４℃ Holdings has established the Compliance Committee, chaired by the president, as a mechanism to efficiently examine and implement specific risk management and other measures for group companies. In accordance with the Committee's operating rules, the Committee monitors the implementation status of measures and evaluates their effectiveness.

The Committee is attended by Audit Committee members, who are also full-time members, to monitor the establishment and operation of the internal control system and provide their opinions as appropriate.
Based on the basic risk management policy, the Company identifies, calculates, evaluates, and selects risks of group companies, implements necessary measures, and discloses important risks in a timely manner.

Risks that may affect our group's business performance and financial position include the following.

The main raw materials for the Group's mainstay jewelry products are platinum and other metals, and since these are international market products, the Group may not be able to fully pass on to selling prices any increases in prices due to fluctuations in distribution prices and exchange rates.

The Group relies on domestic mass merchandisers and department stores for the majority of its sales, which may be affected by trends in personal consumption and clothing consumption. In addition, weather conditions, such as cool summers and warm winters, can significantly affect market trends, which in turn can affect the Group's operating results.

The Group's overseas production products have been increasingly weighted toward direct transactions with local factories. The main settlement currency is the U.S. dollar, and fluctuations in the yen-yen exchange rate against the U.S. dollar may have an impact on our business performance.

Fashion products such as jewelry and bags, which are the core products of the Brands business, have many competing brands, including foreign brands. We will do our utmost to provide original, high-quality products and services, but if the competitiveness of our brands declines due to unforeseen competitive situations, it may affect our business performance.

The Group is working to enhance and strengthen its overseas production background in Vietnam, China, and other countries in order to establish an integrated overseas management system. In the brand business, we have also established stores in China. However, if problems arise in production activities or sales operations at these overseas bases due to deterioration in political or economic conditions, political upheaval, deterioration in public safety, or the occurrence of terrorism or war, the Group's business results may be affected.

The Group's retail stores and real estate facilities are located and operated in Japan. In the event of a major earthquake or other unforeseeable natural disaster, the Group's stores and other real estate facilities could be physically damaged, which could disrupt the Group's procurement, distribution, and sales activities, thereby impeding the Group's business. Similarly, an accident of some kind affecting our group's suppliers or procurement and distribution network could also hinder our group's business and affect our operating results.

The Group procures products from overseas and has established retail stores in almost all areas of Japan to conduct its business activities. If an infectious disease outbreak (pandemic) were to occur in Japan or overseas, production activities and logistics could stagnate, domestic retail stores could be closed, and the Group's business performance could be affected.

The Group has formulated a privacy policy, personal information management regulations, and detailed rules for handling personal information, and has trained all employees, including those on the importance of compliance, and has also raised the level of system security. However, in the event of a leakage of personal information or other serious trouble despite the above measures, the Group's business performance could be affected by claims for damages or loss of trust in the Group.