualified harassment counselors.

5. Risks associated with control of the Group

a. 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.

b. Main countermeasures
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 while respecting the independence and autonomy of group companies for the operation of their businesses.
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 of our 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 in Japan. For companies outside Japan, we have issued a set of Operating Guidelines that clearly set out the necessary regulations and procedures for governance. The guidelines are reviewed annually and we also take measures to confirm compliance with them.
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.

6. Risks related to misconduct (serious improper conduct or inappropriate actions, etc.) and compliance violations (bid-rigging, bribery, other legal or regulatory violations)

a. 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.

b. 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 in Japan, under which Leaders in each workplace lead activities to ensure that the Conduct Guidelines are understood and observed in day-to-day operations. Outside Japan, we share specific procedures for preventing misconduct and compliance violations with overseas subsidiaries via the Operating Guidelines. We also work to reduce the risk of misconduct and compliance violations by issuing a monthly Governance Newsletter aimed at raising the compliance awareness of employees overseas.
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.

7. Risks related to changes in the market environment, such as business conditions or competition with other companies

a. Overview
In addition to factors such as exchange rate fluctuations, geopolitical risks, the globalization of society, innovation in the field of information technology, and advances in the area of networks, increased consciousness of sustainability, including environmental conservation, is 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.

b. Main countermeasures
With demand in the traditional printing business declining, we are driving portfolio transformation that focuses on a shift to businesses where global market growth can be anticipated, growth of the Erhoeht-X business, the creation of new (frontier) businesses, and intensification of structural reform in low-profit businesses. Specifically, we are putting in place supply capabilities to establish a competitive edge in the global packaging business. In the global security business, we are building the necessary platform for business expansion centered on government ID solutions. In the semiconductor business, we are establishing a production system to respond to increased demand and driving development to commercialize next-generation products. In the area of new (frontier) businesses, we are advancing efforts to establish businesses in areas such as healthcare and sensors, centered on technologies and business models with a competitive advantage.

8. Risks related to fluctuations in current value of marketable securities

a. 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.

b. 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.

9. Risks related to fluctuations in foreign exchange rates

a. 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.

b. 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.

10. Risks associated with business strategy and Group strategy, such as partnerships and acquisitions

a. Overview
To achieve its business strategy and Group strategy, the TOPPAN Group engages in 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, or otherwise be unable to achieve our business strategy or Group strategy for any variety of reasons, the TOPPAN Group's performance could be affected.

b. 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, in addition to considering a review of business strategy or Group strategy, 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.

11. Risks associated with product research and development, such as loss of research and development investment (changes in the market that exceed expectations, worsening of the performance of alliance partners or companies invested in, delays in the timing of commercialization or sales launch, etc.)

a. 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.

b. Main countermeasures
We have established the R&D Strategy Office to manage the TOPPAN Group’s research and development activities. 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.

12. Risks related to securing human resources to support growth

a. 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.

b. 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, job-specific recruitment, 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 planning and advancing the introduction of a talent management system to seamlessly shift and rotate human resources to growth businesses.

13. Financial risks (financing, non-performing inventory assets, doubtful receivables, etc.)

a. 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.

b. 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.

14. Risks related to information security

a. 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.
In advancing the DX business and handling important information on behalf of customers, the TOPPAN Group recognizes that cyberattacks and inappropriate handling or leakage of information due to misconduct by employees of the TOPPAN Group or subcontractors are particularly significant risks. There has recently been a surge in targeted email, ransomware, and other cyberattacks that exploit vulnerabilities exposed by remote working and online meetings, and the methods used for such attacks are increasingly sophisticated and elaborate. If information leaks, data corruption or tampering, system or service outages or other damage were to occur due to cyberattacks, misconduct, or other reasons, it could negatively impact the TOPPAN Group’s social reputation and affect its performance and financial position.

b. 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.

15. Risks related to the quality of products and digital services

a. Overview
The TOPPAN Group positions quality management as a matter of paramount importance in the manufacturing and provision of all our products and digital services and strives to prevent quality-related incidents and claims. However, should a quality-related incident occur, there is a risk that it could affect the Group’s performance. If a product whose safety has been compromised were to be released into the market, it might be necessary to implement a self-imposed recall in coordination with the customer selling such product. Such an event could entail significant costs for the recall of products or payment of compensation for damages and could also affect the TOPPAN Group’s business activities and performance due to a negative impact on our social credibility. In the area of digital services, an IT system not functioning, a device failure, a human error or other event could cause a sudden interruption of the business activities or production line of a customer that is using a service. 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 or performance.

b. Main countermeasures
Based on basic policies on product safety management and service quality, the TOPPAN Group establishes quality management systems compliant with international standards in its businesses, and implements thorough quality control and continuous improvements. 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 certification system under which manufacturing sites are granted permission to handle such operations only after passing pre-production 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 ensure comprehensive quality and risk management throughout the entire life cycle of services as well as driving continuous improvement activities throughout the Group.

16. Risks related to the supply chain (raw material supply issues, inappropriate orders, fraudulent acts by business partners, etc.)

a. 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.

b. 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 of our Declaration of Partnership Building both inside and outside the Group, and conduct internal training and audits on compliance with transaction-related laws and regulations to facilitate assessments and corrective measures.

17. Risks related to occupational health and safety (fire, industrial accidents, violations of labor-related laws, labor disputes, etc.)

a. 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 business 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.

b. Main countermeasures
In March 2025, TOPPAN Holdings, four manufacturing companies, and four plants within the TOPPAN Group obtained ISO 45001 certification, the international standard for occupational health and safety management systems. Safety masters and safety personnel are deployed to TOPPAN Group sites across Japan, and we promote safety awareness by holding safety workshops on topics such as risk assessment. 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 that focuses on forepersons and is conducted by personnel with RST (Roudosyo Safety and health education Trainer) qualifications. Going forward, we will strive for continuous improvement of health and safety management by expanding the scope of ISO 45001 certification to eight manufacturing companies and 45 plants with the Group.
To promote employee health, we work with the TOPPAN Group Health Insurance Union on advancing health improvement activities at each site led by health improvement committees. For enhanced job satisfaction, we facilitate changes in work style through flextime and remote working systems and have put in place environments that enable employees to work autonomously and efficiently. We also develop structures and systems that enable routine monitoring of working hours and the use of leave across the Group, aiming to reduce working hours through enhanced productivity while establishing structures to ensure legal compliance.

18. Risk of infringing or being subject to infringement of patents, copyrights, and other intellectual property rights

a. Overview
The TOPPAN Group positions intellectual property and intangible assets as important management resources that serve as a source of business competitiveness. Our initiatives focused on intellectual property are undertaken from a global perspective and are based on an intellectual property strategy that closely aligns market orientation and R&D activities.
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.

b. Main countermeasures
The TOPPAN Group respects the intellectual property rights of other parties and takes appropriate measures to avoid and prevent infringement of such rights when conducting business. We aim to prevent the risk of infringing the intellectual property rights of other parties by continuing to research and monitor such intellectual property rights. In addition to complying with laws and regulations regarding intellectual property in each country, the TOPPAN Group will exercise its rights appropriately and legitimately with regard to infringement of intellectual property rights by third parties.
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.

19. Geopolitical risks, such as wars, conflicts, and disputes between countries

a. 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 in the countries and regions in which we operate. However, geopolitical risks, such as wars, conflicts and disputes between countries, are increasing every year, leading to growing uncertainly. 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.

b. Main countermeasures
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 conduct country risk assessments for the countries in which we operate or plan to conduct business, periodically monitor related information, and have established an organizational structure to respond more flexibly to changes in risks. The risk assessment procedure is based on defined risk appetite levels for the TOPPAN Group, and the mechanism ensures that identification of matters to be considered or addressed and decisions on business continuation or withdrawal are informed by objective data and information, in alignment with the magnitude of risks.
If an unforeseen circumstance arises, we will immediately implement measures to ensure the health and safety of all employees based on reports from the location and overseas safety information (travel advisories) issued by the Japanese Ministry of Foreign Affairs, U.S. Department of State, or similar government agencies. If necessary, we will promptly evacuate personnel from the location. We will also work to minimize the impact on supply chains by taking measures to maintain optimal operating conditions throughout the Group and continuing to improve and review such measures.

In addition to the risks identified as “Business and Other Risks,” the TOPPAN Group strives to continuously monitor trends and identify Emerging Risks that may not currently have a high impact or likelihood of occurrence but could significantly impact the Group’s operations in the future. We currently recognize the following as emerging risks.

(1) Impact of changes in the policy and economic environment of the United States

Although related items such as tariffs, trade issues, and exchange and interest rate fluctuations are already included in the “Business and Other Risks,” political and economic trends in the United States—notably protectionist policies that are a point of concern under the second Trump administration—could result in new impacts on the TOPPAN Group’s business activities overseas, particularly those related to the United States. Potential risks include changes in the terms of transactions or collaborations with specific U.S. companies and impacts on the costs of procuring services and materials due to changes in the U.S. labor environment or rising inflation. In light of the potential impact of these uncertain factors on the TOPPAN Group’s business, we will continue to monitor trends and assess the probability of risks being realized.

(2) Impacts associated with the advancement and social implementation of AI technology

Rapid advancement and social implementation of artificial intelligence (AI) technology could have a significant impact on the TOPPAN Group’s business. The main risks include ethical and legal issues related to AI usage, such as infringement of human rights and privacy, discrimination, prejudice, and violation of intellectual property rights. There are also risks of intensified competition or business model changes that undermine the premise of existing businesses. Addressing these risks, the TOPPAN Group has established the TOPPAN Group AI Ethics Policy to ensure appropriate use of AI and is providing relevant education and training to officers and employees. In parallel with the creation of business opportunities through AI, we are coordinating with our business divisions to study and analyze impacts on existing businesses (including substitution risk and potential for efficiency enhancements) and to consider countermeasures to future risks.