Significant risks of the Fujitsu Group
Critical risks
1. Security risks
Overview and impact of risks
In recent years, cyberattack techniques have become increasingly sophisticated, and it has become difficult to completely prevent incidents such as malware infections, intrusions, and unauthorized access that may result in outages, information leaks, or unauthorized use of customer systems and the Group’s internal networks and systems.
If a data breach occurs and this results in the violation of individual rights or the leakage of customer information, trust in the Group could be significantly undermined, and the company may be subject to fines or penalties under laws and regulations such as the Act on the Protection of Personal Information and the GDPR (General Data Protection Regulation).
Furthermore, the rapid advancement of AI technologies in recent years is giving rise to new and constantly evolving cyber risks that are difficult to anticipate with conventional security measures. These risks are driven by factors such as the increasing sophistication of attacks exploiting generative AI and the proliferation of AI agents capable of autonomous judgment and action. In addition, the Group has implemented a multi-layered physical security framework including site, building, and floor-level controls. However, it remains difficult to completely prevent business interruptions or information leakage resulting from physical incidents. If such risks materialize, the consequences could include the exposure of confidential information, damage to corporate brand value, and loss of business opportunities, all of which could adversely affect the Group’s operations.
Measures against risks
To protect the confidential information and personal information of our customers, business partners, and the Group, we are strengthening the operation of our information protection management system. This includes establishing internal rules, providing employee training, conducting on-site inspections and audits, and offering guidance to contractors as well.
We have clearly stipulated security inspection systems in the rules that all organizations and projects must follow, and we thoroughly formulate and execute security response plans based on global information security standards to ensure robust system construction.
In order for its executive management, Business units, and CISO organization (governance function) to work together as a unified body to address security measures as a key management issue, the Group has established a "Company-Wide Security Risk Management Scheme" focused on the objective identification and visualization of security risks and the implementation of appropriate corrective measures. The Group has introduced information management dashboards and other tools to digitally visualize risks such as residual vulnerabilities in information systems and inappropriate information management, and we implement corrective actions.
Our internal network, a key foundation of the Group's business operations, is managed based on a zero-trust framework, implementing measures tailored to the characteristics of our IT infrastructure. To counter targeted attacks, we have established an authentication and authorization framework that combines measures such as unauthorized access prevention, malware countermeasures, device management, identity management, and data leak prevention, enabling us to address the increasingly sophisticated, diverse, and complex cyber threats we face.
In addition, we have centralized and visualized the management of IT assets for IT systems used by our global customers and our internal operations, enabling us to quickly identify and address security risks across the entire Group.
In addition, to address cyber risks that continue to evolve on a daily basis, including those associated with AI, we are enhancing our capabilities to analyze and detect attack methods and strengthening security governance for new forms of system use, including AI agents.
Furthermore, to address security risks at contractors, we are promoting measures to strengthen the security of our supply chain from both institutional and technical perspectives.
We have also established a physical security environment combining "human security" and "system security" across three layers: sites, buildings, and floors. To further enhance physical security, we are deploying security gates equipped with vein authentication devices capable of preventing impersonation throughout our sites.
2. Deficiencies or flaws in products and services
Overview and impact of risks
The Fujitsu Group regards quality as a core part of our business activities and works continuously to maintain and improve a networked society where people can live comfortably with peace of mind.
In entrusted system development, as well as the operation and maintenance of products and services, and the design, development, and manufacturing of products, customer requirements are becoming more sophisticated, and systems are becoming more complex. This raises the difficulty of developing products and increases the risk of defects and flaws in products. In addition, a decline in price due to intensifying competition may result in delivery delays and unprofitable projects.
If such defects, flaws, or delivery delays occur, product recalls and repairs, system recovery work, compensation to customers, and opportunity losses may impact the Group’s revenue and profitability.
Furthermore, if there are errors in judgment or inappropriate conduct in the course of responding to defects or flaws in our products or services, the Group’s corporate reputation may be damaged, potentially amplifying the negative impact on the Group’s profitability.
Measures against risks
To put into practice “Trust,” one of the core values of the Fujitsu Way, the Group has established the “Fujitsu Global Quality Policy.” Under these guidelines, the Group has stipulated the “Quality Policy (Standard Policy for Quality Management)” and the “Global Quality Rules” within the Fujitsu Group Global Policy, which serves as the common rules for the entire Group. Furthermore, under the Fujitsu Group Global Policy, the Group develops specific regulations and standards tailored to respective countries, the characteristics of products and services, customer needs, and applicable laws and regulations.
To consistently deliver the quality of products and services that meet customer needs and expectations, it is essential to ensure coordination across various internal and external organizations, including business units, corporate functions, and business partners, throughout the entire lifecycle from planning and development to manufacturing, testing, sales, operation, and maintenance. Recognizing that a framework for these organizations to work as a unified body is an indispensable foundation, the Group establishes and operates quality management systems (QMS) in collaboration with relevant functions according to the characteristics of each product and service.
In addition to developing these rules and standards, the Group has established a company-wide quality management organization under the direct supervision of the President. This organization works to enhance development processes, monitor their effectiveness, provide mechanisms for the early detection of quality issues, and promote quality improvement by sharing knowledge and expertise across the Group.
For the products and services we provide, we have established company-wide quality control rules for design, development, and manufacturing, and are promoting compliance with applicable laws and regulations, conformance to the latest standards, ongoing quality improvement, and stronger quality control for externally procured products. In operation and maintenance, we continue to work with customers to improve inspections, quality, contracts, and rules in order to ensure stable operation and reduce quality-related risks.
Significant risks
3. Risks of natural disasters and unforeseen incidents
(1) Risks related to natural disasters, infectious diseases, fires, etc.
Overview and impact of risks
In recent years, the frequency and impact of natural disasters, such as typhoons, flooding, and heavy snow, have been increasing due to global climate change. In addition, unforeseen events, such as major earthquakes in the Tokyo metropolitan area or along the Nankai Trough, outbreaks of infectious diseases, or volcanic eruptions, may occur on a scale that exceeds damage estimates. If such events occur, they may result in the suspension of business functions, the suspension of Internet Data Center (IDC) functions, damage to facilities, interruptions in the supply of electricity, water, and gas, suspension of public transportation and communication networks, shortages or delays in the supply of components from manufacturers, and disruption of the supply chain. These impacts could lead to the suspension of service delivery, including cloud services, and the shipment of products, thereby hindering the Group’s ability to continue business activities.
Measures against risks
The Fujitsu Group has formed a company-wide disaster prevention organization and continuously conducts various disaster training programs to strengthen collaboration for disaster prevention and our business continuity response capabilities. In addition, based on lessons learned from our responses to past earthquakes, we have strengthened earthquake and flood countermeasures and regular inspections at our business sites. Furthermore, to ensure the continuation of critical business activities and fulfill corporate social responsibilities, even in the event of natural disasters such as earthquakes, large-scale flooding, volcanic eruptions, pandemics, fires, and explosions, we formulate, regularly review, and improve our Business Continuity Plans (BCP) and strengthen our Business Continuity Management (BCM). We also conduct e-Learning for all employees worldwide to enhance their disaster response capabilities.
Based on our experience with pandemic outbreaks, we prioritize the safety of our customers, business partners, employees, and their families. We have established systems to ensure the continued provision of products and services to our customers, thereby maintaining our essential business operations and fulfilling our social responsibilities.
(2) Risks related to conflict, terrorism, and political instability
Overview and impact of risks
As the Group operates globally, the occurrence of conflicts, terrorism, demonstrations, strikes, political instability, or geopolitical tensions in various countries and regions could have a significant impact on the Group’s business operations. Such impacts could include the suspension of services and product supply resulting from damage to facilities, shutdown of offices, or disruption of the supply chain, and in some cases, could lead to withdrawal from the affected region. There is also a risk that the Group’s employees and their families could be directly affected by such events, potentially threatening their safety.
Measures against risks
We conduct ongoing risk assessments based on actual business conditions in each country and region through information gathering both internally and externally. The results of these assessments are shared among overseas offices and relevant personnel at the headquarters, and we work to strengthen our coordination system to minimize the impact of risks. We also encourage our suppliers to implement their own BCPs and establish emergency contact systems for the Group’s employees and their families, thereby aiming to ensure both employee safety and business continuity. In addition, we develop guidelines for supporting employees and their families, expand information-gathering channels, and strengthen measures to ensure both employee safety and business continuity.
4. Human rights risks
Overview and impact of risks
In recent years, as reflected in the mandatory human rights due diligence requirements in Europe, there has been a growing demand for respect for human rights. The Fujitsu Group, as well as its supply chain, is expected to prevent and mitigate risks related to human rights in the workplace, including labor conditions, and in connection with conflict minerals. If such human rights risks materialize, they could lead to the loss of talent, loss of business opportunities, administrative penalties, and ultimately, a loss of social credibility for the Group, which may impact our business operations.
In addition, with the enforcement of AI-related regulations in Europe and other countries and regions, if incidents involving human rights violations occur in businesses utilizing rapidly advancing AI technology, this could lead to compensation for damages and financial penalties, as well as a loss of social credibility for the Group.
Measures against risks
The Group has established a code of conduct under the Fujitsu Way, which sets out our principles that all employees of the Group must strictly observe, including respect for human rights, compliance with laws and regulations, fair business practices. These principles are further detailed in the Global Business Standards (GBS), which are uniformly applied across the Group to ensure the thorough implementation of internal rules and foster a corporate culture of compliance.
To build the necessary internal systems and mechanisms, we disseminate top-level messages from management and conduct regular employee training on topics such as human rights and prevention of discrimination and harassment.
In line with the latest international trends, we have identified and assessed human rights risks, prioritized key issues based on their importance and relevance to our business, and established the "Fujitsu Group Human Rights Statement", ensuring that it is communicated to our Group companies and suppliers.
In our supply chain, we have established and published the "Fujitsu Group Sustainable Procurement Guidelines" since 2023 and obtain agreement of our major suppliers.
Regarding AI business, as generative AI and AI agents become more widespread, concerns about their impact on human rights are increasing. Fujitsu has established its "AI Commitment" to promote AI ethics throughout the Group. Specifically, we provide regular training for employees, including e-learning, and conduct AI ethics reviews of all AI-related business.
Furthermore, we have established company-wide AI risk management rules that incorporate regulatory compliance checks and AI safety evaluations. By embedding these mechanisms into our governance framework, we strive to minimize human rights risks arising from AI technologies. These initiatives are regularly evaluated by the Fujitsu Group AI Ethics External Committee, which consists of external experts from various fields.
5. Compliance risks
Overview and impact of risks
As the Fujitsu Group operates globally, it is required to comply with applicable laws and regulations in Japan and overseas, including antitrust and competition laws, bribery laws, and export control laws. If any such laws and regulations are violated, the Group may be subject not only to substantial fines and claims for damages, but also to business opportunity losses due to disqualification from bidding by customers or suspension of transactions by business partners. Furthermore, incidents such as accounting fraud may result in the inability to obtain an audit report from external auditors, the inability to submit an annual securities report, or the need to amend previously submitted securities reports. This could lead to a decline in stock prices or a claim for damages from shareholders, and a significant loss of social credibility for the Group.
Measures against risks
Under our Global Compliance Program, the Group establishes and continuously maintains internal rules and regulations necessary for compliance aligned with the latest laws and regulations to prevent legal violations by officers and employees in the course of business.
For our overseas operations, we also establish country-specific rules, conduct risk assessments for each country, and based on those assessments, our headquarters' compliance function supports local compliance activities to reduce risk.
We also foster a culture of compliance through top-level messaging from senior management, such as the President, as well as regular e-Learning and role-specific training. In parallel, we operate an internal reporting system for whistleblowing to identify potential violations and conduct investigations and remedial actions as needed.
With respect to accounting irregularities, we evaluate internal controls based on applicable laws and coordinate with the internal audit and compliance functions to ensure proper administrative and accounting processes in business operations, in coordination with the internal audit and compliance functions to ensure the appropriateness of business processes and accounting treatment.
6. Financial risks
Overview and impact of risks
Credit ratings issued to the Group by external rating agencies, including those related to Corporate Social Responsibility (CSR) and sustainability, have a significant impact on the Group’s financing and corporate reputation, and may also be used as credit information when dealing with customers and business partners.
If these ratings are downgraded for reasons such as failure to achieve our revenue plan or deterioration in our financial condition, it may affect the Fujitsu Group’s ability to secure financing, as well as place the Group at a disadvantage when participating in bids and other business dealings, thereby affecting its ability to capture business opportunities. In addition, credit risks, such as a deterioration in the business or economic conditions of business partners, may lead to delays in collection or uncollectible accounts receivable and affect the Group’s financial position and cash flows.
Measures against risks
The Group’s measures for securing financing include ensuring liquidity, formulating plans to secure financing, and continuously analyzing market trends. Through these initiatives, the Group strives to maintain a stable financing base.
In addition, as measures for credit management, the Group works to reduce risk by exchanging information among credit management-related divisions, sharing and monitoring corporate credit research information from external organizations with relevant departments, and providing guidance, directives, and alerts regarding the protection of receivables.
7. Risks related to environment and climate change
Overview and impact of risks
The Fujitsu Group's purpose is to bring trust to society through innovation and make the world more sustainable, and we regard addressing sustainability issues, including the environment, as one of the most important management issues. However, if environmental pollution, etc. occurs in the course of our business activities, there is a possibility that the Group’s business performance and profit or loss will be affected due to a decline in the social credibility of the Group and the cost of measures such as environmental remediation.
Natural disasters, which have increased in frequency and impact in recent years due to climate change and other factors, can disrupt procurement, distribution and energy supply networks, and long-term changes in temperature may cause an increase in energy consumption for air conditioning systems, which may affect the Group's business.
As policies and regulations toward carbon neutrality continue to strengthen around the world, the social and economic trend toward carbon neutrality is accelerating.
Alongside stricter regulations on greenhouse gas emissions and the introduction of a carbon tax, we are expected to contribute to carbon neutrality for customers and society. If we fail to respond appropriately to these regulations, or if we fail to contribute beyond the expectations of society, there is a possibility that we will face increased costs due to delayed responses, be unable to participate in bids that require compliance with market standards such as environmental labeling, or risk losing business opportunities due to a decline in corporate reputation.
Moreover, the rapidly growing demand for solutions that support the transformation to a carbon-neutral society and climate change adaptation, such as reducing CO₂ emissions by customers and society, shifting to electrification of energy sources, optimizing energy supply and demand, and expanding renewable energy, requires the Group to deliver effective offerings. If we are unable to provide sufficient solutions that contribute to energy conservation, decarbonization, and climate change adaptation, or if the value of our offerings falls behind those of competitors, this could lead to lost business opportunities, a decline in market share, and reduced profit margins, ultimately impacting the Group's revenue and profitability.
Measures against risks
The Group has established internal rules based on environmental laws and ordinances to reduce environmental impact and prevent environmental pollution before it occurs. In the area of energy consumption, the Group uses an environmental performance management system to monitor energy consumption at each business site. In the area of electricity, we work to optimize electricity costs and CO₂ emissions. For wastewater and exhaust gas, we set internal standards that are stricter than the emission standards of related laws and ordinances and monitor the values through periodic measurements. We are also conducting soil groundwater surveys and remediation activities at Group factory sites, including former sites.
We also analyze the evaluation criteria of major external assessments, disclose information incorporated into the evaluation framework of environmental management, and make improvements aimed at enhancing environmental performance. As part of our climate change measures, we have obtained net-zero certification from the Science Based Targets initiative (SBTi).
To contribute to carbon neutrality of our customers and society, we design and develop environmentally friendly products and solutions, acquire Electronic Product Environmental Assessment Tool (EPEAT) and other eco-labels, and are advancing initiatives toward the practical implementation of environmental value trading platforms based on blockchain technology and carbon neutral-related technologies.
8. Risks related to the Fujitsu Group facilities and systems
Overview and impact of risks
The Fujitsu Group owns and leases a variety of facilities in and outside of Japan, including offices, manufacturing facilities, and data centers, and utilizes cloud services from other vendors. In the event of an earthquake, major flooding, fire, radioactive contamination, infectious disease outbreak, terrorist attack, demonstration, strike, poor construction quality, or the occurrence of operational errors, among other factors, production lines, facilities, or internal core information systems may stop operating. This may affect the Group’s business operations and performance.
Measures against risks
The Group maintains a 24/7 monitoring and operation framework for internal core information systems, implements measures based on the business continuity plan, and conducts regular training. For all facilities and services, we have established our own safety standards in accordance with building codes and other regulations to reduce risks.
9. Risks related to competitors and industries
Overview and impact of risks
Changes in market environments, intensifying competition, and technological innovation may lead to a decline in prices for products and services. As a result, in the event that prices decline more than anticipated or there are significant fluctuations in procurement prices, the Fujitsu Group may not be able to achieve sufficient cost reductions or an increase in sales, which will affect the Group’s revenue and profit or loss.
Further, in the ICT industry, technological advancement occurs at an extremely fast pace, and even new products and technologies can rapidly become obsolete. If the Group loses its competitive advantage in the competition to develop these technologies, market shares and profit margins may decline, and the Group’s revenue and profit or loss may be affected.
Measures against risks
The Group regularly analyzes market trends and the competitive environment and operates its business on the premise that technological advances and intensifying competition may lower the prices of products and services. Specifically, we work to expand sales while reducing costs by identifying issues based on social trends, understanding customer needs and competitor developments, and expanding the lineup of competitive products and services.
In addition, to maintain competitiveness, it is necessary for the Group to continue to invest in research and development of its own advanced technologies. The Group, by initiating appropriate investments in R&D, will work to clarify the strengths of our business and how we differ from our competitors, and ensure the competitive advantage of its technologies and services.
10. Risks related to economic and financial market trends
(1) Economic trends in key markets
Overview and impact of risks
The Fujitsu Group provides a variety of ICT services to corporate clients and public-sector institutions, in Japan and across every region of the globe.
In addition, we are developing the business brand Fujitsu Uvance as our unified global strategy. Revenue and profit or loss generated from these operations are greatly affected by economic conditions and/or sudden changes in the supply and demand balance in each market.
In particular, the economic trends and sudden changes in the supply and demand balance in our key markets, namely Japan, Europe, North America, Oceania, and Asia, including China, can impact the Group’s operations. Economic recessions and declines in customer investment appetite may lead to restrictions on IT investment, delays or downsizing of projects, and intensifying price competition.
Measures against risks
To respond to the rapidly changing market, we regularly monitor economic and market trends and customer investment trends in key markets and reflect the results in business strategy and portfolio decisions, and we reduce risk by clarifying the business strategy of the entire Group and our business portfolio strategies, as well as implementing continuous structural reforms.
(2) Exchange rates, interest rates and capital markets
Overview and impact of risks
The Group is expanding its business globally. Therefore, sudden fluctuations in exchange rates may reduce the price competitiveness of products and services that we export from Japan and affect the imports of components from outside of Japan, increasing the cost of components and materials procured from overseas, which may significantly impact the Group’s business performance and financial position. With respect to foreign currency-denominated assets and liabilities held by the Group, there is a possibility that exchange rate fluctuations could lead to depreciation of assets and appreciation of liabilities.
In addition, the Group also has interest-bearing loans, which include debt directly impacted by interest rate fluctuations. Consequently, rising interest rates could increase borrowing costs such as interest expense and procurement costs.
Further, stock market trends in Japan and overseas have a substantial effect on the value of the Group’s stockholdings in other companies and the management of pension assets. Weak stock market performance could thus force the Group to incur losses on the devaluation of marketable securities held or a reduction in pension assets, leading to an increased burden on the company.
Measures against risks
The Group collects and analyzes information on the financial market environment, including exchange rate fluctuations, interest rates, and capital markets, and hedges foreign exchange risks using forward exchange contracts as necessary. In addition, we work to share information across the entire Group and to minimize any impact on the company.
11. Intellectual property risks
Overview and impact of risks
The Fujitsu Group strives through its research and development activities to create technologies and expertise that help differentiate its products and services from those of other companies, and regards such technologies and know-how as important management resources that support business competitiveness and growth strategies. However, the Group may not be able to adequately protect some of its proprietary technologies and expertise as intellectual property due to legal and economic constraints. Due to this, we may not be able to effectively prevent other companies from using the Group’s technologies and expertise to manufacture and sell similar products or services. Moreover, the creation of comparable or superior technologies by other companies could erode the value of the Group’s intellectual property, weaken the Group’s competitive advantage, hinder the growth of the Group’s business, or result in loss of profits.
In addition, with the advancement of digital technologies and the expanding use of open-source software, the risk is increasing that the Group’s products, services and activities may be alleged to infringe another company’s intellectual property rights, or that the use of third-party software, including open-source software, may be judged not to comply with the terms of the license. If such risks materialize and the company incurs usage fees, design change costs, or litigation-related costs, the Group’s business performance and financial condition may be affected.
Measures against risks
With respect to the protection and utilization of intellectual property, the Group is reviewing and promoting its intellectual property strategy to be more effective within the Group's business strategy and business environment. In addition, we are developing unified intellectual property management rules and processes across the Group and strengthening awareness activities. In order to prevent infringement of intellectual property rights of other companies, we are developing internal rules and systems, strengthening management systems for software use, and regularly conducting investigations into other companies’ intellectual property in the commercialization process of products and services.
12. Customer risks
Overview and impact of risks
A large proportion of our business is with public institutions, such as the government of Japan, local governments in Japan, and foreign governments, and with customers in industries including telecommunications, financial services, manufacturers, distribution and retail, and healthcare. In addition, in our business outside Japan, government projects in each country are an important part of our business. Customers’ policies and action plans, the industry business environment, changes in market trends, and industry restructuring trends are tied to customers’ ICT investment trends. Changes in customers’ ICT investment plans, revisions to those plans, and fluctuations in sales of their products and services can have a significant impact on the demand and prices of the Fujitsu Group’s products and services. In addition, the Group’s revenue and profit or loss will be affected if we are unable to maintain trust, business, or contractual relationships with our customers.
Measures against risks
The Group conducts our business with the mindset of solving societal issues, and we closely monitor market trends, technological trends, and the circumstances of customers. We aim to build long-term relationships of trust by providing our customers with solutions that span the ICT lifecycle. The Group leverages digital technologies and our experience and understanding of diverse industries to respond to the changing environment surrounding our customers, and plays a role in building a new way of life centered on people and data. In addition, the Group works to transition to a business model that does not depend excessively on specific customers and to keep pace with the latest technologies.
13. Risks related to suppliers, alliances, etc.
(1) Procurement risks
Overview and impact of risks
The Fujitsu Group uses cutting-edge technology in its products and services and may use components that are not versatile or contain rare materials. Due to this, there is a risk that we may encounter difficulties in procuring a stable supply of certain components or raw materials, or be unable to secure alternative suppliers, and be unable to sufficiently procure certain components or raw materials in the large volumes required. In addition, in the event of the occurrence of natural disasters, outbreaks of infectious diseases, accidents, legal violations, or any deterioration in business conditions, it will be difficult for business partners to provide the Group with a stable supply of components or raw materials. Furthermore, there is an increasing number of events that affect the stable procurement of components and raw materials, such as abnormal weather conditions and related disasters worldwide, as well as growing instability in international affairs. As such, if we are unable to secure a sufficient supply of certain components or raw materials, it could cause delays in providing products and services, missed delivery deadlines, and business opportunity losses.
With respect to the procurement of components and other materials, foreign exchange rate fluctuations or tight supply and demand conditions could drive procurement costs to exceed initial estimates, leading to deterioration in profit margins or decreased sales due to price increases.
In addition, we cannot guarantee that all components purchased will be free of defects. The occurrence of such issues could result in delays in deliveries, as well as product defects, opportunity losses, repair costs, and costs associated with the disposal of defective goods, as well as indemnities to customers.
Measures against risks
The Group is working to maintain its supply chain and reduce risk by investigating the status of countermeasures at the manufacturing sites and business partners for each component, shifting to multi-sourcing procurement, encouraging our business partners to adopt Business Continuity Management (BCM), increasing our support, and ensuring adequate inventory. In addition, by promoting the Fujitsu Group Sustainable Procurement Policy and introducing mechanisms to evaluate and confirm suppliers’ creditworthiness, compliance, and information security measures, the Group works to reduce supply chain risks and strengthen resilience across the entire supply chain.
(2) Risks related to collaborations, alliances, and technology licensing
Overview and impact of risks
To enhance competitiveness within a global ICT business environment, the Group works with a large number of alliance partners through business alliances, technology collaborations, and joint ventures. However, we may not be able to establish or maintain alliances due to managerial, financial, or other causes, including those related to the management of alliance partners, or be able to achieve the expected results from such relationships. Many of our products and services employ other companies’ patents, technologies, software, and trademarks with the consent of their owners. However, if we are unable to continue to license or use these technologies under terms acceptable to the Group, it may impact the Group’s business.
Measures against risks
The Group, when establishing relationships with other companies through business alliances, technology collaborations, joint ventures and other means, strives to minimize the impact these relationships could have on the Group by accurately identifying and evaluating risks through strict internal processes, reflecting these assessments in contract terms and conditions, and conducting ongoing monitoring after such relationships are established.
14. Risks related to investment decisions and business restructuring
Overview and impact of risks
In the ICT industry, to maintain and strengthen competitiveness, the Group continuously makes large investments in R&D, capital expenditure, transfers and acquisitions of business, and business restructuring.
If the markets, technologies, or acquired businesses that the Fujitsu Group considers to be promising do not lead to the growth it anticipates, supply and demand conditions deteriorate, or prices decline more quickly than we anticipate, the Group may not receive sufficient returns on our investments, which could significantly affect our operating results.
Measures against risks
The Group, when making investments and restructuring its business, takes into consideration a range of factors, including market trends, customer needs, the competitive advantage of its technologies, and the Group’s business portfolio. In addition, we examine our investment efficiency, establish evaluation indicators and processes, and reduce risk by dividing our investments into multiple stages in response to changing circumstances and forming partnerships with customers. The Group has also established a framework to provide specialized support for investment projects, including acquisitions, and has built a post-investment monitoring framework.
15. Risks related to public regulations, public policies and tax matters
Overview and impact of risks
As the Fujitsu Group operates globally, it is affected by a wide range of public regulations, policy trends, tax laws and practices in each country and region. In each country and region where we operate, we are subject to various regulations, including government policies, business and investment permits, restrictions on imports and exports, and laws and regulations related to antitrust, intellectual property rights, consumers, the environment and recycling, labor conditions, dispatching and subcontracting, and taxation.
Furthermore, the current international situation remains uncertain and unstable, and regulations are becoming increasingly stringent and restrictions on global business activities are increasing, such as economic security policies in various countries and regions and the tariff measures imposed by the United States. Such policy changes and stricter regulations may have an impact on the markets and supply chains targeted by the Group, resulting in increased compliance costs and the risk of fines and other penalties if violations occur, as well as business opportunity losses.
In addition, the fields in which the Group provides solutions include areas subject to public regulations, such as telecommunications, healthcare, construction, and the handling of personal information, and trends in these regulations may have an impact on the Group's business operations.
Measures against risks
The Group closely monitors trends in regulations and policies in each country and region by collecting and analyzing information from government ministries and industry groups. In the field of economic security, we expect that regulations will continue to become increasingly strict in the future, and we are developing an internal response system within the Group by closely monitoring regulatory trends in Japan and overseas, as well as trends among governments and corporations. In addition, we have established communication frameworks with key government stakeholders in major countries and regions and work to identify early signs of regulatory and policy changes and assess their impact on the business.
16. Risks related to human resources
Overview and impact of risks
The Fujitsu Group’s growth and operating profits depend heavily on its human resources, so it is essential to hire and train key personnel, such as management personnel and highly specialized engineers, as well as to create an environment where employees can continue to work. If the Group is unable to hire or train talent, to prevent an outflow of human resources, or if serious labor issues occur, it may impact the Group’s growth and operating profits.
Measures against risks
As one of its materialities, the Group has identified the improvement of people’s well-being and is actively promoting measures to enhance well-being so that each employee can maximize their capabilities. In addition, the Group is expanding initiatives such as posting systems, reskilling programs, and on-demand learning in order to support autonomous career development (career ownership) and foster a culture that respects diversity and challenge. In promoting Work Life Shift, the Group promotes telework as a standard work style and actively utilizes flexible working arrangements, such as flextime and discretionary work hours, to achieve appropriate labor management and ensure the recruitment and retention of talented individuals, as well as create an environment in which they can thrive. Positioning people as its most important capital, the Group also actively promotes employee health and well-being so that all employees can work in a healthy and productive manner.
