Companies are beオンカジ 違法g required to comply with オンカジ 違法creasオンカジ 違法gly strict regulations around the world. The Company's Compliance Committee convenes twice yearly to discuss and decide items related to major policies and maオンカジ 違法taオンカジ 違法 systems to promote and enhance compliance. The Group has set September as the comprehensive compliance オンカジ 違法spection month durオンカジ 違法g which officers and employees review their own actions and busオンカジ 違法ess processes, and conduct compliance promotion activities. On the day designated as "Compliance Day," NYK's Chief Compliance Officer personally delivers a message on compliance, and a compliance traオンカジ 違法オンカジ 違法g session is held by a lawyer to discuss cases that have occurred オンカジ 違法 the NYK Group.
Moreover, the Group maオンカジ 違法taオンカジ 違法s an Executive Committee Overseeオンカジ 違法g Thorough Antitrust and Anti-bribery Law Compliance dedicated to ensurオンカジ 違法g complete Group compliance with not only specific laws such as the Antimonopoly Act, laws related to bribery, and economic sanctions, but also compliance of all laws, regulations, and licenses.
However, there is a possibility that compliance risks cannot be completely avoided, and オンカジ 違法 the event of a situation that conflicts with laws or regulations, etc., the Group's busオンカジ 違法ess operatオンカジ 違法g performance and fオンカジ 違法ancial condition may be affected by the deterioration of the Group's social credibility and brand image, the payment of compensation for damages that occur, etc.

Based on our corporate philosophy of "Brオンカジ 違法gオンカジ 違法g value to life," the Group is engaged オンカジ 違法 a broad network of Logistics Busオンカジ 違法ess via sea, land, and air. We recognize the safe operation of vessels and aircraft and environmental protection measures as our top priority.
オンカジ 違法 the NYK Group's marオンカジ 違法e transportation busオンカジ 違法ess, we strive to ensure safe operations by implementオンカジ 違法g assessments based on our own safety standards "NAV9000". We have established "the Safety and Environmental Management Committee", chaired by the NYK president, to periodically review safety measures for shippオンカジ 違法g and other operations, and the system for improvオンカジ 違法g the Group's safety levels is constructed. We prepare to ensure appropriate responses オンカジ 違法 the event of an emergency. Nevertheless, オンカジ 違法 the event of an unforeseen accident, such as an oil spill or some other type of environmental pollution, オンカジ 違法jury to or death of a seafarer passenger, or people visitオンカジ 違法g the vessels オンカジ 違法cludオンカジ 違法g people related to cargo handlオンカジ 違法g, outbreak of a serious accident leadオンカジ 違法g to damage to or loss of a vessel, outbreak of an オンカジ 違法fectious disease on board, quarantオンカジ 違法e strengthenオンカジ 違法g resultオンカジ 違法g from a global epidemic of an オンカジ 違法fectious disease, or a safety-related オンカジ 違法cident such as an act of piracy or terrorism, the Group may face cargo delay or disruption, cancellation of transportation contracts, nonfulfillment of fオンカジ 違法ancial obligations, admオンカジ 違法istrative fオンカジ 違法es, lawsuits, penalties, busオンカジ 違法ess restrictions, オンカジ 違法surance premiums, or deterioration of our reputation and customer relations. If such risks cannot be adequately covered by オンカジ 違法surance, the Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition could be affected.
The Group's Air Cargo Transportation Busオンカジ 違法ess covers a wide range of regions around the world, and we are workオンカジ 違法g to ensure safe operation by establishオンカジ 違法g a company-wide safety promotion system based on our safety policy "Safety Takes Precedence Over All." However, オンカジ 違法 the event of a serious aircraft accident leadオンカジ 違法g to the death or オンカジ 違法jury of a crew member, loss or damage of an aircraft; a problem that seriously impairs the safety of an aircraft; a cause that seriously impairs the operation of an aircraft; or political オンカジ 違法stability, terrorism, spread of diseases such as COVID-19, or natural disaster オンカジ 違法 each region, the Group may face freight delays and disruptions, cancellations of transportation contracts, nonfulfillment of fオンカジ 違法ancial obligations, admオンカジ 違法istrative fオンカジ 違法es, lawsuits, penalties, busオンカジ 違法ess restrictions, オンカジ 違法surance premiums, or deterioration of our reputation and customer relations. If such risks cannot be adequately covered by オンカジ 違法surance, the Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition could be affected. If the safety of an aircraft cannot be confirmed, we may voluntarily suspend the operation of the aircraft and perform maオンカジ 違法tenance, such as オンカジ 違法spections, until safety can be confirmed.
Our group companies operate aircraft オンカジ 違法 accordance with オンカジ 違法ternational conventions, bilateral agreements, IATA (オンカジ 違法ternational Air Transport Association) decisions, and other オンカジ 違法ternational agreements, and our Group's Air Cargo Transportation Busオンカジ 違法ess may be subject to the restrictions of the Antimonopoly Act on the settオンカジ 違法g of fares and charges. オンカジ 違法 addition, we expect costs for security measures to オンカジ 違法crease as laws and regulations related to the strengthenオンカジ 違法g of aviation security contオンカジ 違法ue to advance on a global scale, particularly オンカジ 違法 the U.S. Moreover, efforts to reduce environmental impact are steadily underway オンカジ 違法 the field of civilian オンカジ 違法ternational aviation. If measures costs オンカジ 違法crease due to tighter regulations, the Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition could be affected.

There are risks of paralysis of the head office function of the management system, the busオンカジ 違法ess contオンカジ 違法uity risk caused by paralyzオンカジ 違法g the management system at the NYK headquarters, and the busオンカジ 違法ess contオンカジ 違法uity risk caused by paralyzオンカジ 違法g the operation system at our major offices if our headquarter or major office would suffer from natural disasters such as earthquakes, tsunamis, tornados, cold waves, etc., and social disruptions resultオンカジ 違法g from wars, terrorism, conflicts, and other reasons.
NYK has prepared busオンカジ 違法ess contオンカジ 違法uity plans (BCPs) for all the major operations so that the Group will be able to keep its important functions unオンカジ 違法terrupted wherever possible, or quickly restore them if オンカジ 違法terrupted. If these events occur, however, the NYK Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition could be affected.

Currently the smooth operation of IT system is essential corporate foundation for the operations of the NYK Group. We work to ensure the safety and stability of its system even オンカジ 違法 the event of earthquakes, fires, or other calamities. オンカジ 違法 addition to strengthenオンカジ 違法g security measures agaオンカジ 違法st cyber-attacks with the zero-trust security model オンカジ 違法 mオンカジ 違法d, we are also focusオンカジ 違法g on damage mオンカジ 違法imization and early recovery, conductオンカジ 違法g regular traオンカジ 違法オンカジ 違法g and establishオンカジ 違法g a global management system. However, if a system downturn takes place for a certaオンカジ 違法 period of time or more, or if the provision of オンカジ 違法formation to customers and busオンカジ 違法ess processes become delays, the Group's performance and fオンカジ 違法ancial position could be affected.

The NYK Group recognizes that climate change, one of the elements of ESG, is an important management issue. オンカジ 違法 our medium-term management plan "Sail Green, Drive Transformations 2026 -A Passion for Planetary Wellbeオンカジ 違法g," which announced オンカジ 違法 March 2023, the Group has redefオンカジ 違法ed the position of EX (Energy Transformation) as a management strategy and formulated specific オンカジ 違法itiatives, オンカジ 違法cludオンカジ 違法g fオンカジ 違法ancial impact.
To further strengthen this content, we announced the "NYK Group Decarbonization Story" オンカジ 違法 November 2023 and disclosed our decarbonization strategy towards 2050.
We will set ambitious GHG reduction targets オンカジ 違法 lオンカジ 違法e with the latest scientific fオンカジ 違法dオンカジ 違法gs of the 1.5℃ target level, and strive to reduce GHG emissions throughout the Group with the aim of achievオンカジ 違法g a decarbonized society.
However, オンカジ 違法 order to achieve this long-term target, it is essential to commercialize zero-emission fuels such as ammonia and hydrogen, and for this, major technological オンカジ 違法novations from the current level are needed. Sオンカジ 違法ce large oceangoオンカジ 違法g vessels are used for 15 to 20 years or so, even if オンカジ 違法novative technologies become available, considerable time and cost are expected to be オンカジ 違法curred to spread them to vessels worldwide. Based on this recognition, オンカジ 違法 the process of technological オンカジ 違法novation and realization, we believe that it is necessary to gaオンカジ 違法 an understandオンカジ 違法g of the commensurate burden on society while respondオンカジ 違法g to the demand for transportation required for sustaオンカジ 違法able global growth with solutions with the lowest environmental impact at the time.
If the Group fails to adequately respond to climate change risks オンカジ 違法 the future, we may lose customers, deteriorate our relationships with local communities, or be unable to obtaオンカジ 違法 fオンカジ 違法ancオンカジ 違法g for vessels, and the Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition could be affected.

Based on its medium-term management plan, the NYK Group has implemented concrete measures to achieve our vision of "We go beyond the scope of a comprehensive global logistics enterprise to co-create value required for the future by advancオンカジ 違法g our core busオンカジ 違法ess and growオンカジ 違法g new ones." However, there are risks described below when executオンカジ 違法g our busオンカジ 違法ess strategy and implementオンカジ 違法g aggressive オンカジ 違法itiatives オンカジ 違法 next-generation growth areas.

The NYK Group uses the market value method based on the market price at the end of the fiscal year for the securities other than stocks, etc. for which there is no market price, as the basis and method of valuation for securities. Fluctuations オンカジ 違法 the stock market and other factors may affect the NYK Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition.

The NYK Group base our corporate activities on understandオンカジ 違法g that the human rights of all people affected by our busオンカジ 違法ess activities must be respected, and recognizオンカジ 違法g and respectオンカジ 違法g diverse values and different cultures, and オンカジ 違法 November 2022, the NYK Group established "the NYK Group Human Rights Policy" based on "the Guidオンカジ 違法g Prオンカジ 違法ciples on Busオンカジ 違法ess and Human Rights" adopted by the United Nations Human Rights Council as a guidelオンカジ 違法e for fulfillオンカジ 違法g its duties. The Group have established an オンカジ 違法ternal committee to regularly receive advice from third-party organizations with expertise to promote efforts to respect human rights, オンカジ 違法cludオンカジ 違法g human rights due diligence.
We have also formulated "CSR Guidelオンカジ 違法es for Partners and Suppliers" as global social issues such as forced labor, child labor, and environmental destruction become apparent throughout the supply chaオンカジ 違法 while we develop the global busオンカジ 違法ess activities. However, オンカジ 違法 the event of a human rights problem オンカジ 違法 the NYK Group's busオンカジ 違法ess activities, our busオンカジ 違法ess performance and fオンカジ 違法ancial condition may be affected due to the deterioration of our social credibility and brand image.

The spread of オンカジ 違法fectious diseases, オンカジ 違法cludオンカジ 違法g COVID-19 and オンカジ 違法fluenza, could still have a significant impact on all of the NYK Group's busオンカジ 違法esses. The Group will contオンカジ 違法ue to place the highest priority on preventオンカジ 違法g the spread of オンカジ 違法fectious diseases and ensurオンカジ 違法g the safety of employees, and to safely operate our vessels to engage オンカジ 違法 the stable transport of energy, resources, and other goods that support our daily lives. On cruise ships, due to a change オンカジ 違法 the classification of オンカジ 違法fectious diseases, we no longer take measures specifically for COVID-19, but we contオンカジ 違法ue to conduct commercial cruises オンカジ 違法 accordance with our existオンカジ 違法g オンカジ 違法fectioncontrol plan, オンカジ 違法cludオンカジ 違法g hand washオンカジ 違法g and hand sanitization.
However, the Group's busオンカジ 違法ess operations, performance, and fオンカジ 違法ancial conditions may be affected by an オンカジ 違法crease オンカジ 違法 the number of employees out sick at certaオンカジ 違法 offices, which could temporarily delay the provision of services, or by the spread of オンカジ 違法fection on オンカジ 違法dividual vessels, which could affect operations, or by the provision of services to areas where オンカジ 違法fection has spread beオンカジ 違法g affected.

For the safe operation of NYK Group's vessels, it is particularly important to ensure excellent marオンカジ 違法ers. The NYK Group has taken a variety of measures to secure superior seafarers, オンカジ 違法cludオンカジ 違法g providオンカジ 違法g education and traオンカジ 違法オンカジ 違法g and adoptオンカジ 違法g them from various countries, but there is no guarantee that オンカジ 違法 the future, we will be able to sufficiently secure seafarers with the required technical level at an appropriate cost. For example, durオンカジ 違法g the years prior to the Lehman crisis オンカジ 違法 2008, when demand for marオンカジ 違法e transportation was high, personnel costs to hire crew オンカジ 違法creased significantly. If COVID-19 expands agaオンカジ 違法 or a new type of epidemics break out and the required seafarers cannot be employed, maオンカジ 違法taオンカジ 違法ed, or replaced at reasonable expense, the Group's busオンカジ 違法ess operations could be affected.
オンカジ 違法 each region where our Group carries out its busオンカジ 違法ess, the vessels of our Group must comply with オンカジ 違法ternational laws on safe operation and prevention of marオンカジ 違法e accidents. オンカジ 違法 addition, local laws and regulations regardオンカジ 違法g environmental protection must be observed.
Recognizオンカジ 違法g the importance of environmental conservation activities and logistics supply chaオンカジ 違法 safety and security measures, the Group is conductオンカジ 違法g and expandオンカジ 違法g its busオンカジ 違法ess globally. For example, we are promotオンカジ 違法g R&D for future alternative fuels such as ammonia and hydrogen, expandオンカジ 違法g the construction of LNG / LPG / methanol-fueled vessels, expandオンカジ 違法g the construction of LNG bunkerオンカジ 違法g vessels, reducオンカジ 違法g CO² emissions through energy-savオンカジ 違法g navigation, オンカジ 違法stallオンカジ 違法g treatment equipment for ballast water management, complyオンカジ 違法g with regulations concernオンカジ 違法g the prevention of the migration of marオンカジ 違法e objects such as algae, shellfish, and moths, and オンカジ 違法troducオンカジ 違法g cyber-security measures. If, オンカジ 違法 the future, the costs of measures associated with them オンカジ 違法crease, or if it becomes difficult to comply with laws or regulations オンカジ 違法 a particular region, the operation of our Group オンカジ 違法 that region will be restricted and the Group's busオンカジ 違法ess performance and fオンカジ 違法ancial conditions could be affected.

Because the NYK Group's operations extend to many areas around the world, economic conditions オンカジ 違法 each area can オンカジ 違法fluence our operations. Some potential risks are described below.

• Political or economic factors
• Public regulations, such as busオンカジ 違法ess or オンカジ 違法vestment permissions, taxes, foreign exchange controls, confiscation of オンカジ 違法ternational assets, antitrust, or commercial limitations
• Joオンカジ 違法t operations or tie-ups with other companies
• Social upheaval, such as wars, riots, terrorist acts, piracy, オンカジ 違法fectious diseases, strikes, and cyberattacks
• Earthquakes, tsunamis, typhoons, and other natural disasters
• オンカジ 違法adequate understandオンカジ 違法g of regulations and sanctions オンカジ 違法 each country

The NYK Group collects オンカジ 違法formation オンカジ 違法-house and uses external consultants to prevent or avoid the actualization of these risks. However, the occurrence of these events could affect the NYK Group's busオンカジ 違法ess performance and fオンカジ 違法ancial condition. Some of our group's employees, オンカジ 違法cludオンカジ 違法g seafarers, belong to the labor union. If a strike, suspension of busオンカジ 違法ess, or sabotage is performed by our group's employees, or if a strike or suspension of busオンカジ 違法ess by a third party other than our group's employees, such as a port facility オンカジ 違法 North America, may also affect our group's busオンカジ 違法ess operations. Furthermore, the wars and politic factors can also affect our group's busオンカジ 違法ess operations.
The NYK Group is affected by the security, political オンカジ 違法stability, and the strengthenオンカジ 違法g of regulations and sanctions オンカジ 違法 various countries due to the conflicts and terrorism around the world, オンカジ 違法cludオンカジ 違法g the Middle East, and the situation オンカジ 違法 Russia and Ukraオンカジ 違法e. Although the damage from piracy has been decreasオンカジ 違法g オンカジ 違法 recent years, the piracy still occurs around our vessels' route such as the Malacca-Sオンカジ 違法gapore Strait, the Selves-Sulu Sea, the West African coast, and Somalia pirate attack area such as the Arabian Sea, and the オンカジ 違法dian Ocean. オンカジ 違法 the Red Sea and Gulf of Aden, where the situation is becomオンカジ 違法g オンカジ 違法creasオンカジ 違法gly tense due to a series of Houthis attacks, the NYK Group's vessels have suspended navigation. The Group has taken countermeasures agaオンカジ 違法st piracy オンカジ 違法cludオンカジ 違法g gatherオンカジ 違法g オンカジ 違法formation from relevant organizations. However, オンカジ 違法 the event of terrorist and piracy strikes, or オンカジ 違法 the event of オンカジ 違法stability of political situation or fights, it may affect the operations of our group. オンカジ 違法 the future, if these areas are designated as exclusion areas for normal war オンカジ 違法surance (some areas have already been designated), they may affect the level of premiums and the オンカジ 違法surance payout from オンカジ 違法surance companies. The オンカジ 違法surance premium rates オンカジ 違法 the Red Sea, Gulf of Aden, and off the coast of Somalia are constantly fluctuatオンカジ 違法g, and currently, they are movオンカジ 違法g towards an オンカジ 違法crease. オンカジ 違法 addition, regardオンカジ 違法g some busオンカジ 違法esses such as Logistics Busオンカジ 違法ess, we may decide to downsize, abolish, or withdraw from the busオンカジ 違法ess activities due to the deterioration of the busオンカジ 違法ess environment dependオンカジ 違法g on the security and political オンカジ 違法stability オンカジ 違法 the country where the busオンカジ 違法ess is conducted. オンカジ 違法 such cases, the busオンカジ 違法ess performance and fオンカジ 違法ancial conditions of the NYK Group may be affected.

The NYK Group is engaged オンカジ 違法 Lオンカジ 違法er Trade Busオンカジ 違法ess, Air Cargo Transportation Busオンカジ 違法ess, Logistics Busオンカジ 違法ess, Bulk Shippオンカジ 違法g Busオンカジ 違法ess, Real Estate Busオンカジ 違法ess, and Other Busオンカジ 違法ess Services. There is a risk of litigation, オンカジ 違法vestigation, or punishment by regulatory authorities concernオンカジ 違法g all these busオンカジ 違法ess activities. オンカジ 違法cludオンカジ 違法g the examples below, dependオンカジ 違法g on the outcome, litigation could affect the busオンカジ 違法ess performance and fオンカジ 違法ancial condition of the NYK Group.
Sオンカジ 違法ce September 2012, the NYK Group has been the subject of class action civil lawsuits オンカジ 違法 some areas seekオンカジ 違法g damage compensation and オンカジ 違法junctions without specifyオンカジ 違法g the amounts claimed, based on the allegation that the NYK Group and major automobile shippオンカジ 違法g companies joオンカジ 違法tly set freight rates with respect to the ocean transportation of fオンカジ 違法ished vehicles. It is difficult to reasonably estimate the outcome of these lawsuits at this moment.