Investor Relations

(1) Basic policy on Management of the Company

At the Okamura Group (the “Group”), our mission is to “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality.” Under this mission, we aim to realize a society in which all people can work and live with vitality and smiles in line with our purpose of “Realizing a society where people can thrive.”
In 1945, Okamura Seisakusho (Okamura) was founded jointly by engineers who embraced its founding purpose, each providing funds, expertise, and labor. The spirit of the founding members took hold as our corporate culture guided by our Basic Policy, a corporate philosophy composed of Innovative Creation, Cooperation, Being Cost Conscious, Saving for Future, and Social Responsibility. Under the motto of “Quality Pays for Itself,” we have been working to provide society with high-quality products and services that precisely address our customers’ needs. This endeavor has become Okamura’s corporate DNA and passed down to the Okamura Group’s present management and business activities.
Okamura Way, our corporate philosophy, comprises Okamura’s Mission (our management approach), the Okamura Declaration (what we want to be), and Okamura Basics (the values we hold dear). At the core of all of these is our perspective “Where people can thrive.”
In today’s changing value system, one in which sustainability is becoming ever more important, the vitality of every individual will lead to solutions to social issues. Based on this belief and our sense of corporate purpose, we at the Okamura Group aim to contribute to the realization of a society in which all people can work and live with vitality and smiles.
We will strive to create new demand and strengthen our management base to respond to change while working to resolve social issues through our businesses.

Social Issues to Tackle and Value Propositions

The Okamura Group tackles social issues through its business activities, helping realize a society where people can thrive through customer and social value it supplies.

Value Creation Story Overview

To realize a society where people can thrive, as set out in the Okamura Group’s Purpose, we leverage our unique values and strengths while creating new value, based on the foundation of the Okamura Way, our philosophy cherished and shared by all employees.

(2) Corporate Management Strategies for the Medium and Long Term

Okamura has formulated its Midterm Management Plan 2025 covering the three years from the fiscal year ended March 2024 to the fiscal year ending March 2026. In light of recent business performance and the business environment, the financial targets were revised upward on May 9, 2025.

1) Aims of Midterm Management Plan 2025

• ·Creating new demand
  Grasping the flow of the times, accelerate the transformation to a demand creating company by refining our ability to make proposals and products
• ·Strengthening our management foundation to respond to change
  Human resource development and improving employee engagement:Support career development, promote human resource development and employee engagement improvement
  Accelerating the digital transformation:Accelerate the Digital Transformation in management, business, and work and promote DX human resources development
  Enhancement of highmix, variable-volume production system:Maintain and strengthen competitive advantage by utilizing a transformative production system that responds to environmental changes
  Development of overseas business rooted in the local market:Development of local production for local consumption business through M&A and partnerships and joint ventures with leading local partners
• ・Initiatives to address social issues through business
  Continuous initiatives to address social issues and steady progress of long-term global environmental initiatives toward realizing carbon neutrality by 2050

2) Financial targets for the fiscal year ending March 31, 2026 (revised upwards on May 9, 2025)

・Net sales:	330.0 billion yen(Initial target: 325.0 billion yen or more)
・Operating profit:	27.0 billion yen (Initial target: 27.0 billion yen)
・Operating profit ratio:	8.2 ％
・ROE:	10.0 ％

3) Basic policy on investment and shareholder returns

• ・Investment for growth
  We have set aside up to 50.0 billion yen for strategic investment and will implement investments with a good balance between maintaining and enhancing the strengths of existing businesses and developing new markets and businesses
• ・Shareholder returns
  We will maintain a stable dividend payout ratio of at least 40%, raising it from the level of the previous Midterm Management Plan
  We will flexibly implement the purchase of treasury shares based on factors such as the status of investment and the external environment

(3) Business Environment and Issues to be Addressed

1) Changes in business environments

The future of the Japanese economy is extremely uncertain due to geopolitical risks surrounding the situations in Ukraine and the Middle East, the prolonged slowdown of the Chinese economy, and concerns about the impact of trade policies in the United States. In addition, rising funding costs due to the establishment of a high-interest rate environment, soaring prices of various materials, and sustained wage increases are expected, making the response to inflationary pressures a material management issue.
In this business environment, we will aim to create new demand by shifting to new offices that foster innovation, addressing labor shortages in the distribution industry, and responding to sustainability issues, thereby capturing major changes in society and the market.

2) Issues to be addressed in each business

Office Furniture
With regard to our core business, Office Furniture, the importance of communication has been reaffirmed across the market in the wake of the COVID-19 pandemic, along with the rise of work styles that are not bound by time or location. As a result, there is a growing demand for open office designs that promote communication. In addition, as a solution to the issue of securing human resources, which is a challenge for the Japanese market as a whole, opportunities to relocate or renovate offices are expanding, and we expect that the creation of “The Office You Want To Go To” will continue to grow steadily.
Under these circumstances, we will aim to increase net sales and operating profit by creating new demand through our strengths of proposal capabilities based on research findings on future work styles and knowledge obtained through our extensive delivery track record, as well as of product development that anticipates changes in the times.

Store Displays
In terms of our Store Displays business, we expect strong demand for labor-saving and efficiency-enhancing measures in stores against the backdrop of labor shortages, as well as for the creation of employee-friendly working environments, regardless of region or business type. In addition, addressing social issues in the retail industry, such as environmental considerations, is becoming increasingly important in proposals.
Under these circumstances, we will leverage our strengths, including our extensive product lineup, such as display fixtures and refrigerated showcases, our comprehensive services ranging from proposals to after-sales service, and our design, research, and development systems related to store construction. We will work closely with our customers to resolve various issues facing the retail industry, such as reducing environmental impact and food waste, with the aim of increasing net sales and operating profit.

Material Handling Systems
In the Material Handling Systems business, demand for labor-saving and efficiency-enhancing measures is expected to remain strong due to labor shortages at logistics facilities, as is demand for reducing logistics costs through high-density storage and high-efficiency transport within warehouses.
Under these circumstances, as a material handling systems integrator, we will strive to expand our business scale and secure profits by enhancing our comprehensive system, which ranges from management issue resolution consulting to maintenance services. We will also engage in research and development of differentiated products using advanced technologies.

Improving Productivity and Efficiency
To improve productivity and efficiency, we will strengthen our production and supply systems with the aim of creating smart factories that can flexibly respond to changing demand. Sales, production, and logistics will work together as one company to promote supply chain reform with the aim of improving inventory turnover. Through effective investment and continuous improvement activities, we will strive to improve productivity, rebuild a company-wide quality management system, and achieve both efficiency and stable supply. In addition, based on the creation of a safe and healthy workplace, we will further strengthen our efforts to implement human resource development and employee engagement improvement throughout the Company and to promote operational efficiency, including the use of digital technology, thereby improving competitiveness.

Promotion of Sustainability

(1) Views and Initiatives Concerning Sustainability

At the Okamura Group, our mission is to “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality.” Under this mission, we aim to realize a society in which all people can work and live with vitality and smiles in line with our purpose of “Realizing a society where people can thrive.” Recognizing the importance of pursuing business activities centered on sustainability, to “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality,” as well as the economic, social, and environmental impact of our business activities, we are working to fulfil our corporate social responsibility based on the Okamura Group Sustainability Policy.

*Okamura Group Sustainability Policy (in Japanese)
https://www.okamura.co.jp/corporate/sustainability/policy/sustainability_policies.pdf

1) Governance

The Sustainability Committee is chaired by the Representative Director and consists of Executive Officers who oversee each business division and corporate department. The Committee formulates, deliberates, and approves yearly plans related to material management issues, and distributes them to related departments. It also promotes and supports group-wide initiatives related to material issues and monitors their progress.
In addition, the Committee reevaluates current risks and identifies and evaluates new risks, taking into consideration the impact on management and finance, etc., regarding the Okamura Group's overall risks (opportunities and threats), including climate change, biodiversity, and human rights. It also identifies and reviews risks to be prioritized. For details, see “Business and Other Risks.”
These deliberations, decisions, and activity results are reported to the Board of Directors, which manages and supervises the contents of the reports.
The Sustainability Promotion Department operates the Sustainability Committee as its secretariat, develops approved items into business activities through various organizations within the company, and regularly conducts follow-ups.
In addition, for company-wide sustainability projects, it follows up on the progress of each business division and spreads awareness of the activities among employees.

Composition and achievements of each meeting

2) Strategies

The Okamura Group will further hone the three core strengths it has developed through loving people: “relationships of trust with customers,” “ability to solve customers’ issues,” and “reliable manufacturing.” In this way, we will “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality.” Under the Midterm Management Plan 2025 announced in May 2023, we have clearly set forth our aim of contributing to society through business while sustainably enhancing corporate value.
We recognize the importance of pursuing business activities centered on sustainability to “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality.” Based on this recognition, we have identified the Materiality (material management issues) and are promoting initiatives in four areas.
Based on our management principle of responsible corporate behavior, we are committed to reducing the environmental burden throughout our supply chain. This is possible by motivating our employees and ensuring their lives are fulfilled through pursuing employee engagement, and by implementing our global environmental initiatives. Through our business activities, we will contribute to the realization of a society where people can thrive.
We will promote activities to address the material issues, aiming to contribute to society while sustainably enhancing corporate value.

The Okamura Group’s Materiality (Material Management Issues)

The Okamura Group identifies material issues and promotes initiatives in four areas to help realize a society where people can thrive.
Based on our management principle of responsible corporate behavior, we are committed to reducing the environmental burden throughout our supply chain. This is possible by motivating our employees and ensuring their lives are fulfilled through pursuing employee engagement, and by implementing our global environmental initiatives.
Through our business activities, we will contribute to the realization of a society where people can thrive.

Risks and Opportunities Related to Material Issues

*For details, see "(3) Approach to and Initiatives for Human Capital."

3) Risk Management

As stated in “Business and Other Risks,” in order to control the overall risks of the Okamura Group to a reasonable extent, and to minimize the losses and maximize the opportunities that the risks may bring, we link them organically with activities that promote sustainability, and carry such activities out systematically. In order to improve the effectiveness of risk management, the Sustainability Committee makes decisions on various matters related to risk management within the Group, evaluates their effectiveness, and provides guidance for improvement.
In addition, the Sustainability Promotion Department, which acts as the secretariat for the Sustainability Committee and which was established for the purpose of systematically promoting sustainability, is also involved in its capacity as the Risk Management Bureau, supporting and carrying out risk management operations.

4) Indicators and Targets

We recognize the importance of pursuing business activities centered on sustainability to “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality.” Based on this recognition, we have identified Materiality (material management issues) and are promoting initiatives across four areas: “Creating environments where people can thrive,” “Pursuing employee engagement,” “implementing global environmental initiatives,” and “Responsible corporate behavior.”
We integrated various perspectives, including various sustainability-related guidelines, items subject to inspection by evaluating organizations, inhouse policies and standards, and questionnaires and interviews inside and outside the Company, and identified the material issues by quantitatively and qualitatively analyzing their importance to stakeholders and the Group.
Additionally, in order to consistently implement measures for the identified material issues, we set KPIs and annual targets for each issue that we strive to undertake and pursue efforts to achieve these targets. Sustainability Committee and the Sustainability Promotion Project monitor the progress of initiatives.
Progress on various activities related to "Creating environments where people can thrive" is managed in the same way as progress on the Midterm Management Plan (KPI).

(2) Response to Climate Change and Biodiversity (Efforts toward TCFD and TNFD Recommendations)

The Group recognizes that assessing the impact of risks and opportunities related to climate change on our businesses, setting KPIs based on these assessments, and formulating specific responses are essential to ensuring the sustainability of both society and our business operations. As such, we announced our support for the TCFD recommendations in April 2021 and began disclosing information.
In FY2022, we started product development and related initiatives grounded in the idea of Circular Design, which is based on the circular economy concept.
Moreover, in FY2023, we revised our risks and opportunities related to climate change based on analysis of the 1.5℃ scenario, a more ambitious target than the previous 2℃ scenario. In our disclosure for FY2024, we engaged in a more concrete consideration of our transition plan aimed at achieving carbon neutrality by 2050 and visualized our roadmap to reducing GHG emissions.

The Group recognizes that loss of biodiversity, on which ecosystem services are founded, is a critical issue that can lead to increased risk of natural disasters, reduced supply of crops, forests, and other natural resources, and increased risk of outbreaks of infectious diseases. Based on this recognition, we have been actively working to reduce the environmental impact of our business activities, but in order to comprehensively evaluate our connection with nature, our dependence on nature, our impact, risks, and opportunities from a broader perspective, we conducted an analysis using the Taskforce on Nature-related Financial Disclosures (TNFD) framework and disclosed TNFD information in June 2025. In the future, we plan to review and determine our strategy, indicators, and targets in line with the TNFD framework.

*Okamura Group Information Disclosure Based on TCFD/TNFD Recommendations (in Japanese)
https://www.okamura.co.jp/corporate/sustainability/report/pdf/2025/okamura_TCFD_TNFD_250624.pdf

1) Governance (Common to Climate Change and Biodiversity)

The Okamura Group has established a Sustainability Committee to appropriately manage the formulation and promotion of sustainability strategies.
The Sustainability Committee identifies important risks and opportunities related to sustainability, including climate change, loss of natural capital, and biodiversity loss. It formulates annual plans for responding to these risks and opportunities, deliberates and approves them, and disseminates them to relevant departments. The Committee also promotes and supports group-wide initiatives on important issues and monitors their progress.
With the President and Chief Executive Officer as chairperson and the general manager of the Sustainability Promotion Department appointed as the person responsible for climate change and biodiversity, the Committee is promoting initiatives related to climate change and biodiversity risks and opportunities, including responses to TCFD and TNFD recommendations. In addition, the Committee reports the results of these initiatives on a regular basis to the Board of Directors, which manages and supervises the content therefor.
For details, see “(1) Views and Initiatives Concerning Sustainability 1) Governance.”

2) Strategy (Climate Change)

The Okamura Group is conducting a broad review of climate change-related risks and opportunities that will affect our business and finances across the value chain as a whole, from a short-term to a medium- and long-term perspective, including the period covered by our Midterm Management Plan, based on predictions of social and regulatory trends in 2030 and other factors. The events identified as risks are classified into transition risks (policy/legal regulations, technology, market, reputation) and physical risks (acute, chronic), while events that bring benefits to our business are classified as opportunities. On top of that, we evaluate the importance of the risks and opportunities we've identified based on "likelihood of occurrence" and "financial impact."
In our analysis of climate change-related risks and opportunities, we have selected the following scenarios, including a 1.5℃ scenario that is consistent with our greenhouse gas emission reduction targets.

・Reference scenario

1.5℃	4℃	Source
NZE: Zero Emissions by 2050 Scenario	STEPS: Stated Policies Scenario	IEA (2023)
RCP1.9	RCP8.5	IPCC (2021)

The Sustainability Department consults with other departments including the Corporate Strategies Department, Risk Management Department, General Affairs Department, and the Human Resources Department, to identify specific risks and opportunities. It then first organizes and summarizes the qualitative impact on business and calculates the respective financial impacts.
The Sustainability Department consults with business divisions on important risks and opportunities, considers countermeasures, and then implements them. In addition, risks that have been deliberated and approved by the Sustainability Committee are recognized as material risks to be addressed as necessary, and each risk owner analyzes the impact on the business in the event that they materialize, formulates countermeasures, and strives to implement them.
Based on the framework for climate-related risks and opportunities outlined in the TCFD recommendations, we have identified climate-related risks in our value chain and determined which risks are material from the perspectives of “likelihood of occurrence” and “financial impact.”
We engaged in a more concrete consideration of our transition plan aimed at achieving carbon neutrality by 2050 and visualized our roadmap to reducing greenhouse gas emissions with regard to Scopes 1 and 2. It shows a feasible path based on a long-term time frame and promotes initiatives such as the use of renewable energy, energy conservation, and the use of new technologies to reduce greenhouse gas emissions. In addition, we will introduce internal carbon pricing on a trial basis from fiscal 2025. When updating production equipment, we will multiply the CO₂ reduction effect by a set price to evaluate the CO₂ reduction effect monetarily and promote low-carbon capital investment.

・Financial impact and our response policy assuming the year 2030

* Financial impact: Small: less than 300 million yen; Medium: less than 1 billion yen; Large: 1 billion yen or more.
Assumed period: Short: less than 1 year; Medium: less than 5 years; Long: 5 years or more.

・Basic design of internal carbon pricing within the Okamura Group

3) Risk Management (Common to Climate Change and Biodiversity)

Risks related to climate change and biodiversity are included in the risks listed by the Group. For details, see "(1) Views and Initiatives Concerning Sustainability 3) Risk Management.”

4) Indicators and Targets (Climate Change)

The Group has established the Okamura Group’s Environmental Policy, and based on the concept of the “GREEN WAVE,” in which we create, and subsequently ride, a green (environmentally friendly) wave, we formulate a long-term environmental vision every 10 years that outlines the direction we should aim for, and engage in activities to reduce the impact on the environment by utilizing our management resources in all our business activities. In April 2021, we formulated the long-term environmental vision “GREEN WAVE 2030” aimed at fiscal 2030 and are promoting initiatives based on this vision. “GREEN WAVE 2030” sets quantitative targets such as reductions in greenhouse gas emissions, improving energy productivity, reducing water resource usage, reducing the emission intensity of waste generated during the production process, as well as qualitative targets such as reducing the environmental impact of product development and sales.
We have set targets for Scope 1 and 2 to reduce emissions by 50% compared to 2020 levels by fiscal 2030 and achieve net zero by 2050, and for Scope 3 to reduce emissions by 25% compared to 2020 levels by fiscal 2030. In August 2022, we obtained certification from the international initiative SBTi (Science Based Targets initiative).
We will promote initiatives such as utilizing renewable energy, saving energy, and reducing greenhouse gas emissions through the use of new technologies, with the goal of achieving carbon neutrality by 2050.
Indicators and targets related to climate change are incorporated in the Group’s material issues. For details, see “(1) Views and Initiatives Concerning Sustainability 4) Indicators and Targets, a. Area: Global environmental initiatives.”
Details are provided in the Sustainability Report disclosed on our website (in Japanese).
https://www.okamura.co.jp/corporate/sustainability/

(3) Approach to and Initiatives for Human Capital

Since its founding, Okamura has always regarded its employees as collaborators and team members who work together to make the company prosperous, and has pursued a management style centered on people, based on the company creed of “creativity, cooperation, frugality, savings and service.” In keeping with the founding spirit of the company and upholding the management philosophy of “making people thrive,” we will further nurture talent and accelerate employee engagement improvement to improve employee satisfaction that in turn will support sustainable growth, based on the approach outlined below. We aim to become a “strong Okamura” that can respond to changes in the surrounding environment by enabling each and every employee to thrive in his or her work.

1) Governance

Human capital is incorporated into the Group's sustainability governance, and the Sustainability Committee monitors the progress of material issue KPIs.
In order to effectively implement its human resources strategy, the Okamura Group has appointed HR managers as “business partners” for responsible persons to each business division since 2024, with the aim of forming the organization and allocating human resources necessary for business strategy. Once a month, an “HRBP Meeting” is held jointly with corporate HR Business Partners (Corporate Strategies Department, Human Resources Department, and Human Development Department) to promote human resource strategies for realizing management strategies through close collaboration between each business division and corporate departments.

During these meetings, attendees align their understanding of initiatives common to all business divisions, share best practices with HR managers across divisions, and collaborate to resolve any issues encountered in implementing various measures. In addition, opinions and results obtained from WiL-BE 2.0 Project for Improving Employee Engagement, are presented to the WiL-BE Promotion Committee, where they are discussed by Board Members who are committee members, and improvements are made to each measure. The HR Manager Meeting and WiL-BE Promotion Committee collaborate to implement more realistic initiatives and improve employee engagement.

2) Strategy

In its Midterm Management Plan 2025, the Okamura Group has established “human resource development and improving employee engagement” as an important theme for strengthening its management foundation. With “human resource development” and “employee engagement improvement” as the dual pillars, the Group is implementing various human resource measures with the aim of achieving mutual growth between employees and the company.

• ・Increase corporate value by creating an environment where each and every employee can thrive and achieve WiL-BE*, thereby enhancing engagement and maximizing results.
• ・Build a human capital portfolio needed to realize management strategies, and promote the growth and career development of each employee through the human capital cycle of recruitment, development, evaluation, treatment, and appointment.
• ・Achieve management targets by building an organization and allocating human resources in a way that allows for maximized performance across the entire company, along with the promotion of the Okamura Way and the strengthening of teamwork.

*:“WiL-BE” is the name of the work style reforms that we are promoting at Okamura. “WiL-BE” is derived from “Work in Life” proposed by Okamura, which in turn is based on the idea that “life is composed of many parts, of which work is one.”

・Human resource development
In a rapidly changing society, we will promote proactive investment and the appointment and promotion of young people with a view to developing professionals who possess the ability to solve problems with no clear answers. The Okamura Career Journey is defined as one in which each and every employee continues to envision his or her future career and achieves personal growth on a continuing basis through diverse experiences. We utilize a talent management system to support this. This will maximize employee and organizational performance, increase the mobility of the right people in the right places, and encourage employees to regularly reflect on their careers and think autonomously about how they want to grow in the future.

・Employee engagement improvement
As part of our effort to realize a state in which each and every employee can thrive at work with a sense of fulfillment, we are striving to revitalize internal communication by creating a flow that enhances job satisfaction and supports employees in their work. As part of the initiative WiL-BE 2.0 Project for Improving Employee Engagement, department heads are responsible for creating opportunities to deepen mutual understanding about job satisfaction. We will utilize employee engagement surveys to address workplace issues and improve employee engagement.

Initiatives

3) Risk Management

The main risks related to human capital are included in the risks listed by the Group. For details, see “(1) Views and Initiatives Concerning Sustainability 3) Risk Management.”

4) Indicators and Targets

Indicators and targets related to human capital are incorporated in the Group’s material issues. For details, see “(1) Views and Initiatives Concerning Sustainability 4) Indicators and Targets, b. Area: Pursuing employee engagement.”
Details have also been presented in the “Sustainability Report” and published on our website (in Japanese).
https://www.okamura.co.jp/corporate/sustainability/

Business and Other Risks

(1) Risk Management System

The Okamura Group regards matters that may impact the achievement of business objectives (either favorably and unfavorably) as risks, and after identifying, analyzing and evaluating such risks, we work systematically to control risks to a reasonable extent, and to minimize the losses or maximize the opportunities that the risks may bring.
In order to improve the effectiveness of risk management by organically linking risk management, a systematic approach for risk outlined above, with the Group’s sustainability activities, the Sustainability Committee, which has been established to deliberately promote sustainability activities, determines the Group’s basic policy on risk management, priority risks and response measures, and evaluates the effectiveness of risk management.
An overview of the Sustainability Committee and risk management is presented below.

1) Sustainability Committee

a. Purpose	The deliberate promotion of the Group’s sustainability activities
b. Role	The Sustainability Committee undertakes the following roles related to risk management. ・ Making decisions on the basic policy on risk management ・ Making decisions on risks to be prioritized related to company-wide risks, countermeasures, and risk owners ・ Confirming the status of risk management, evaluating its effectiveness and guiding improvements ・ Reporting important matters related to risk to the Board of Directors
c. Meetings	Two regular meetings in a year and an extraordinary meeting as necessary
d. Composition	Chaired by the President and Chief Executive Officer and composed of Executive Officers from each business division, the Corporate Functional Officer, and others

2) Risk Management Bureau

The general manager of the Legal & Risk Management Department serves as the head of the Bureau, with the Legal & Risk Management Department, the Sustainability Promotion Department, the Corporate Strategies Department, and the General Affairs Department as members to support and promote risk management in the Okamura Group.

3) Risk management at the company-wide level

We conduct risk management with the Sustainability Committee as the decision-making body for situations that may affect the entire company or the Group.

4) Risk Management at the Business Unit Level

A business unit is the unit responsible for business activities within the Okamura Group, which collectively refers to the company’s business divisions and group companies, with the executive officer of the business division serving as the senior general manager in charge. For situations that can be handled by a business division or Group company, risk management is carried out with the business unit’s senior general manager in charge.

5) Risk owner

For each risk, we have designated a risk owner who is tasked with the responsibility to act to effectively control the risk, and is accountable for the actions and results. Risk owners have the authority to choose and apply appropriate risk response measures in light of business objectives and performance targets. Risk ownership for company-wide risks is undertaken by Executive Officers and determined by the Sustainability Committee.

The Group’s risk management system is described below.

To develop and operate this system, the Company has established Risk Management Rules to be followed as part of risk management during normal times, and Emergency Response Rules to be upheld as part of crisis management during emergencies.

(2) Risk Assessment Process

In risk assessment, risks are first identified, and then evaluated after analyzing the identified risks in terms of its likelihood of occurring and its degree of impact using risk maps.
The various risks identified are classified into five major categories: risks in the business environment, risks in business strategy, operational risk, financial risk, and risks pertaining to human rights, human resources, and labor. The major categories are further organized into three minor and sub-minor categories.

・Occurrence Scale

・Impact Scale

・Risk Map

Risk assessments are conducted twice a year at the company-wide level and once a year at the business unit level.
For risk assessment at the business unit level, the Group company first analyzes and evaluates the risks associated with itself. Next, based on the results of the assessment by the Group company, the Senior General Manager in charge of the business unit determines material risks to be intensively and proactively addressed for each business unit.
For risk assessment at the company-wide level, an assessment department designated by the Risk Management Bureau conducts a primary assessment by referencing the risk assessment of the business unit, and the Risk Management Bureau conducts a second assessment after comprehensively reviewing the results produced by each assessment department. Based on that assessment, risks that are positioned as “Serious” or “High” on the risk map, as well as risks that are deemed important in consideration of their projected changes in future impact or their importance given the social responsibility, are referred to the Sustainability Committee, which determines material risks on a company-wide basis.
For each material risk, the risk owner analyzes the degree of impact the risk would have on the applicable business when it is materialized, formulates countermeasures, and strives to implement them. In formulating the countermeasures, the Sustainability Committee identified those risks that need to be addressed in the short term and on a priority basis, and the outcome of this process is factored into the plan.
In addition, the risk owners and the Risk Management Bureau monitor response efforts, and if issues are identified, the risk owners work to correct or improve them.

(3) Material Risks

The following are major risks that management recognizes as having a significant impact on the financial position, operating results, and cash flows of the consolidated companies, among the matters related to the status of operations and financial conditions described in the Securities Report. We strive to control these risks and avoid them as much as possible. Please note that the risk factors listed below do not cover all risks related to our group's business. Furthermore, the future-related matters described in this section are based on the judgment of the Group as of the end of the current consolidated fiscal year. (The items listed below as material risks are risks that have been identified as risks that would have a significant impact on the entire company through the aforementioned risk assessment process. These risks have been classified into four categories of material management issues based on the hierarchy of risk subcategories.)

1) Risks associated with creating environments where people can thrive

a. Develop products and services
The Group believes that our competitive superiority comes not from the difference in quality of our products and services compared to our rivals, but from our differing value proposition concepts, and recognizes that this constant search of differing concepts leads to the creation of entirely new markets. We leverage our reliable manufacturing backed by the advanced ability to solve customers’ issues, and the design capabilities and advanced production technologies that bring shape to the necessary products, to build strong relationships of trust with customers and expand our business domains. However, if our development of products and services does not keep up with the pace of change in customer preferences and we are unable to provide products and services that exceed customer expectations in a timely manner, we may be impacted by a resulting decline in customer satisfaction. Moreover, the Group belongs to a highly competitive industry, and the Group’s business performance may be adversely affected if our competitors copy the Group’s product designs or technologies and sell these at a lower price, or if they increase their market share through more sophisticated designs and technologies.
Material risks: Development of products and services

b. Maintain and improve the quality of products and services
The quality of products and services is fundamental to our mission to “Contribute to society by creating environments where people can thrive with rich ideas and reliable quality.” We pursue safe, high-quality and innovative products and services. We always endeavor to ensure quality control in all our processes from procurement through production and logistics to installation work so that we can meet customer expectations.
The Group manufactures each product in accordance with a globally recognized quality standard (ISO 9001). However, there is no guarantee that all products will be free of accidents or future complaints. Although we have product liability insurance, there is no guarantee that insurance will adequately cover the Group’s total compensation liability. Product defects may affect the Group’s reputation and adversely affect the Group’s business performance and financial position. The quality control targets to be addressed are becoming increasingly diverse and complex due to business changes, such as the provision of new value to customers, the expansion of sales from goods to services, and the expansion of total sales not only for in-house manufactured products but also for externally-procured products, contracted construction, and services. Under the recognition that quality maintenance may not be able to keep up with the pace of business growth, and that quality control activities may be insufficient, we have established management systems for safety and product quality across the entire supply chain, including the establishment of the Quality Assurance Committee. We identify more detailed risks, including the possibility of serious accidents and defects, as well as promoting and supporting the formulation of annual plans and activities to address these risks and monitoring the progress of these plans and activities. We also provide practical quality control training, incorporating case studies, at each stage in the supply chain through cooperative relationships with our suppliers. We constantly review our quality control approach and activities to maintain a robust approach, striving to maintain and improve quality through ongoing quality control and improvement activities.
Material risks: Quality of products and services

2) Risks associated with pursuing employee engagement

a. Human capital and diversity
Failure to effectively gather, develop, and secure the human resources needed to conduct and grow our business runs the risk of impeding the capabilities critical to executing, managing, and supervising our business activities, thereby hindering the achievement of our performance targets as planned. In the event that efforts to develop human resources are not adequately implemented due to lacking human capital investments, sufficient consideration is not given to the health and safety of employees, or the psychological safety of the workplace is not ensured and the workplace environment becomes unpleasant, this may lead to a decline in morale, poor physical health, or employee resignations. A decline in productivity may also adversely affect the Group’s business performance and financial position. Violations of laws and regulations related to health and safety may not only result in penalties and compensation payments, but also affect the Group’s reputation, which may adversely affect business performance and financial position. (For measures to address risks, see “Promotion of Sustainability”)
Material risks: Human resources, health and safety, labor, human rights

3) Risks associated with implementing global environmental initiatives

a. Climate change
Delays in climate change measures, conflicts with relevant laws and regulations, or failure to shift business activities to the resource recycling-oriented approach demanded by society may not only hinder the Group’s contribution to the creation of a sustainable society, but may also damage the Group’s social credibility and adversely affect earnings due to exclusion from customer selection criteria. (For measures to address risks, see “Promotion of Sustainability”)
Material risks: Climate change and the transition to a resource recycling-oriented society

4) Risks associated with responsible corporate behavior

a. Supply chain disruption
The Okamura Group's business performance may be adversely affected by disruptions to the supply chain caused by natural disasters such as earthquakes and floods, accidents such as fires, outbreaks of new infectious diseases, and policy trends in various countries, including trade friction. This could result in the suspension of business activities, loss of opportunities, and costs associated with recovery. Moreover, if we are unable to adequately address situations such as soaring material prices and difficulties in procuring raw materials caused by factors such as heightened geopolitical risks and soaring energy prices, this could adversely affect the Group's business performance due to lost business opportunities and increased procurement costs.
The Group has established Emergency Response Rules and a Business Continuity Plan (BCP) that stipulate appropriate measures to be taken in the event of an emergency that could have a significant impact on society and business activities. Detailed procedures have been laid out in a manual to enable a swift response, with the aim of preventing the situation from escalating and bringing it to a swift conclusion in order to ensure business continuity and early recovery. We are also reinforcing activities aimed at improving business and procurement focused on sustainability through mutual cooperation with our business partners.
Material risks: Large-scale natural disasters, procurement of materials and raw materials, accidents and man-made disasters

b. Governance and compliance
In addition to thorough legal compliance, the Okamura Group always strives to act fairly, transparently, and honestly based on high ethical standards. We also strive to build better relationships and earn the trust of our customers, business partners, employees, local communities, and other various stakeholders through disclosure of information in a timely and appropriate manner and good communication. We are working to ensure that our corporate philosophy and management policy are thoroughly shared within the Group and corporate activities are carried out in a unified manner across the Group by clearly defining responsibilities, while continuing to implement awareness-raising activities such as communications from management, dissemination of the Code of Conduct, and education through e-learning and other methods.
Although it is necessary for the entire Group to cultivate awareness and thoroughly implement measures, there is no guarantee that all corporate activities and the words and actions of individual board members and employees will be appropriate and that no problematic behavior will occur in the future, including cases where group company control does not function properly. If we fail to meet social expectations, the Group's credibility may decline, which could adversely affect our business performance. We also recognize that inappropriate actions, loss of credibility, and deterioration of business performance within the Group may have a negative impact on our business partners. When communication and psychological safety within an organization decline, it can lead to delays in detecting risks and issues, incorrect business operations due to misjudgment and unilateral decisions, and situations where misconduct and inappropriate handling go unreported even when they are noticed. As such, the Group has established helplines within and outside the company, as well as overseas, to resolve concerns at an early stage. We also conduct regular awareness surveys of all group members to analyze changes in awareness over time and implement improvement activities.
Failure to design appropriate controls for risks, errors in business design, or failure to review business processes may hinder the achievement of internal control objectives. In addition, the increasing complexity and volume of business processes may be overlooked, resulting in unnecessary and inefficient business processes that burden the workload and adversely affect the achievement of business objectives. In order to maintain the checks and balances, effectiveness, and efficiency of our operations, we strive to improve and standardize our business processes from the perspectives of overall optimization, standardization, and productivity improvement through the organization and visualization of business processes.
Material risks: Governance, credibility, legal and regulatory compliance, business process design

c. Information security
The Group holds confidential information for business purposes. This includes customer information and personal information. We also use a variety of ICT systems in our manufacturing, sales, and other businesses. The level of information security risk to these systems is rising year by year. The Group has established the Confidential Information Management Rules on the handling of confidential information and holds in strict confidence all confidential information, including electronic data. We have also signed agreements with suppliers regarding the protection of confidential information to implement appropriate information management. We appropriately handle personal information in accordance with the PrivacyMark System. We are stepping up measures to prevent the occurrence of information security incidents, such as virus infections and unauthorized access due to cyberattacks, etc., based on the Information Security Policy we have established for the purposes of protecting critical information assets and maintaining their confidentiality, integrity, and availability. This includes establishing new rules concerning information security management. We are also implementing measures to minimize damage in the event of an information security incident through the Computer Security Incident Response Team (CSIRT) established in 2020. In addition, for employees, we have established appropriate information usage methods in our Rules for Using Internal Information Systems. We continuously conduct educational activities to raise awareness of information security risks in daily work by providing training via e-learning programs and targeted attack e-mail drills for employees, and by calling for attention when employees access the intranet and start up their PCs. However, if these countermeasures and response measures fail to keep pace with the increasingly sophisticated cyberattacks, etc., it could result in a serious information security incident that could lead to deterioration in our social credibility or the suspension of operations, thereby adversely affecting the Group’s business performance.
Material risks: Information security

5) Risks associated with changes in financial position, operating results, and cash flows other than those stated above

a. Financial situation
The Group strives to obtain timely information on changes in the economic environment through communication with external stakeholders and internal meetings and reporting procedures. We collect and organize this information centrally, then analyze and assess the potential short-term and medium- to long-term impact on our business with an eye to flexibly reviewing our business activities. However, domestic sales account for over 90% of the Group’s total sales. Reduced capital investment, accompanied by a downturn in the domestic economy, could lead to decreased demand, thereby adversely affecting the Group’s business performance and financial position.
Material risks: Changes in the economic environment