Business and Other Risks

Issues to Address

We will work to tackle the following issues requiring our attention. Despite the following issues being jointly applicable to each business segment, ii. and iv. are particularly relevant to both of the R&D Outsourcing Business and Construction Management Outsourcing Business, whereas v. is mainly related to the R&D Outsourcing Business, Construction Management Outsourcing Business, and Other Businesses in Japan.

i. Responding to changes in the external environment

As coexisting with COVID-19 has become the new normal, leading Japanese companies, that are our major customers, to continue to actively invest in research and development to sustain their international competitiveness in the future. This is a key factor contributing to the sustainable growth of the Group. On the other hand, the shortage of skilled engineers and the upward pressure on wages in Japan continue to persist. As a result, we began to see various risk factors which may affect our Group, including cost increase related to engineer recruitment and training, rising engineer salaries, and engineer retirement. Moving forward, as we shift from quantity to quality, we will continue to invest in the training of engineers who are mainly focused on the high-demand fields of digital technology, while also aim to achieve short and long-term growth both in revenue and profit, by pursuing an optimal mix between recruitment and training and improving the efficiency of recruitment and training.

ii. Improvement of base charge

  FY2019 FY2020 FY2021 FY2022 FY2023
Unit Sales Price (yen in thousands/month, year-to-date) 630 630 634 658 669

(Note)Calculated as [Total revenue for the years ended June 30]/ ∑ [Number of assigned engineers at the end of each month](Two major subsidiaries in Japan through the fiscal year ended June 30, 2021, and all subsidiaries in Japan for the fiscal year ended June 30, 2022 and thereafter

The Group's unit sales price per engineer has remained flat through the fiscal year ended June 30, 2020, due to factors such as a reduction in overtime hours resulting from laws related to work style reform and the hiring of many new graduate engineers. During the COVID-19 pandemic from the fiscal year ended June 30, 2021, the Company has curbed the hiring of low-skilled engineers, including new graduates, which has led to a unit sales price hike that surpassed the impact from dilution due to new hires. In addition, the expansion of the solution business and the training of engineers, which are stated in the new medium-term management plan “Evolution 2026,” contributed to raising the unit sales price to 669 thousand yen per month in the fiscal year ended June 30, 2023. Considering medium- and long-term trends in the supply and demand of engineers and the level of the unite sales price in competitors, we believe that there is room for improvement in per-engineer sales going forward. Moving forward, in addition to continuously increasing added value for customers through the expansion of the Solution Business and enhancement of training for engineers, as outlined in "Evolution 2026", the Group is also working to increase base charges by promoting strategic shift-up (i.e., not assigning engineers to the same project for a long period of time, but assigning them to other projects at appropriate price levels according to the improvement in their skill levels).

iii. Securing and Training High Value-Added Engineers

A cornerstone of the Group’s growth is securing talents, and one important management issue is how to acquire as many high value-added engineers as possible and/or how to improve the skills of existing engineers. The hiring market for engineers has become tighter in recent years; accordingly, to promote the acquisition of high value-added engineers, we will leverage not only web and other media, which have traditionally been our mainstay channels, but also a variety of recruitment channels, such as referrals and professional recruitment agencies. Furthermore, we also promote hiring foreign engineers, and strive to strengthen the quality of hiring to expand our Solution Business. In addition, we will leverage the Group’s training infrastructure and strategic alliances to accelerate the fostering of engineers in targeted elemental technology domains (AI/data science, cloud, cyber security, IoT, 5G, etc.), mainly digital technologies where demand is expected to grow over the medium- to long-term. This is done with the aim of fostering higher value for our engineers, thereby promoting the retention of engineers in conjunction with enhancement of personnel systems for the same.

iv. Leveraging IT and Building a Platform

In our engineering dispatch business, there are a number of core processes, including the formation of recruitment candidate pools, screening and employment, matching, retention, training, development and workforce planning. With the advancement of IT, we are promoting a platform which visualizes information of engineers in each of these processes, and utilizes them in an integrated manner. By utilizing data science and AI to further enhance the gathering, accumulation, and analysis of engineer information in this platform, we implement effective measures for strengthening our core processes, including efficient recruitment, effective talent development, and appropriate matching of engineers (increasing base charges). In the medium- to long-term, we will also utilize the knowledge gained from these processes and data analyses in our Engineer Training Business as well as in initiatives aimed at further commercialization (DX Promotion Business).

v. Business Process Improvements

The Group sees further room for efficiency improvement in back-office work at the Group’s head office and business offices by promoting standardization of processes, rules, and forms. We aim to create a unified system and strengthen shared IT infrastructure by radically reviewing our core systems in sales, human resources, and accounting. Along with upgrading our core systems by investing into information technology, we will leverage the tools of our internal controls to promote standardization and greater efficiency of back-office work as well as strengthen back-office functions to improve operating leverage as the business expands and evolves.

vi. Promoting Investment for the Evolution of Core Businesses

The Group considers that the upfront investments such as talent acquisition, training, IT investments, and M&A investments are essential in order to grow the Solutions Business, Engineer Training Business, and DX Promotion Business faster. The key to the Group’s medium- to long-term growth and value creation will be to evolve our Core Business through these upfront investments, leveraging the assets and capabilities we have developed in the domestic engineer staffing business.

Business and Other Risks

The Group’s Enterprise Risk Management (ERM) system recognizes "risks" as the events that may affect the achievement of our strategies and business objectives, and we have created structures and processes to appropriately manage our organization as a whole. We identify all risks based on a clear understanding of the Group’s approach to the type and amount of acceptable risk (risk tolerance). We conduct qualitative and quantitative assessments of risks in terms of impact, foreseeability, and probability of occurrence, and consider countermeasures in terms of avoidance, mitigation, transfer, acceptance, etc. The ERM Committee takes the lead in managing these group-wide risks, monitoring risks and implementing appropriate response measures in cooperation with each risk management department. Furthermore, the Company’s Board of Directors oversees group-wide risk management through reports from the ERM Committee and deliberations by the Board of Directors.

The following lists the risks that we consider to be of high importance for each category, but also includes risks that are less predictable or likely to occur. We believe that investment decisions regarding our company's stocks should be made after fully considering these listed matters. Forward-looking statements in the text are based on information available at the time of submission of the Annual Securities Report, and are judged to be reasonable by the Company. In addition, the following does not necessarily include all potential risks that may arise within the Group and all major risks that may have a significant impact on investment decisions of the investors.


(1) Economic Trends in Customer Industries

As of June 30, 2023, the Group employs 24,125 engineers in Japan, 91.6 percent (22,102) of whom are permanent employees. If the industries to which our customers belong experience downturns, the Group may experience shortened work hours, less-advantageous contractual terms, or cancellation of labor dispatch contracts in progress. As the Group employs significant numbers of permanent employed engineers, the burden of personnel costs for standby employees could increase during phases of economic downturn, which may affect the Group’s business performance and financial position. The Group is strengthening education and training to increase value addition by engineers and is working hard to maintain a stable engineer utilization rate. In addition, by doing business with a broad range of industries and customers, we are able to diversify risk by not being significantly affected by the business conditions of any particular industry or customer. The share of revenue of the Group’s top 10 customers was 12.7% (for the fiscal year under review).

(2) Long-Term Trends in the Global Economy

Demand for Group services linked firmly to R&D and IT systems development at our customers. Major Japanese companies, many of which are main customers of the Group, continue to invest in R&D to maintain global competitiveness. This is a factor in the Group’s growth. However, in the event that the recent return to protectionism around the world, continued restrictions on liberal economies in the future, or the shift to regular global spread of new infectious diseases causes a pivot among many Japanese companies to passive investment in R&D, such events could reduce demand for engineering talents in Japan. This could lead to a decrease in the demand for technical personnel, which in turn could have an impact on the Group’s business operations and earnings.
The Group has established its ability to respond to economic fluctuations by ensuring financial soundness, promoting greater efficiency in administrative operations, strengthening the monitoring of economic and demand trends in Japan and the countries in which it operates, and implementing forward-looking KPI management.

-Technology Trend-

(3) Response to Technological Innovations

The pace of technological change is accelerating in today’s world, and the Group must respond to technological innovation in a timely and appropriate manner. Risks associated with technological innovation include the following. Failure to address these risks may affect the Group’s business operations and performance.

  • The risk that the Group fails to predict or recognize the direction of technological changes correctly, or the risk that the Group cannot improve the technical skills of engineers in response to recognized technological changes, resulting in an obsolete skill set.
  • The risk that the Group may experience an excess of personnel due to a decrease in demand for engineering resources stemming from new technologies cause a major reduction in the work hours required for R&D and IT systems development.
  • The risk that the Group may incur major expenses to secure or train engineers capable of adapting to new technologies.

The Group strives to improve the capital efficiency of education and training by providing various educational and training opportunities to support the advancement of our engineers’ abilities and skills, as well as their familiarity with new technologies. Furthermore, analyze future technology trends and identify specific elemental technologies and solutions to focus on in Center of Intelligence(COI), secure and train engineers who will play a key role in these areas, and develop Centers of Excellence (COE) to achieve sustainable growth.

-Work Environment-

(4) Securing Engineers

There is a risk that the Group will face difficulties in securing engineering personnel, and that we will be unable to secure sufficient supply to meet the demand, the Group’s business operations and earnings could be affected. In particular, the acquisition of engineers in the digital technology field continues to be difficult due to increased demand, and if sufficient supply cannot be secured to meet demand, the Group's business operations and results of operations could be affected.
Our recruitment capability is one of the Group’s strengths, and acquisition of superior engineers is a driving force for our growth. The Group is diversifying its recruitment channels to include the use of professional recruitment agencies and referrals from acquaintances, and is also promoting the acquisition of foreign national engineers in an effort to strengthen recruitment with an emphasis on the quality needed to expand the Solution Business.
In the fiscal year ended June 30, 2021, the number of hires decreased significantly from the previous fiscal year as a result of restrained hiring in response to the uncertainties in the business environment caused by the spread of the COVID-19 pandemic. After the fiscal year ended June 30, 2022, however, the number of hires for both new graduates and mid-career workers recovered due to the resumption of hiring activities, with the total number of engineers on the payroll reaching a record high as of June 30, 2023.

  FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Number of newly recruited engineers 2,684 4,151 4,512 4,398 1,405 3,830 4,314
Number of engineers employed 14,346 16,797 19,293 21,264 20,330 22,048 24,125

(Note)The number of engineers hired (including those acquired through M&A) and the total number of engineers are both limited to those in Japan, and the total number of engineers is as of the end of the fiscal year. In terms of securing engineers in Japan, we conduct an employee satisfaction survey every year, and based on the results, we are working to reduce the turnover rate by implementing measures such as improving compensation, and others.

Furthermore, as an initiative for engineer retention in Japan, conduct annual employee satisfaction surveys and use the results of these surveys to implement measures for improved treatment.

(5) Changing Demographic in Japan

The majority of our Group’s business is conducted in Japan. However, a continued decline is expected in both the total population and the number of engineers in Japan, and if the market in which our Group operates shrinks or competition for new graduates and mid-career hires further intensifies, our Group’s business operations and earnings could be impacted.
At the same time, the Group could develop new opportunities for growth if demand for technical talents in Japan continues to rise as expected and if the Group can meet the technical development needs of our customers by recruiting global talents and improving efficiency of technological development.

(6) Changes in Employment Practices and Work Styles

One reason behind the strong demand for technology development services in Japan is employment practices that encounter difficulty in adjusting quickly to direct employment needs. R&D and IT systems development projects sometimes have difficulty in securing talents in a timely and appropriate manner. However, employment practices in Japan have been gradually changing in recent years, and the spread of HR tech, remote work, and the gig economy, including freelance workers, may lead to further job mobility and diversification of work styles in the future. If it becomes common practice for customers to directly secure the personnel needed for their development projects, the demand for outsourcing of talents will decrease, which may affect our Group’s business operations and performance.
While these changes in employment practices and work styles pose a risk to our Group, they can also present opportunities, such as providing new sources of talented personnel. Instead of being bound by the traditional business model, we will utilize freelancers, expand offshoring development, and introduce a more flexible personnel system, evolving the way we do business.

(7) Finding Qualified Candidates to Expand Into New Business Areas

In order to accelerate the evolution of the Group’s core business, it is essential to secure management and business personnel from beyond the framework of the domestic temporary engineer business. Although the Group is competitive when it comes to recruiting engineers, it faces stiff competition for management and business personnel from businesses who recruit across various industries in a tight labor market. We plan to acquire personnel through recruitment agencies and M&A, however, if those efforts do not progress as planned, the evolution of our core business may slow down, and this may affect our Group's business operations and earnings.
In addition to hiring domestic personnel, the Group is working to further strengthen training and promote the use of highly skilled foreign personnel in order to expand the talent pool that will be responsible for the evolution of the core business.

-Strategy/Market, Competitor, Operation-

(8) Progress of Globalization

In recent years, major Japanese companies, many of which are main customers of the Group, have pursued globalization in R&D and IT systems development. This movement is only expected to accelerate further in the future. In addition, due to the improvement of technological capabilities in emerging countries, offshoring development tends to be selected for both cost and technology reasons, even for important development projects in the U.S. and Europe. If our Group is unable to establish a global solution provision system, we may not be able to respond to these changes in the demand for technology development services in Japan, which may affect our Group’s business operations and performance.
The Group has positioned M&As as one of the pillars of its growth strategy. Offshoring development (especially in the digital domain) for Japanese companies is still less prevalent than in Europe and the U.S. We see M&A as creating an opportunity to be a leader in Japan by bringing in service delivery capabilities, technological expertise, and talents cultivated in the U.S. and European markets.

(9) Changes in Customer Demand

The range of technological domains required by customers has been expanding due to the progress of digitalization and software. In addition, customer demand is going beyond the engineer deployment and is increasingly seeking deliverables, as well as the identification and resolution of issues. The Group may not be able to respond to these changes in demand trend could result in missed growth opportunities, which could affect the Group’s business operations and earnings.
Being fully aware of the need for the Group’s services to evolve beyond the mere provision of services into solution-providing services, the Group is making investments to acquire capabilities and innovate its organization and operations, while continuing to consider the balance with the domestic engineer staffing business.

(10) Achievement of the Medium-term Management Plan

The Group has formulated a five-year medium-term management plan, "Evolution 2026", with the fiscal year ending June 30, 2022 as its first year, and is implementing its medium-term business strategy accordingly. However, the Group may misread changes in the external environment, fail to keep up with the speed of such changes, or be unable to “evolve” our capabilities as expected, and as a result, may be unable to achieve growth or evolution in the Core Business as laid out in our medium-term management plan, “Evolution 2026,” our Group’s business operations and performance may be affected. The Group creates a five-year roadmap that outlines detailed policies and timelines for each business strategy, while also establishing detailed KPIs tied to each policy to strengthen our system for promoting and managing the progress of our medium-term business strategies. If there is a delay in the execution of these strategies, or if they need to be revised, invest management resources and strengthen the organizational structure. By doing so, promote the realization of our strategies and achievement of our target figures.

-M&A/Alliances, Country Risks, Accounting&Finance-

(11) Mergers and Acquisitions (M&A)

As part of its growth strategy, the Group is pursuing mergers and acquisitions in Japan and overseas. In the event of an M&A, we conduct detailed due diligence on the target company and make every effort to avoid risks. However, the Group may be affected by contingent liabilities, etc., that arise after the acquisition, the target company being unable to achieve its initially envisioned earnings plan, or a situation arising that interferes with the business operations of the target company, this could have an impact on the Group’s business performance and financial position.
The Group’s basic principles for M&A include consistency with the medium-term business strategy, transparency in the acquisition process, strong financial discipline, and post-acquisition integration (PMI) and governance policies. In particular, in terms of financial discipline, emphasize return on invested capital (ROIC) in excess of the cost of capital.

(12) Adoption of Impairment Accounting

As of June 30, 2023, the Group had a total of 51,179 million yen in goodwill and intangible assets on our consolidated statement of financial position. They account for 35.5% of total assets, with the majority of goodwill found in fields related to machinery, electricity and electronics (14,651 million yen), Robosoft Group (9,400 million yen), and fields related to embedded control and IT infrastructure (7,969 million yen). Goodwill and intangible assets have increased as a result of our active pursuit of M&A in Japan and overseas. However, a recognizable decline in Group profitability may require the Group to determine whether goodwill or intangible assets have been impaired. Impairment losses related to goodwill or intangible assets may affect the Group’s business performance and financial position. Further, the goodwill is a non-amortized asset.
In connection with M&A and equity investment, the Group may take action to avoid downside risk by reducing the potential amount of impairment loss by reducing initial investment or ownership ratio, or by granting put options to minority shareholders to act as an incentive to the founders (sellers) of the investee company to reduce management risk associated with the investment. If the performance of an investee business diverges significantly from originally forecasted plans, there may be a change in the fair value of put options granted to minority shareholders. Such changes may affect the Group’s business performance and financial position.
When engaging in M&A, the Group forms a team consisting of business unit and PMI representatives beginning at the due diligence stage, creating a post-investment plan in advance. Plans are executed promptly after the conclusion of an investment as we strive to improve the management of the investee company and secure expected synergies between the investee company and Group affiliates.

-Legal, Regulatory and Information Systems-

(13) Changes in Related Laws and Regulations

The Group conducts labor dispatch business under the provisions of the Worker Dispatching Act, Standards on the Classification between Dispatching Businesses and Subcontracting Businesses (Ministry of Health, Labor and Welfare Notice No.37, 1986), and other relevant laws and regulations. Any conflict with said laws and regulations could result in the cancellation of permission to engage in the labor dispatch business, suspension of business, etc. If the Group is found to be in violation of the Worker Dispatching Act or other related laws and regulations, the Group's business operations and earnings could be affected.
The Group has established and operates a strict system of legal compliance, including organizational considerations, internal rules, and training for officers and employees.
The Worker Dispatching Act and other related laws and regulations are revised on a continuous basis in response to changes in the economic and social environments. If revisions occur in the future that are significantly disadvantageous to the Group’s business model, such revisions may affect the Group’s business operations and performance. Besides revisions to the Worker Dispatching Act, other changes have been introduced in recent years, including overtime hour work limits, seasonal specifications for annual paid leave, fair treatment in employment (regardless of employment terms), and measures ensuring employment of senior-age workers. The Group has adopted a variety of measures to respond to these changes. However, changes in the future could require responses resulting in significant costs to the Group. At the same time, stricter regulations could result in the weeding out of small- and medium-sized staffing businesses, increasing demand for Group services and allowing the Group to seize larger market share.
The Group will establish and operate a strict system of legal compliance, including organizational structure, internal rules, and training for executives and employees, as well as strengthen its resilience to the revision of laws and regulations by developing various systems that provide attractive work styles and benefits, etc. to employees ahead of said revisions, and by expanding both its overseas Solution Business and the Engineer Training Business. The grounds for business abolition, revocation of permission, or business suspension with respect to the Group’s permission to operate a labor dispatch business and a paid placement service are stipulated in Article 14 of the Worker Dispatching Act and Article 32 of the Employment Security Act. As of the date of submission of thAnnual Securities Reportis document, TechnoPro Holdings is not aware of any facts or indications that the Group has become subject to grounds for business abolition, revocation of permission, or business suspension.

(14) Personal Information Protection

The Group retains a significant amount of personal information related to engineers and other employees, as well as information on job applicants. An external leak of personal information may result in the loss of social trust in the Group and may affect the Group’s business operations.
The Group recognizes that proper management of personal information is extremely important. We instill the proper handling of personal information through ongoing education and training for officers and employees. In addition, we have designated the general manager of the CSR Promotion Department responsible for personal information protection. We have also structured other security measures related to personal information, including the development and operation of personal information protection rules and information systems.

(15) Information Security

In the course of their duties, Group engineers may become aware of confidential information, including customer research and development. If an external leakage of customer confidential information by Group engineers results in a demand of reparation for damages, such may affect the Group’s business performance and financial position. In addition, data loss or leakage from the Group’s information systems may interfere with the Group’s business operations.
The Group has developed and operates various rules related to information security. We also instill the proper handling of information and information equipment through education and training of officers and employees. The Group works to address data loss or leakage from the Group’s information systems by strengthening network security and taking other measures.

-Labor Management-

(16)Labor Management

The Group employs approximately 27,000 people and hires a large number of new employees each year. Therefore, disputes with employees regarding occupational health and safety, employment relationships, and other issues may affect the Group’s business operations and earnings.
The Group has adopted the following Our Values as part of the TechnoPro Group’s Philosophy Framework:

  • Providing the conditions and programs to encourage learning and skill development.
  • Creating opportunities to not only hone their expertise but also to switch or acquire new skills.
  • Supporting our talent through technology evolutions and environmental changes to stay active.

Under this policy, we are implementing initiatives to ensure the quality of talents at the time of hiring, enhance the management of engineers including labor management with an emphasis on compliance, strengthen the education and training system, and improve employee satisfaction.

-Disaster, ESG, Climate Change-

(17) Response to Infectious Diseases

With the advance of globalization of people, goods, money, and information, there is a steady increase in risk from infectious diseases. This risk has become apparent with COVID-19, an as-yet unresolved situation that spread worldwide in 2020. With infectious diseases, there is a unique factor of restricting physical contact between people. As it pertains to the Group’s business operation, the initial impacts are on the supply-side: requests for employee (e.g. engineer) remote work, limitations on engineer movement between regions, and restrictions on face-to-face sales and recruitment activities. Furthermore, demand-side impact in the form of reducing engineer demand and shrinking and postponed R&D projects due to deterioration in business performance of customers, though this will vary in depth and length depending on country and industry. As a result, there will also be demand-side impact for our services in the form of reducing engineer demand and shrinking and postponed R&D projects. In general, infectious disease risks can spill over into other risks, such as political and economic, as well as risks associated with technological trends, and the labor environment. The emergence and increase of various infectious disease risks, not limited to the novel coronavirus, could affect the Group’s business operations and earnings.
The Group practices a business management system that prioritizes the health and safety of employees even under the spread of infectious diseases. This includes building and operating information technology and personnel systems that support telecommuting, promoting remote customer development, and more. In addition, the dramatic increase in infectious disease risk awareness driven by COVID-19 is certain to promote the penetration of digital technologies in social and corporate activities. The Group considers this as an opportunity to enhance our engineers and solutions supporting digital technologies, expanding our business.

(18) Natural Disasters and Accidents

The Group operates more than 200 business locations throughout Japan and Group engineers work at more than 2,400 customers in this country. Accordingly, if a natural disaster such as earthquake or flooding occurs, or if an unforeseen accident occurs, such events may affect the Group’s business operations and performance.
The Group has established business continuity plans and corporate crisis countermeasure regulations in the event of natural disasters or accidents. Measures include utilizing a data recovery center in the event of information system failure.

(19) Climate Change

The Group has confirmed through scenario analysis that the direct impact of climate change will be negligible because the Group does not need to own any sites or production facilities for its business operations. However, the introduction of a carbon tax, the implementation of the government's renewable energy policy, or advances in low-carbon or next-generation environmental technologies will affect the technologies required by customers. If our engineers and solutions are unable to respond to these changes in customer demand, our Group’s performance could be severely affected. If the Group’s efforts to address climate change are inadequate, or customers and investors do not understand these measures, we may encounter problems establishing smooth business relationships with customers and attracting long-term stable shareholders.
The TechnoPro Group has determined that addressing climate change is one of the priority environmental areas in the TechnoPro Group Environmental Policy. We will respond to changes in customer demand by strengthening our engineer training system and providing solutions related to environmental technologies such as low-carbon and decarbonization, utilizing the research and analysis functions of our specialized department in charge of research and analysis of industry and technology trends, etc. In June 2022, we expressed our support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and joined the TCFD Consortium. In the future, we will promote information disclosure based on the TCFD framework (Governance, Strategy, Rsk Management, Metrics and Targets) in order to communicate even more effectively with a wide range of stakeholders, including shareholders and investors. At the same time, we will analyze risks from a long-term perspective and take measures to address climate change. For more information, please visit our website. (


(20) Compliance and Industry Image

Engineer staffing, which is our Group’s main business, is a business that entails a great deal of social responsibility, employing a large number of personnel. If any of our Group’s executives or employees conduct themselves in a manner that violates social ethics by disregarding compliance, or acting in a manner that tarnishes social trust or our corporate image, our business operations and business performance may be affected by the need to pay compensation for damages suffered by society or our customers, as well as by damage to our reputation, etc.
The engineer staffing market is subdivided across a large number of business operators. If an act that violates social ethics in disregard of compliance is committed by the Group or by any other company engaged in similar business, such act may harm the reputation of the entire industry and may affect the Group’s business operations.
The Group’s Compliance Committee, chaired by the executive officer in charge of General Affairs and CSR and composed of the general managers of each division of the Company, identifies compliance risks that should be taken seriously and places priority on managing them. In practical terms, we strive to prevent major compliance violations by establishing a cross-Group compliance department, ensuring consistent escalation of arising issues, implementation and of internal audits and corrective action, and dissemination of the internal reporting system.