当社グループの財政状態、経営成績およびキャッシュ・フローの状況に重要な影響を与える可能性があると認識している主要なリスクは、以下のとおりです。
なお、文中の将来に関する事項は、当連結会計年度末現在において当社グループが判断したものです。

ⅰ. Risks related to domestic market environment

The Group’s business activities in Japan include the wholesale and retail of automotive goods and services, statutory safety inspection and maintenance services, and used car dealership. Accordingly, economic downturn in Japan, the stagnation of personal consumption, or a shift in competitive advantage caused by volatility in product procurement or exchange rates or other consequences of a change in the situation in Japan or overseas could negatively affect the Group’s operating results and its financial position. The Group established the Risk Management Committee, chaired by the Representative Director & Chief Executive Officer, to mitigate such risks, entrusts an outside organization to carry out a risk assessment, selects and addresses material risks which need tackling, and constantly seeks to mitigate risks.

 

ⅱ. Risks associated with store operation

The Group operates retail stores selling automotive goods, providing statutory safety inspection and maintenance services, and purchasing and selling used cars. Associated risks include the disposal of waste discharged from store operations, the handling of toxic substances, accidents in service pits activities, and other accidents occurring on the premises of stores. These may affect the financial performance of the Group directly or indirectly through, for instance, a decrease in customers visiting stores of the Group due to the deterioration of customers’ impressions about the Group.

Recognizing accidents in service pits activities as serious risk, the Group continues to provide instruction and education through training, thoroughly inform work manuals, and conduct inspections and improvements through a compliance check program.

 

ⅲ. Risks associated with securing and developing human resources

For the growth and maintenance of the Group’s business, it is essential that the Group secures and develops human resources specializing in next-generation maintenance such as automobile maintenance and inspections and human resources with diverse knowledge, skills, and values enabling innovation. Difficulties in the continuous recruiting of appropriate human resources due to future social conditions or changes in the employment environment, causing problems in the securing of sales of existing business or the implementation of growth strategies, may affect the financial performance of the Group.

To secure human resources, the Group is stepping up initiatives to support the recruitment and hiring of human resources and secure certified mechanics across the AUTOBACS chain, including consolidated and franchise chain operations. The Group also attaches importance to work-life balance and is working to develop personnel systems and work environments in response to the diversification of work styles and values.

The Group is focusing on developing human resources by working to enhance human resource development programs which cover consolidated and franchise chain operations and also by encouraging executives and employees to improve their own knowledge and skills through the establishment of a system to support employees in gaining mechanic and other qualifications and the development of its own in-house qualifications.

 

ⅳ. Risks associated with technological innovations

Automobile-related technologies change every day, and the development of driving-support features and autonomous driving technology and the increasingly common use of electric vehicles may change the size of the market or the demand for replacement parts sold by the Group. Failing to flexibly respond to diverse customer needs associated with the advance of technology may affect the Group’s financial performance and financial condition.

To address such risks, the Group continuously implements initiatives to acquire knowhow about technological innovations, including collaborating with automakers both in Japan and overseas, entering the electric vehicle market, and obtaining special maintenance authorization (electronic control unit maintenance) at all stores designated for performing statutory safety inspection

 

ⅴ. Risks associated with the development and procurement of products

The Group is engaged in the development of Private Brand (PB) goods. While the Group implements a range of initiatives to address risks in the development process, such as establishing strict standards and carrying out quality inspections, any accident caused by PB goods or other products could lead to a loss of customer trust and the damage to the brand could affect the Group’s financial performance and financial position.

The PB goods and other products sold by the Group are procured in Japan and abroad. Difficulty in the procurement due to geopolitical conditions, natural disasters, economic conditions, and various other factors may affect the financial performance of the Group. A fall in demand for products and services due to a rise in retail prices caused by a surge in - 27 - purchase prices may affect the financial performance of the Group.

 

ⅵ. Risks associated with information securit

Many of the Group’s business activities rely on information systems and communication networks. If unforeseen circumstances such as a disaster or cyberattack caused data centers to stop functioning or systems to fail, and IT systems were no longer able to function normally for a prolonged period of time, the Group’s operations may be significantly held up, which could affect the Group’s financial performance. Moreover, any leakage of personal information, corporate trade secrets or other confidential information could undermine public confidence in the Group or necessitate compensation of damages, adversely affecting the Group’s financial performance.

To address such risks, the Group implements measures at the entry and exit points of networks such as firewalls as well as information protection measures to verify access. The Group has also laid down information security regulations (IT Governance Regulations, Information Security Regulations, etc.) and seeks to thoroughly implement education and training including providing information security e-learning and training on how to counter targeted attack emails to executives and other employees. In addition, the Group takes into consideration resilience to natural disasters, power outages, fires and other disasters and security concerns when selecting data centers and uses multiple data centers to achieve risk decentralization. It also implements risk control measures, regularly backing up data and developing systems to recover data and resume services as quickly as possible in the event of emergency

 

ⅶ. Risks associated with changes in laws and regulations

When opening a store, the Group is subject to various laws, ordinances and other regulations governing the living environment and other matters, including the regulation of noise, traffic congestion, waste disposal and other issues associated with the opening of a new store with floor space larger than 1,000 sq. meters or the extension of an existing store pursuant to the Act on the Measures by Large-Scale Retail Stores for Preservation of Living Environment. The Group’s policy for opening a new large store with an area of more than 1,000 sq. meters is to fully consider the local environment from the stage of planning the store opening and make adjustments with local residents and municipalities. However, if the regulations change and the Group is affected by new legislation, it may not be able to open stores as planned and this may affect the Group’s financial performance.

 

ⅷ. Risks associated with climate change

The number of units of some merchandise sold by the Group, including studless snow tires and tire chains, is significantly affected by weather. Abnormal weather such as cool summers and mild winters may cause a fall in demand for seasonal merchandise or a decrease in sales due to a shift in the timing of sales. The introduction of carbon taxes or other public dues as the increasing legal regulations and social demands related to the environment or an increase in various regulations constraining business activities, increasing operation or facility costs, or otherwise impeding business may affect the financial performance of the Group.

To address such risks, the Group aims to achieve carbon neutrality by 2050 and, in line with a target of reducing greenhouse gas emissions across its store operations to zero, is focusing on using renewable energy and also promoting energy conservation through decarbonization initiatives such as environmentally-enhanced stores and the sale and maintenance of EVs. In addition, the Group flexibly reviews its business portfolio, aiming to strike a balance between climate change issues and business and to mitigate risks at every level, from senior management to shopfloor.

（気候変動に関するリスクの詳細は気候変動への対応をご参照ください。）

 

ⅸ. Risks associated with natural disasters

An earthquake, typhoon, or other natural disaster in an area in which the Group operates stores or owns business-related facilities, damaging these facilities physically or causing positions to be vacant due to the death or injury of the Group’s officers or employees and damaging merchandise or decreasing sales or increasing expenses for rebuilding, reinforcing human resources, and other recovery measures may affect the Group’s financial performanc

To address such risks, the Group formulates business continuity plans (BCP) and carries out drills twice a year based on the assumption of various disaster scenarios in an attempt to identify any issues and mitigate risks

 

ⅹ. Risks associated with virulent infectious diseases

The Group, centered on the AUTOBACS business, plays a part in traffic infrastructure. In preparation for the spread of infectious diseases such as COVID-19, the Group takes measures such as securing human resources during an infectious disease outbreak to enable it to continue operating by prioritizing the safety of its customers, suppliers, and employees to protect customers’ safe and secure use of automobiles. However, the Group may take measures such as the suspension of store operations or reduced hours of operation depending on conditions such as outbreaks of infection or the increase of infections. In such cases, there is a possibility of an impact on the Group’s business performance and finances.

The Group also endeavors to minimize the impact of outbreaks by distributing and stockpiling emergency supplies and introducing remote work for back office staff.

 

ⅺ. Risks associated with impairment of non-current assets

The Group has adopted the Accounting Standard for Impairment of Fixed Assets. Newly posting an impairment loss due to such factors as a fall in profitability of stores may affect the financial performance and financial condition of the Group.

 

ⅻ. Risks associated with compliance

The Group develops internal control to address problems related to legal compliance. It has established a division that leads company-wide internal control in order to establish a better internal control system, and a Code of Conduct and Guidelines for Action to guide officers and employees in the implementation of corporate activities based on a high ethical perspective. However, officer or employee misconduct may not be completely prevented in all cases. Misconduct may cause a decline in the trust the Group has earned from society, parties may claim a large amount of compensation for damages, and other consequences may affect the financial performance, financial position, or other conditions of the Group.

The Group implements various measures to address such risks including raising awareness about the AUTOBACS Code of Conduct and Guidelines for Action, implementing a program to check compliance within store operations, and establishing a major incident reporting system and whistleblowing system, in an effort to minimize risks.

 

xiii. Risks associated with management of private and confidential information

The Group possesses private information and confidential information in the course of its business. If this information held by the Group is leaked or other accidents occur, a decline in the trust the Group has earned from society may affect the Group’s financial performance, financial position, or other conditions.

The Group has introduced regulations and restrictions on the handling of materials to address such risks. For very important electronic data, the Group has introduced strict control measures including establishing access permissions, passwords and time limits.

 

リスクの管理体制は統合リスクマネジメント態勢をご参照ください。