Business Risks | Management Policy and Systems | Investor Relations

The Lion Group's management performance and financial status may be adversely affected by various risks as business activities are pursued in the future. Of these risks, the following items in particular may have a material impact on the decisions of investors.
Forward-looking statements are based on decisions made by the Lion Group.
Business risks are not limited to the items listed below.

Risk	Description	Main Response Initiatives
(1) Risks related to business performance and investment recovery	Risks of falling behind the competition, deterioration of business performance and being unable to recover investments due to delayed response to changes in the market, distribution and consumer consumption and purchasing behavior	Analyze markets and consumer consumption and purchasing behavior from multiple angles and develop products that offer new living habits that create value Build an efficient supply chain that can handle changes in distribution and purchasing environments Assess risks from multiple angles and analyze recovery sensitivity before investing; conduct strict due diligence especially when acquiring external resources
(2) Product quality risks	Risks of problems with products, such as unforeseen product-related accidents, due to unforeseen product defects or mistaken use by customers	Ensure compliance with related laws and regulations and implement product development and other processes in line with our Product Management System based on the JIS Q 9000 family of standards In the unlikely event of an incident occurring, we will strive to minimize ill health effects by establishing a specific quality assurance system Utilize feedback from customer support to improve products, containers, packaging and labeling Cultivate Company-wide quality awareness and strengthen organizational management by acquiring and implementing ISO 9001 certification Strengthen audit functions and implement regular quality checks to prevent issues with raw material suppliers and production contractors
(3) Raw material procurement risks	Risks of supply-chain delays or breaks due to purchase price increases and intensifying competition in procurement resulting from climate change, international demand trends, geopolitical risks, or supplier problems	Ensure stable raw material procurement through the use of interchangeable materials, purchasing from multiple sources and practicing global procurement while implementing responsible procurement activities based on our Procurement Principles Conduct checks based on the Lion Group Supplier CSR Guidelines to prevent risks related to human rights, labor, the environment, fair business practices and consumer issues in the supply chain Actively implement cost reductions by optimizing compositions and modifying specifications
(4) Overseas business expansion risks	Risk of incurring costs associated with limitations on business activities arising from political and economic developments or changes in or the tightening of laws and regulations in the countries and regions where we do business as our operations expand Risk of changes in the policies or finances of important stakeholders related to business operations	Closely monitor developments related to political and economic conditions as well as laws and regulations in the counties and regions where we do business, continually gathering information and preparing for changes Conduct due diligence in the course of M&A on the company’s business, financial status and legal matters Diversify Lion’s portfolio of countries, regions, and businesses to diversify risk Strengthen ongoing communication with joint venture partners, for example, continuously fine-tune aligned policies to maintain good relationships
(5) Human resource risks	Risks of stagnation in corporate growth due to difficulty in securing and developing necessary human resources according to plans as a result of such factors as the decreasing working population and changes in the employment environment Risks of stagnation in business activities if human resources leave due to poor corporate culture that does not respect diversity of values or support improved internal relationships	Secure human capital (recruitment, training and assignments) in accordance with the human resources portfolio aimed at realizing Lion’s management strategy Maintain competitive personnel system with appropriate compensation levels Strengthen approach to gender equality and healthy work styles for employees
(6) Information management risks	Risks of information leaks, system paralysis or other incidents due to such unforeseen events as computer virus infections or improper system access	Established a manual of procedures for storing and handling confidential information aligned with the Basic Policy of Our Information Management and manage information as the work environment changes Established countermeasures against system failures in the Information Security Regulations and update them as necessary All employees (including directors) participate in annual training on information security and social media risks
(7) Compliance risks	Risks of serious legal or regulatory violations due to the unforeseen establishment or abolition of relevant laws or significant regulatory changes or tightening	Established the Lion Group Charter for Corporate Behavior and Behavioral Guidelines, which serve as a code of conduct, regarding which we implement periodic education for all employees Implement specific compliance measures centered around the Corporate Ethics Committee Establish and operate the AL Heart Hotline as an internal and external whistleblowing system Establish the LION Anti-Bribery Principles and appropriately implement business activities in compliance with laws and regulations of the countries and regions in which we do business Establish the LION Human Rights Policy and apply it to all employees and require business partners and suppliers to follow this policy
(8) Reputation risks	Risks of inappropriate comments or messages on social networking services (SNSs) or other platforms quickly spreading and generating controversy or backlash	Establish the Social Media Policy and conduct training for all employees on social media risks Continuously monitor social media to swiftly detect inappropriate information and create the Social Media Risk Response Manual to establish a system to promptly, carefully and appropriately handle risks
(9) Exchange rate risks	Risks of exchange rate fluctuation impacts on product supply, raw material procurement and other import or export transactions Risk of impact on Group management performance and financial position resulting from foreign currency translation to Japanese yen in the consolidated financial statements	Carefully monitor the exchange rates of key currencies and strive to reduce risks presented by exchange rate fluctuations through hedging and other means
(10) Major lawsuit risks	Risk of economic impact or damage to the Company’s brand image or social credibility resulting from unfavorable decisions for the Group in major lawsuits	Ensure thorough legal compliance, clearly explain and discuss contract terms before forming agreements, appropriately manage intellectual property and take other steps to prevent lawsuits Establish a system to quickly and appropriately respond to lawsuits by working with lawyers and the legal and intellectual property departments of subsidiaries in countries and regions where we do business
(11) Novel influenza and other infectious disease risks	Risks of restrictions on the movement of people and things and limited business operations due to the emergence and prolongation of epidemics of novel strains of influenza or other infectious diseases	Implement thorough measures to prevent infections in normal times and establish a system that enables prompt and appropriate action in the event of an epidemic as defined in the Manual on Countermeasures against Novel Influenza and Other Infectious Diseases Communicate and publicize proactive prevention measures internally and externally, and steadily supply products that help prevent infections both in normal and abnormal times
(12) Major earthquake, typhoon and other natural disaster risks, and accident risks	Risks of human damage, such as the death or injury of employees, as well as physical damage, such as damage to manufacturing facilities or warehouses, caused by a major earthquake, major typhoon or other natural disaster, insufficient safety precautions at manufacturing facilities, or equipment malfunction, and risks of any such incident disrupting business activities and product supply	Improve safety and disaster management activities with a focus on the emergency contact system, safety confirmation system and disaster countermeasure headquarters system as well as regular training, regular safety audits and equipment upgrades at production bases Establish a Business Continuity Plan (BCP) Framework to ensure business continuity and rapid recovery in the event of a disaster, and implement such measures as securing inventory, establishing multiple manufacturing facilities and securing alternative routes of supply
(13) Climate change and other environmental change risks	Risks related to responding to tightening regulations, rising raw material costs, other cost increases and reputational damage due to delays in responding arising from global temperature increases caused by climate change	Take on the challenge to decarbonize and realize a resource-circulating society by formulating the LION Eco Challenge 2050 for long-term environmental objects to shift towards a more sustainable society Work with stakeholders to reduce environmental impact across product life cycles by applying environmentally friendly design to our products and services from raw material procurement to production, transport, use and disposal Actively and effectively communicate how we address environmental issues, including through our strategies and measures