Risks for Businesses and Others
The Group's main business for corporate clients, is systems integration, including IT system planning, design, development, operations, and maintenance. Our profitability depends on a wide range of factors. Some of the major factors with the potential to significantly impact Group business results are given below.
Domestic economic trends and trends in client IT investment
The Group draws its clients from a wide range of industries, including manufacturing, distribution, finance, and services. Trends in client IT investment and demand, which reflect economic conditions and events like the COVID-19 pandemic, can affect Group business results. Within each industry, the Group competes directly against other firms to win orders from client firms. It is not always possible to anticipate the combined impact of these various factors. Nevertheless, the Group takes various measures to avoid and/or minimize their potential impact, including making staff allocations after identifying and anticipating demand trends at client firms.
Risks related to information systems integration
The Group often handles information systems integration contracts from clients. As such, it is charged with delivering functioning information systems that meet client demands by contracted deadlines. These efforts involve a broad range of technical, quality, and other risks. Should they materialize in the form of delayed development or rising development costs, these risks can impair Group business results. In this regard, the Group pursues development activities based on a keen and constant awareness of these risks, and our project promotion organization maintains systems that support the risk assessment and project management efforts needed to minimize the possibility of these risks materializing.
Risks related to information security
Certain real-world outcomes can impact Group business results. These include litigation, demands for compensation for damages, and loss of societal trust resulting from leaks of personal information or confidential information obtained from clients, exposure to computer viruses, or intellectual property rights infringement. The precise assessment of such risks is difficult. Nevertheless, through JFE-SIRT,1 a security program for all JFE Group members, the Group strives to strengthen information security measures not just within the Group, but at Group affiliates and partners.
Impact on business activities of major natural disasters or other incidents
Major natural disasters such earthquakes or events like the COVID-19 pandemic can impact business activities and business results, whether through affecting many Group employees or causing serious damage to major business facilities, equipment, and infrastructure. Predicting the time of occurrence of natural disasters or outbreaks of infectious disease is difficult, if not impossible. Nevertheless, the Group takes various measures to minimize the potential impact of such events on Group business activities, including establishing the environments needed to enable Group employees and employees of partner companies to work from home.
JFE-SIRT: JFE-Security Integration and Response Team
An information security and incident response team established to protect JFE Group information assets from the risks posed by information leaks and by increasingly sophisticated cyberattacks