Business risks

Yaskawa monitors risks related to the execution of management, including economic conditions and market trends, through executive bodies such as the Executive Committee and the Board of Directors. Furthermore, in order to respond promptly and appropriately to risks that may directly or indirectly affect the management or business operations of the Yaskawa Group, the Company has established the Risk Management Committee under the Board of Directors. The Committee is chaired by the executive officer in charge of risk management and crisis management and is responsible for establishing, promoting, and supervising the Company-wide risk management framework and systems. In addition, several specialized committees including the Environmental Promotion Committee, the Information Security Committee, and the Compliance Committee are organized under the Risk Management Committee to enhance day-to-day activities. To manage risks comprehensively and integratively across the Company and its affiliates, Yaskawa has developed and operates Enterprise Risk Management (ERM) under the supervision of the Risk Management Committee. The status of risk management based on the ERM framework is regularly reported to executive bodies such as the Executive Committee, the Board of Directors, and the Sustainability Committee, and is monitored to ensure the effectiveness of the risk management structure and systems. Moreover, in the event that a risk materializes and escalates into a crisis, Yaskawa has established a structure that enables a swift response, centered on the executive officer responsible for crisis management. Specific procedures, including the establishment of a crisis response headquarters according to the severity of the crisis, are defined in the Basic Crisis Management Regulations and are appropriately implemented. Matters concerning the future in the text are based on Yaskawa Group’s judgment as of the end of the fiscal year under review.

Key risks and countermeasures

Geopolitical

Description of the risk	Yaskawa Group has production bases in Japan and overseas, including China, and provides products and services to customers on a daily basis through sales bases in approximately 30 countries around the world. As a result, changes in international relations, continued tensions between the United States and China, the situation in Russia and Ukraine, and the expansion of armed conflicts and geopolitical tensions in the Middle East and Asia as well as the resulting social and environmental changes and changes in laws and regulations, may have an impact on our business activities. In particular, increases in protectionist measures, including the expansion of export restrictions, tighter controls on technology transfers, and tariff increases in various countries and regions, may restrict development, production, logistics, and sales activities, and hinder the supply of products to customers, which may affect the Yaskawa Group’s operating results and financial condition.
Measures	In response to these risks, we regularly monitor political and economic conditions and trends in laws and regulations in each region through our business bases, and have established a system that enables us to quickly ascertain the impact on our business. In the event that various business risks arising from geopolitical risks materialize, Yaskawa will take prompt initial action centered on the executive officer responsible for crisis management, while strengthening coordination among the Risk Management Committee, specialized committees, and executive bodies such as the Executive Committee. Through these efforts, we strive to establish an effective global incident response system and minimize damage and losses. In recent years, in order to strengthen the monitoring of changes in global laws and regulations which have a significant impact on our business, we have established a global control system centered on the legal department of the headquarters by assigning a person in charge of laws and regulations to overseas subsidiaries and other global bases in addition to the domestic bases and headquarters.

Description of the risk

Yaskawa Group has production bases in Japan and overseas, including China, and provides products and services to customers on a daily basis through sales bases in approximately 30 countries around the world. As a result, changes in international relations, continued tensions between the United States and China, the situation in Russia and Ukraine, and the expansion of armed conflicts and geopolitical tensions in the Middle East and Asia as well as the resulting social and environmental changes and changes in laws and regulations, may have an impact on our business activities.
In particular, increases in protectionist measures, including the expansion of export restrictions, tighter controls on technology transfers, and tariff increases in various countries and regions, may restrict development, production, logistics, and sales activities, and hinder the supply of products to customers, which may affect the Yaskawa Group’s operating results and financial condition.

Measures

In response to these risks, we regularly monitor political and economic conditions and trends in laws and regulations in each region through our business bases, and have established a system that enables us to quickly ascertain the impact on our business.
In the event that various business risks arising from geopolitical risks materialize, Yaskawa will take prompt initial action centered on the executive officer responsible for crisis management, while strengthening coordination among the Risk Management Committee, specialized committees, and executive bodies such as the Executive Committee. Through these efforts, we strive to establish an effective global incident response system and minimize damage and losses.
In recent years, in order to strengthen the monitoring of changes in global laws and regulations which have a significant impact on our business, we have established a global control system centered on the legal department of the headquarters by assigning a person in charge of laws and regulations to overseas subsidiaries and other global bases in addition to the domestic bases and headquarters.

Raw material and component procurement

Description of the risk	Yaskawa Group procures raw materials such as steel materials and various parts from a number of suppliers globally, and supplies products to countries and regions around the world. Accordingly, in addition to rising prices and increased demand in the industry, changes in international relations—such as continued tensions between the United States and China, the situation in Russia and Ukraine, and the expansion of armed conflicts and geopolitical tensions in the Middle East and Asia may make it difficult to secure and supply the necessary quantities on a continuous basis. Furthermore, due to natural disasters, expansion of infectious diseases, accidents, and worsening business conditions, it may be difficult for suppliers to provide Yaskawa Group with parts and raw materials in a stable manner.
Measures	To address these procurement risks, Yaskawa Group is working to strengthen its supply chain. For example, we are building relationships of trust through dialogue with suppliers, diversifying our suppliers globally, responding to demand fluctuations by ensuring appropriate inventory levels and promoting local production and procurement, expanding transportation means and routes, and enhancing our responses to disaster risks through the formulation of Business Continuity Plans (BCP) for our domestic and main overseas bases. In addition, we are working to identify risky parts early and strengthen company-wide measures, and for parts that continue to be hard to come by, we are strengthening our response by changing the design to parts that are available.

Description of the risk

Yaskawa Group procures raw materials such as steel materials and various parts from a number of suppliers globally, and supplies products to countries and regions around the world. Accordingly, in addition to rising prices and increased demand in the industry, changes in international relations—such as continued tensions between the United States and China, the situation in Russia and Ukraine, and the expansion of armed conflicts and geopolitical tensions in the Middle East and Asia may make it difficult to secure and supply the necessary quantities on a continuous basis. Furthermore, due to natural disasters, expansion of infectious diseases, accidents, and worsening business conditions, it may be difficult for suppliers to provide Yaskawa Group with parts and raw materials in a stable manner.

Measures

To address these procurement risks, Yaskawa Group is working to strengthen its supply chain. For example, we are building relationships of trust through dialogue with suppliers, diversifying our suppliers globally, responding to demand fluctuations by ensuring appropriate inventory levels and promoting local production and procurement, expanding transportation means and routes, and enhancing our responses to disaster risks through the formulation of Business Continuity Plans (BCP) for our domestic and main overseas bases. In addition, we are working to identify risky parts early and strengthen company-wide measures, and for parts that continue to be hard to come by, we are strengthening our response by changing the design to parts that are available.

Exchange rate fluctuations

Description of the risk	Yaskawa Group is exposed to the risk of exchange rate fluctuations because it operates globally, and its business partners are located all over the world. In addition to selling and providing products and service and purchasing raw materials and parts in local currencies such as USD, EUR, and CNY, Yaskawa Group also exports products in local currencies. Unexpected fluctuations in exchange rates could weaken the competitiveness of Yaskawa Group’s products and adversely affect its operating results and financial condition. In addition, as Yaskawa Group holds assets and liabilities denominated in local currencies, foreign exchange rate fluctuations may have an adverse effect on Yaskawa Group’s financial position, which is reported in JPY.
Measures	In order to address the risk of exchange rate fluctuations, Yaskawa Group is working to build an earnings structure that is resistant to exchange rate fluctuations by promoting local production and procurement in addition to executing forward exchange contracts and currency hedging.

Description of the risk

Yaskawa Group is exposed to the risk of exchange rate fluctuations because it operates globally, and its business partners are located all over the world. In addition to selling and providing products and service and purchasing raw materials and parts in local currencies such as USD, EUR, and CNY, Yaskawa Group also exports products in local currencies. Unexpected fluctuations in exchange rates could weaken the competitiveness of Yaskawa Group’s products and adversely affect its operating results and financial condition. In addition, as Yaskawa Group holds assets and liabilities denominated in local currencies, foreign exchange rate fluctuations may have an adverse effect on Yaskawa Group’s financial position, which is reported in JPY.

Measures

In order to address the risk of exchange rate fluctuations, Yaskawa Group is working to build an earnings structure that is resistant to exchange rate fluctuations by promoting local production and procurement in addition to executing forward exchange contracts and currency hedging.

Increased competition

Description of the risk	Yaskawa Group has strong competitors in each of its business areas. In the face of intensifying price competition in particular, there is no guarantee that Yaskawa Group will remain competitive in the future, even in areas where it has a high market share. Intense price competition may adversely affect Yaskawa Group’s performance and financial position. In addition, it is necessary to introduce products of the Group in a timely and appropriate manner in order to ensure competitiveness in technology and quality. If the competitiveness of Yaskawa Group’s products is relatively weak or if the timing of product rollout is inappropriate, Yaskawa Group’s performance and financial position may be adversely affected.
Measures	Through i³-Mechatronics, the Group strives to differentiate its products and services and add high value by providing optimal solutions to customers. Led by the Yaskawa Technology Center, we are continuously strengthening our cross departmental R & D efforts to develop the world’s first and best innovative products. We are also working to shorten the development period by thoroughly improving efficiency and to ensure the timely release of highly cost competitive products to the market.

Description of the risk

Yaskawa Group has strong competitors in each of its business areas. In the face of intensifying price competition in particular, there is no guarantee that Yaskawa Group will remain competitive in the future, even in areas where it has a high market share. Intense price competition may adversely affect Yaskawa Group’s performance and financial position. In addition, it is necessary to introduce products of the Group in a timely and appropriate manner in order to ensure competitiveness in technology and quality. If the competitiveness of Yaskawa Group’s products is relatively weak or if the timing of product rollout is inappropriate, Yaskawa Group’s performance and financial position may be adversely affected.

Measures

Through i³-Mechatronics, the Group strives to differentiate its products and services and add high value by providing optimal solutions to customers. Led by the Yaskawa Technology Center, we are continuously strengthening our cross departmental R & D efforts to develop the world’s first and best innovative products. We are also working to shorten the development period by thoroughly improving efficiency and to ensure the timely release of highly cost competitive products to the market.

Climate change

Description of the risk	With regard to climate change, there is a possible risk of “transition” caused by changes in policies, regulations, and other climate change measures, as well as changes in social demands. Examples include increases in fuel and material procurement costs resulting from the introduction of carbon prices and carbon taxes by national governments, and increases in costs such as purchasing green power resulting from the introduction of national carbon emissions policies and emissions trading and the tightening of emissions regulations.
Measures	In response to these risks, Yaskawa Group has expressed its support for the TCFD recommendations on climate change, promoted various activities, including participation in a project to support scenario analysis of climate risks and opportunities in line with the Ministry of the Environment’s TCFD, and disclosed climate-related information based on the TCFD recommendations. We will continue to enhance the disclosure of climate-related information, and continue to conduct business activities that are even more environmentally friendly in order to contribute to the realization of a sustainable society and further enhance our corporate value. The Sustainability Committee, chaired by the President, monitors activities to ensure consistency between risk assessment and materiality analysis. For overall implementation, including other measures, under the environmental promotion system of an environmental promotion manager appointed by the President, the quality of activities is improved through the PDCA cycle.

Description of the risk

With regard to climate change, there is a possible risk of “transition” caused by changes in policies, regulations, and other climate change measures, as well as changes in social demands. Examples include increases in fuel and material procurement costs resulting from the introduction of carbon prices and carbon taxes by national governments, and increases in costs such as purchasing green power resulting from the introduction of national carbon emissions policies and emissions trading and the tightening of emissions regulations.

Measures

In response to these risks, Yaskawa Group has expressed its support for the TCFD recommendations on climate change, promoted various activities, including participation in a project to support scenario analysis of climate risks and opportunities in line with the Ministry of the Environment’s TCFD, and disclosed climate-related information based on the TCFD recommendations. We will continue to enhance the disclosure of climate-related information, and continue to conduct business activities that are even more environmentally friendly in order to contribute to the realization of a sustainable society and further enhance our corporate value. The Sustainability Committee, chaired by the President, monitors activities to ensure consistency between risk assessment and materiality analysis. For overall implementation, including other measures, under the environmental promotion system of an environmental promotion manager appointed by the President, the quality of activities is improved through the PDCA cycle.

Human rights

Description of the risk	There is a social demand to address issues such as forced labor and child labor by not only our company but also our business partners. In addition, laws and regulations requiring human rights initiatives are being introduced in various countries and regions, and there is a risk of violation of laws and regulations by not responding appropriately. Inappropriate responses to these human rights issues may lead to a risk that our group’s competitiveness could suffer from a loss of public trust.
Measures	Based on the Universal Declaration of Human Rights and the United Nations Guiding Principles on Business and Human Rights, Yaskawa has stipulated respect for human rights in the Yaskawa Group Code of Conduct and the Yaskawa Group Human Rights Policy, and promotes initiatives to respect the human rights of all people. The promotion system is led by the department in charge of sustainability, the department in charge of risk management and the department in charge of procurement, and we are working to respect human rights in Yaskawa Group and in the supply chain. In regard to these initiatives, the Sustainability Committee deliberates and monitors measures on a regular basis. In addition, we will identify and assess the negative impact and risks on human rights of domestic Group employees and major business partners, implement appropriate measures, and disclose information after conducting follow-up surveys and monitoring. Through these initiatives, we will continuously respond to the ever-changing social demands and issues related to human rights.

Description of the risk

There is a social demand to address issues such as forced labor and child labor by not only our company but also our business partners. In addition, laws and regulations requiring human rights initiatives are being introduced in various countries and regions, and there is a risk of violation of laws and regulations by not responding appropriately. Inappropriate responses to these human rights issues may lead to a risk that our group’s competitiveness could suffer from a loss of public trust.

Measures

Based on the Universal Declaration of Human Rights and the United Nations Guiding Principles on Business and Human Rights, Yaskawa has stipulated respect for human rights in the Yaskawa Group Code of Conduct and the Yaskawa Group Human Rights Policy, and promotes initiatives to respect the human rights of all people.
The promotion system is led by the department in charge of sustainability, the department in charge of risk management and the department in charge of procurement, and we are working to respect human rights in Yaskawa Group and in the supply chain. In regard to these initiatives, the Sustainability Committee deliberates and monitors measures on a regular basis.
In addition, we will identify and assess the negative impact and risks on human rights of domestic Group employees and major business partners, implement appropriate measures, and disclose information after conducting follow-up surveys and monitoring. Through these initiatives, we will continuously respond to the ever-changing social demands and issues related to human rights.

Information Security

Description of the risk	Yaskawa Group appropriately manages personal information and confidential information of customers and business partners in its business activities. However, cyberattacks, unauthorized access, ransomware incidents, and virus infections may result in information leaks, server and system outages, and network disruptions. If such events occur, they may hinder business continuity, reduce production capacity, and lead to a decline in trust from customers, investors, and other stakeholders in the market. In addition, new risks are anticipated, including privacy violations, copyright infringement, and leakage of confidential information due to inappropriate use of generative AI. Furthermore, Yaskawa Group may be secondarily affected by security incidents occurring at business partners.
Measures	Yaskawa recognizes information security risk as a key management issue and is strengthening its organizational structure and operations under top management leadership. Under normal circumstances, we continuously promote initiatives to strengthen the information security infrastructure. At the same time, we conduct global monitoring and information gathering regarding increasingly sophisticated cyberattacks, vulnerability information, and brand damage risks, and implement measures in a planned manner. When information security risks are foreseen or identified, we promptly determine response policies under the risk management framework and implement incident response in coordination with the CSIRT (Computer Security Incident Response Team), thereby minimizing damage and achieving early recovery. In addition, regarding the use of generative AI services in business operations, we promote appropriate utilization through the establishment of internal rules and training programs such as e-learning. Furthermore, we confirm the status of security measures at business partners and request improvements as necessary, thereby striving to reduce risks across the entire supply chain.

Description of the risk

Yaskawa Group appropriately manages personal information and confidential information of customers and business partners in its business activities. However, cyberattacks, unauthorized access, ransomware incidents, and virus infections may result in information leaks, server and system outages, and network disruptions. If such events occur, they may hinder business continuity, reduce production capacity, and lead to a decline in trust from customers, investors, and other stakeholders in the market. In addition, new risks are anticipated, including privacy violations, copyright infringement, and leakage of confidential information due to inappropriate use of generative AI. Furthermore, Yaskawa Group may be secondarily affected by security incidents occurring at business partners.

Measures

Yaskawa recognizes information security risk as a key management issue and is strengthening its organizational structure and operations under top management leadership. Under normal circumstances, we continuously promote initiatives to strengthen the information security infrastructure. At the same time, we conduct global monitoring and information gathering regarding increasingly sophisticated cyberattacks, vulnerability information, and brand damage risks, and implement measures in a planned manner. When information security risks are foreseen or identified, we promptly determine response policies under the risk management framework and implement incident response in coordination with the CSIRT (Computer Security Incident Response Team), thereby minimizing damage and achieving early recovery. In addition, regarding the use of generative AI services in business operations, we promote appropriate utilization through the establishment of internal rules and training programs such as e-learning. Furthermore, we confirm the status of security measures at business partners and request improvements as necessary, thereby striving to reduce risks across the entire supply chain.

Securing human resources

Description of the risk	As the labor shortage continues to grow on a global scale, competition is intensifying to acquire human resources, including those with advanced expertise. In addition, in order for each employee to continue to demonstrate his or her abilities with initiative, it is becoming more important to develop human resources who can contribute to business expansion on a global scale, transcending barriers such as culture, customs, and language, and to create a working environment in which employees can live in good physical and mental health. Under these circumstances, if there is a delay in hiring and developing human resources, or if there is an outflow of talented human resources, the competitiveness of the Group may decline.
Measures	As part of our human capital management initiatives aimed at realizing our Vision 2025, we will place emphasis on dialogue with employees. At the same time, we implement human resources strategies linked to our management strategies by formulating human resource requirements necessary for the execution of business strategies and strengthening human resources management that encourages human investment and the active participation of diverse human resources based on the visualization of human resource data. In addition, in order to formulate sustainable management strategies and achieve high results, we select candidates for the next generation of executives, who will lead the Yaskawa Group’s future, at an early stage, and train and promote them through training programs and other means. In addition, we will focus on “deepening understanding of Yaskawa Principles,” “ advancing diversity and inclusion, ” and “creating a comfortable working environment ”. By constantly monitoring these efforts through active communication with employees, such as an employee awareness survey (ES questionnaire) and direct dialogue with management, we can quickly reflect these efforts in improving human resources measures and accelerate improvements in productivity and motivation. By improving the centripetal force of each human resource (employee), which is our human capital, on a global scale and strengthening our brand power (being chosen and trusted), we will continue to acquire and secure sustainable human resources.

Description of the risk

As the labor shortage continues to grow on a global scale, competition is intensifying to acquire human resources, including those with advanced expertise. In addition, in order for each employee to continue to demonstrate his or her abilities with initiative, it is becoming more important to develop human resources who can contribute to business expansion on a global scale, transcending barriers such as culture, customs, and language, and to create a working environment in which employees can live in good physical and mental health.
Under these circumstances, if there is a delay in hiring and developing human resources, or if there is an outflow of talented human resources, the competitiveness of the Group may decline.

Measures

As part of our human capital management initiatives aimed at realizing our Vision 2025, we will place emphasis on dialogue with employees. At the same time, we implement human resources strategies linked to our management strategies by formulating human resource requirements necessary for the execution of business strategies and strengthening human resources management that encourages human investment and the active participation of diverse human resources based on the visualization of human resource data. In addition, in order to formulate sustainable management strategies and achieve high results, we select candidates for the next generation of executives, who will lead the Yaskawa Group’s future, at an early stage, and train and promote them through training programs and other means.
In addition, we will focus on “deepening understanding of Yaskawa Principles,” “ advancing diversity and inclusion, ” and “creating a comfortable working environment ”. By constantly monitoring these efforts through active communication with employees, such as an employee awareness survey (ES questionnaire) and direct dialogue with management, we can quickly reflect these efforts in improving human resources measures and accelerate improvements in productivity and motivation. By improving the centripetal force of each human resource (employee), which is our human capital, on a global scale and strengthening our brand power (being chosen and trusted), we will continue to acquire and secure sustainable human resources.

Compliance

Description of the risk	Yaskawa Group considers compliance with various laws and regulations, including competition laws, anti-bribery regulations, and personal data protection laws in each country and region, to be an important responsibility in the course of its business operations.　However, as international regulations become increasingly complex and sophisticated, there is a possibility that business practices and sales activities may unintentionally be deemed to be in violation of applicable laws and regulations, which may affect the Yaskawa Group’s operating results and financial condition.
Measures	Based on the Group Compliance Basic Regulations, Yaskawa has established compliance officers and compliance promotion leaders in divisions reporting directly to each president within the Company and in relevant group companies to ensure the proper implementation of compliance. In addition, personnel responsible for various laws and regulations have been appointed in the Company’s headquarters departments in order to appropriately manage compliance matters related to their respective areas of responsibility. Furthermore, led by the legal and compliance departments, Yaskawa strengthens coordination with compliance officers and compliance promotion leaders at domestic and overseas group companies, while supporting the activities of personnel responsible for legal matters. Through these initiatives, Yaskawa strives to reduce compliance risks.

Description of the risk

Yaskawa Group considers compliance with various laws and regulations, including competition laws, anti-bribery regulations, and personal data protection laws in each country and region, to be an important responsibility in the course of its business operations.　However, as international regulations become increasingly complex and sophisticated, there is a possibility that business practices and sales activities may unintentionally be deemed to be in violation of applicable laws and regulations, which may affect the Yaskawa Group’s operating results and financial condition.

Measures

Based on the Group Compliance Basic Regulations, Yaskawa has established compliance officers and compliance promotion leaders in divisions reporting directly to each president within the Company and in relevant group companies to ensure the proper implementation of compliance. In addition, personnel responsible for various laws and regulations have been appointed in the Company’s headquarters departments in order to appropriately manage compliance matters related to their respective areas of responsibility. Furthermore, led by the legal and compliance departments, Yaskawa strengthens coordination with compliance officers and compliance promotion leaders at domestic and overseas group companies, while supporting the activities of personnel responsible for legal matters. Through these initiatives, Yaskawa strives to reduce compliance risks.

Quality

Description of the risk	Yaskawa Group gives the highest priority to ensuring product quality and safety. However, in the event that defects occur in Yaskawa products, the Company may be subject to liability for damages based on product liability laws. In addition, regulations related to product security are being strengthened both in Japan and overseas, including the European Cyber Resilience Act, and inadequate responses to such regulations may result in administrative actions or other penalties. Furthermore, if quality misconduct occurs due to inappropriate handling of quality data or similar issues, there is a risk of revocation of various certifications and deterioration of corporate reputation and evaluations.
Measures	In preparation for product liability (PL) risks, Yaskawa has taken measures such as obtaining PL insurance, establishing a legal framework capable of promptly responding to overseas litigation, and strengthening incident prevention systems through information sharing within the Group. In order to appropriately respond to product security-related regulations, Yaskawa is also working to develop security systems and reporting processes, strengthen compliance by assigning responsible personnel across the Company, and verify and improve these systems through operational testing. Furthermore, to prevent inappropriate handling of quality data and similar issues, the Company systematically verifies consistency in product information, regulatory compliance, handling instructions, and contractual terms, and audits the soundness of the Quality Management System (QMS).

Description of the risk

Yaskawa Group gives the highest priority to ensuring product quality and safety. However, in the event that defects occur in Yaskawa products, the Company may be subject to liability for damages based on product liability laws. In addition, regulations related to product security are being strengthened both in Japan and overseas, including the European Cyber Resilience Act, and inadequate responses to such regulations may result in administrative actions or other penalties. Furthermore, if quality misconduct occurs due to inappropriate handling of quality data or similar issues, there is a risk of revocation of various certifications and deterioration of corporate reputation and evaluations.

Measures

In preparation for product liability (PL) risks, Yaskawa has taken measures such as obtaining PL insurance, establishing a legal framework capable of promptly responding to overseas litigation, and strengthening incident prevention systems through information sharing within the Group. In order to appropriately respond to product security-related regulations, Yaskawa is also working to develop security systems and reporting processes, strengthen compliance by assigning responsible personnel across the Company, and verify and improve these systems through operational testing. Furthermore, to prevent inappropriate handling of quality data and similar issues, the Company systematically verifies consistency in product information, regulatory compliance, handling instructions, and contractual terms, and audits the soundness of the Quality Management System (QMS).

Intellectual property

Description of the risk	Yaskawa Group places importance on the appropriate protection of intellectual property in order to secure its competitive advantage. However, unauthorized use or exploitation of the Yaskawa Group’s intellectual property rights by third parties may result in the loss of revenue opportunities. On the other hand, in the event that the Yaskawa Group inadvertently infringes the intellectual property rights of third parties, there is a risk of being subject to legal actions, including claims for damages and injunctions against use.
Measures	To address unauthorized use of its intellectual property rights by third parties, Yaskawa is actively promoting the acquisition of patent rights and trademark rights for its products and services in major countries.In addition, when infringement by third parties may impair the Yaskawa Group’s revenue opportunities, the Company considers exercising its rights and takes appropriate measures to recover damages and reduce the risk of lost revenue opportunities. Furthermore, to prevent infringement of third-party intellectual property rights, Yaskawa conducts thorough intellectual property investigations before launching new products and services, thereby striving to prevent infringement risks in advance.

Description of the risk

Yaskawa Group places importance on the appropriate protection of intellectual property in order to secure its competitive advantage. However, unauthorized use or exploitation of the Yaskawa Group’s intellectual property rights by third parties may result in the loss of revenue opportunities. On the other hand, in the event that the Yaskawa Group inadvertently infringes the intellectual property rights of third parties, there is a risk of being subject to legal actions, including claims for damages and injunctions against use.

Measures

To address unauthorized use of its intellectual property rights by third parties, Yaskawa is actively promoting the acquisition of patent rights and trademark rights for its products and services in major countries.In addition, when infringement by third parties may impair the Yaskawa Group’s revenue opportunities, the Company considers exercising its rights and takes appropriate measures to recover damages and reduce the risk of lost revenue opportunities. Furthermore, to prevent infringement of third-party intellectual property rights, Yaskawa conducts thorough intellectual property investigations before launching new products and services, thereby striving to prevent infringement risks in advance.

Disaster

Description of the risk	In the Yaskawa Group, occupational accidents may occur due to physical incidents associated with business activities or exposure to hazardous substances. In such cases, administrative actions, civil liability based on the duty of care for safety, and damage to the Company’s social credibility may arise, which may affect business operations. In addition, insufficient preparedness for widespread infectious diseases (pandemics) and natural disasters such as large-scale earthquakes including those associated with the Nankai Trough tsunamis, heavy rainfall, and typhoons may result in significant impacts on the Yaskawa Group’s financial condition and business continuity through employee injuries, damage to facilities, and business interruptions.
Measures	To address occupational accident risks, Yaskawa continuously implements measures such as strengthening safety and health patrols aimed at prevention, conducting thorough risk assessments and safety education, and ensuring proper management of hazardous substances. In addition, led by the Disaster Countermeasures Committee, Yaskawa is working to prepare for large-scale disasters by promoting seismic reinforcement of critical facilities, establishing initial response guidelines in the event of natural disasters, and conducting effective training programs.

Description of the risk

In the Yaskawa Group, occupational accidents may occur due to physical incidents associated with business activities or exposure to hazardous substances. In such cases, administrative actions, civil liability based on the duty of care for safety, and damage to the Company’s social credibility may arise, which may affect business operations. In addition, insufficient preparedness for widespread infectious diseases (pandemics) and natural disasters such as large-scale earthquakes including those associated with the Nankai Trough tsunamis, heavy rainfall, and typhoons may result in significant impacts on the Yaskawa Group’s financial condition and business continuity through employee injuries, damage to facilities, and business interruptions.

Measures

To address occupational accident risks, Yaskawa continuously implements measures such as strengthening safety and health patrols aimed at prevention, conducting thorough risk assessments and safety education, and ensuring proper management of hazardous substances. In addition, led by the Disaster Countermeasures Committee, Yaskawa is working to prepare for large-scale disasters by promoting seismic reinforcement of critical facilities, establishing initial response guidelines in the event of natural disasters, and conducting effective training programs.

Technology and innovation

Description of the risk	Yaskawa Group is working to acquire new technologies and strengthen research and development to achieve sustainable growth. However, if the Group fails to keep pace with rapidly evolving technological trends such as artificial intelligence (AI), there is a risk of losing its technological superiority over competitors with respect to products and technologies in the market. In addition, if the Group misjudges priority areas for research and development investment resulting in excessive concentration in specific fields or, conversely, excessive dispersion of investments it may not be able to allocate sufficient resources to high-growth technology areas, which may lead to missed opportunities to secure future competitiveness and expand markets.
Measures	Based on medium- to long-term technology strategies defined through technology and product roadmaps, Yaskawa conducts continuous technological development in response to changes in market needs. With regard to AI technologies, Yaskawa has established dedicated organizations and is working under a framework that enables it to focus on applying such technologies to its products while leveraging external expertise. Research and development investments are categorized into several development areas, and development activities are carried out while regularly confirming that the allocation ratios such as those for research, new product development, and derivative product development are in line with established policies.

Description of the risk

Yaskawa Group is working to acquire new technologies and strengthen research and development to achieve sustainable growth. However, if the Group fails to keep pace with rapidly evolving technological trends such as artificial intelligence (AI), there is a risk of losing its technological superiority over competitors with respect to products and technologies in the market. In addition, if the Group misjudges priority areas for research and development investment resulting in excessive concentration in specific fields or, conversely, excessive dispersion of investments it may not be able to allocate sufficient resources to high-growth technology areas, which may lead to missed opportunities to secure future competitiveness and expand markets.

Measures

Based on medium- to long-term technology strategies defined through technology and product roadmaps, Yaskawa conducts continuous technological development in response to changes in market needs. With regard to AI technologies, Yaskawa has established dedicated organizations and is working under a framework that enables it to focus on applying such technologies to its products while leveraging external expertise. Research and development investments are categorized into several development areas, and development activities are carried out while regularly confirming that the allocation ratios such as those for research, new product development, and derivative product development are in line with established policies.

Security and economic security

Description of the risk	Yaskawa Group complies with security-related laws and regulations in each country and region. However, in the event of a violation, there is a risk that both the Company and individuals may be subject to sanctions, including arrest, fines, and export prohibitions. In addition, if business partners, including domestic and overseas sales partners, violate regulations, there is a possibility that the Yaskawa Group’s business operations and transactions may be affected. From a security perspective, even if there is no legal violation, there is a risk of reputational damage if Yaskawa Group products are diverted and exported to countries involved in conflicts and such cases become public through social media or other channels. In terms of economic security, sanctions, tariffs, export restrictions, and suspension of resource supplies are increasingly being used as tools in international negotiations. Moreover, as the scope of economic security expands to cover technological fields, risks such as supply chain disruptions and leakage of critical technologies are also recognized.
Measures	Recognizing that countermeasures against security and economic security risks are an important global management issue, Yaskawa maintains close coordination with its overseas group companies and conducts internal audits and training at overseas subsidiaries to ensure compliance with laws and regulations and to prevent reputational damage. In addition, Yaskawa provides appropriate explanations to business partners and seeks their cooperation in risk mitigation, thereby strengthening compliance across the entire supply chain.

Description of the risk

Yaskawa Group complies with security-related laws and regulations in each country and region. However, in the event of a violation, there is a risk that both the Company and individuals may be subject to sanctions, including arrest, fines, and export prohibitions. In addition, if business partners, including domestic and overseas sales partners, violate regulations, there is a possibility that the Yaskawa Group’s business operations and transactions may be affected. From a security perspective, even if there is no legal violation, there is a risk of reputational damage if Yaskawa Group products are diverted and exported to countries involved in conflicts and such cases become public through social media or other channels. In terms of economic security, sanctions, tariffs, export restrictions, and suspension of resource supplies are increasingly being used as tools in international negotiations. Moreover, as the scope of economic security expands to cover technological fields, risks such as supply chain disruptions and leakage of critical technologies are also recognized.

Measures

Recognizing that countermeasures against security and economic security risks are an important global management issue, Yaskawa maintains close coordination with its overseas group companies and conducts internal audits and training at overseas subsidiaries to ensure compliance with laws and regulations and to prevent reputational damage. In addition, Yaskawa provides appropriate explanations to business partners and seeks their cooperation in risk mitigation, thereby strengthening compliance across the entire supply chain.

Production

Description of the risk	When orders increase rapidly, there is a risk that it may not be possible to secure sufficient direct personnel required for production, resulting in insufficient production capacity and disruption in product supply. In addition, if operational technology (OT) used to control and operate production facilities and systems becomes a target of cyberattacks, the risk of direct impacts on business activities, such as operational shutdowns, quality abnormalities, and equipment damage, may increase, potentially leading to production delays or stoppages and serious impacts on safety.
Measures	To address challenges related to securing direct personnel in response to surges in orders, Yaskawa is evolving its production systems by expanding automation, aiming to establish a structure in which production volume does not depend on the number of direct personnel and can respond flexibly to demand fluctuations. Yaskawa also recognizes OT environments at its factories as a critical management asset and is implementing measures to address risks such as cyberattacks, unauthorized operation of equipment, and disruptions caused by supply chain or physical factors. Specifically, the Company is strengthening control over remote access and maintenance terminals, implementing access controls for equipment controllers and manufacturing data, and establishing monitoring systems for networks. In addition, Yaskawa assesses risks across the entire supply chain, including equipment vendors and business partners, and confirms the status of countermeasures to reduce the risk of unauthorized access. Furthermore, the Company has established business continuity plans that include measures to prevent physical intrusion into factories and to respond to disasters, thereby building a system that enables prompt response and early recovery in the event of abnormalities and minimizing impacts on production activities.

Description of the risk

When orders increase rapidly, there is a risk that it may not be possible to secure sufficient direct personnel required for production, resulting in insufficient production capacity and disruption in product supply. In addition, if operational technology (OT) used to control and operate production facilities and systems becomes a target of cyberattacks, the risk of direct impacts on business activities, such as operational shutdowns, quality abnormalities, and equipment damage, may increase, potentially leading to production delays or stoppages and serious impacts on safety.

Measures

To address challenges related to securing direct personnel in response to surges in orders, Yaskawa is evolving its production systems by expanding automation, aiming to establish a structure in which production volume does not depend on the number of direct personnel and can respond flexibly to demand fluctuations. Yaskawa also recognizes OT environments at its factories as a critical management asset and is implementing measures to address risks such as cyberattacks, unauthorized operation of equipment, and disruptions caused by supply chain or physical factors. Specifically, the Company is strengthening control over remote access and maintenance terminals, implementing access controls for equipment controllers and manufacturing data, and establishing monitoring systems for networks. In addition, Yaskawa assesses risks across the entire supply chain, including equipment vendors and business partners, and confirms the status of countermeasures to reduce the risk of unauthorized access. Furthermore, the Company has established business continuity plans that include measures to prevent physical intrusion into factories and to respond to disasters, thereby building a system that enables prompt response and early recovery in the event of abnormalities and minimizing impacts on production activities.