This section describes the principal matters that may be risk factors concerning the business development and other aspects of the Group (the Company, 36 consolidated subsidiaries, and 2 equity-method affiliates). In addition, matters that do not necessarily fall under such risk factors are also disclosed from the perspective of active information disclosure to investors. The Group is aware of the possibility of such risks occurring and has a policy of striving to avoid their occurrence and responding to them if they do occur. However, investment decisions concerning the Company's shares should be made after careful consideration of both this section and oother statements within the annual report for the 40th fiscal year. Forward-looking statements in the text are based on the Group's judgments as of the end of the current consolidated fiscal year.
Risks related to the market and industry conditions of the BPO business
The growth of the BPO market is significantly affected by the progress of outsourcing against the backdrop of deregulation and other factors. Therefore, if outsourcing does not progress, the Group's growth may slow down.
In Japan and overseas, major companies such as non-life insurance companies, automobile manufacturers, and credit card companies often conduct BPO operations as their own group's in-house business, which may restrict or limit market expansion. In addition, when client companies jointly establish an outsourcing company by industry or business type, or when industry reorganization or M&A progresses, there is a possibility that independent BPO providers like the Group may lose business opportunities.
Risks in global affairs, etc.
The Group has established overseas bases in the U.S., the U.K., China, Singapore, Thailand, Australia, and other countries to develop its business globally.
Business development overseas entails several risks, such as the following. Should such events occur, they could affect the management strategies and business policies of client companies, which in turn could affect the Group's operating results and financial position.
- Unexpected changes or tightening of laws or regulations
- Adverse political or economic factors
- Changes in tax systems or tax rates
- Social turmoil due to terrorism, war, or other factors
Risks of loss of credibility and reputational damage
Many of the Group's client companies are leading companies in their respective industries, such as non-life insurance companies, automobile manufacturers, and property management companies, and tend to be susceptible to loss of credibility and reputational damage. If a problem of loss of credibility or reputational damage were to occur at a client company, the impact could extend to the Group's business results. Furthermore, in the event of a major problem or complaint arising from the Group's BPO operations, the outsourcing contract with the client company may be terminated, and this trend of contract termination may even spread to other client companies.
Foreign exchange risk
The Group's overseas sales, mainly in the Global business, were 3,337 million yen in the fiscal year ended March 2025 (5.2% of consolidated net sales) and 3,674 million yen in the fiscal year ended March 2026 (5.2%). Since the majority of overseas sales are denominated in foreign currencies, fluctuations in foreign exchange rates could affect the Group's operating results and financial position.
Risks related to facilities
Risks related to information networks and systems
In its management activities, the Group utilizes various information technology networks and systems, including those managed by third parties, to process electronic information such as confidential data and personnel/accounting data, and recognizes cyber risks related to these as a critical management issue. Based on this recognition, in response to the threat of increasingly sophisticated and ingenious cyber attacks, the Group is implementing technical measures such as strengthening network monitoring and endpoint security, and multiplexing data backups, as well as organizational measures such as building an early recovery system in the event of an incident and educating employees. However, these information technology networks and systems may be damaged, obstructed, or halted due to unexpected advanced cyber attacks, unauthorized use or misuse by persons with access privileges, suspension of services by related business partners, infrastructure failures, natural disasters, etc., as well as risks associated with failures/specification changes of cloud service providers and cross-border data transfers.
In the unlikely event of data destruction/falsification/information leakage or system shutdown, it could cause serious hindrance to business continuity and could have a material impact on the Group's operating results and financial position due to loss of credibility from client companies, claims for damages, etc.
Risks related to the use of AI
The Group is promoting the business use of AI technologies, including generative AI, for the purpose of improving operational efficiency and service quality. On the other hand, in the use of AI, the Group recognizes appropriate management of confidential and personal information of client companies, securing the accuracy and quality of AI output, and responding to changes in terms of use or termination of services by AI vendors as important issues. Based on this recognition, the Group strives to mitigate risks through formulating and operating AI usage guidelines, ensuring thorough internal education, and establishing quality verification processes for AI output.
However, if unintended leakage of client information or data deletion caused by AI, serious operational errors due to incorrect AI output, or suspension of services by AI vendors occur, business execution may be hindered, which could have a material impact on the Group's operating results and financial position due to loss of credibility from client companies, claims for damages, etc.
Risks related to disasters
Unforeseen circumstances such as natural disasters like typhoons, floods, and heavy snow, volcanic eruptions, and pandemics caused by infectious diseases could occur on a scale exceeding damage estimates. If such a situation occurs, it could affect the continuation of the Group's business activities, such as the functional shutdown of each BPO center or office, damage to facilities, suspension of supply of electricity, water, gas, etc., and suspension of public transportation and communication means.
Risks related to human resource management
- At each of the Group's contact centers, we strive to secure and train human resources such as operators, allocate personnel and organize shifts according to work volume, and conduct proper labor management. As BPO operations become increasingly diverse, sophisticated, and globalized, the importance of such human resource management is growing. If the Group is unable to conduct appropriate human resource management, service quality and operational efficiency may decline, and outsourcing contracts with client companies may be terminated.
- Currently, labor shortages have become chronic in Japan and represent a serious social problem. The Group conducts its core operations at various BPO centers located in regional areas, enabling it to secure a relatively stable number of new hires compared to the Tokyo metropolitan area. However, if recruitment activities do not progress as planned, resulting in hiring significantly below target, or if wages rise markedly due to inflation, etc., it could affect the Group's business activities.
Risks of customer information leakage
The Group concludes certain confidentiality agreements with client companies and handles massive amounts of customer information. Therefore, we have established personal information protection regulations and information security management regulations, and ensure continuous security education for employees. While ISO certification has been acquired by major locations such as the Akita BPO Main Campus and other major bases, even relatively small contact centers that have not yet acquired certification are operated in accordance with security standards equivalent to those of certified locations. However, if an employee or related party of the Group privately misappropriates or externally leaks customer information by any means, outsourcing contracts with client companies may be terminated, and the Group may face claims for damages from client companies or end-users.
Risks related to laws and regulations, etc.
Currently, there are no specific licensing systems for the major businesses related to the Group. However, there is a possibility that new self-regulations may be established or the acquisition of public/semi-public qualifications may become mandatory in the future. Although we pay close attention to trends in laws and regulations, if legal regulations or self-regulations exceeding the Group's assumptions are established, it could affect the Group's business activities.
Risks related to litigation and complaints
Currently, there are no lawsuits or complaints in the major businesses related to the Group. If lawsuits or complaints regarding the services provided by the Group arise in the business developments planned for the future, it could affect the Group's business activities, financial position, and business results.
Risks in the Automotive business
Earnings structure of Roadside Assistance service
The outsourcing fee for Roadside Assistance service basically consists of a fixed and variable revenue and expenditure structure, and the calculation method for the fixed cost portion is mainly classified into the following two methods. Contracts with client companies are revised at regular intervals.
(a) Volume warranty method
A method in which the outsourcing fee is determined by the number of insurance contracts of the client company (or the number of covered vehicles) multiplied by the unit price.
(b) Unit price warranty method
A method in which the outsourcing fee is determined by the number of arrangements (estimated number of arrangements) multiplied by the unit price.
The number of Roadside Assistance services provided, namely the relevant expenses, has a seasonal nature, increasing during periods of heavy traffic such as holiday seasons and year-end/New Year holidays, and during periods of severe weather such as heavy rain and snowfall. The performance of this division is influenced by these seasonal factors. In particular, if natural disasters such as typhoons, heavy snowfalls, and earthquakes occur more frequently than usual, breakdowns and accidents will increase significantly, which may temporarily deteriorate business results. However, depending on the details of the contract with the client company, there may be ancillary clauses providing ex-post compensation for relevant expenses that exceed expectations, which may mitigate the deterioration in business results.
Guarantee business
In the Automotive business, we provide automobile extended warranties and maintenance programs as a guarantee business. The guarantee business guarantees specific breakdowns for a specified period by collecting a fixed fee from users.
The Group calculates appropriate fees based on past results and takes measures such as reinsurance for expected costs.
However, if breakdowns occur more frequently than expected, the Group's financial position and business results could be affected by factors such as an increase in reinsurance premiums.
Risks in the Property business
Earnings structure of real estate services (Home Assist)
The outsourcing fee for real estate services (Home Assist) basically consists of a fixed and variable revenue and expenditure structure, and the calculation method for the fixed cost portion is the number of managed units of the client company (or the number of covered units) multiplied by the unit price. Contracts with client companies are revised at regular intervals.
The number of various Home Assist services provided, namely the relevant expenses, has a seasonal nature, increasing during the year-end/New Year and summer periods. The performance of this division is influenced by these seasonal factors, which may temporarily deteriorate business results. However, depending on the details of the contract with the client company, there may be ancillary clauses providing ex-post compensation for relevant expenses that exceed expectations, which may mitigate the deterioration in business results.
Risks in the Global business
Judgment of liability/non-liability in claim agent services for overseas travel insurance
In the claim agent service for overseas travel insurance, the Group judges liability/non-liability based on its unique know-how in accordance with the insurance policy on behalf of the client company for medical expenses up to a certain limit (insurance claims), but such judgments are not always appropriate. If an investigation by the client company reveals that an event falls under a non-liability clause, the Group will bill the insured for the medical expenses it has paid in advance, but there is a possibility that the receivables may not be collected.
Advance payment of insurance claims
In the claim agent service for overseas travel insurance and the healthcare program for Japanese expatriates, the Group pays medical expenses, etc. (insurance claims) in advance in the local currency. If exchange rates fluctuate significantly between the time of advance payment and the time the insurance claims are received from the client company, foreign exchange gains or losses will occur.
Issuance of credit cards for Japanese expatriates
The issuance of credit cards such as the "PREMIO CARD" for Japanese expatriates in the U.S. is premised on a three-party tie-up among the Group, local financial institutions, and Japanese airlines, as well as approvals and licenses from financial authorities for the local financial institutions. Therefore, if for some reason the three-party tie-up is dissolved, transaction terms are changed, or the approvals and licenses from the financial authorities are revoked, the performance of this division may be affected, and it may become difficult to continue the business.
Risks in the Financial Guarantee business
Guarantee business
In the Financial Guarantee business, we provide guarantee-related services such as the property rent guarantee program. The property rent guarantee program provided by the Group is one in which the Company makes subrogated payments in the event of default by the guarantee delegator. Due to the nature of this service, there is a possibility that a portion of the advanced receivables for which subrogated payments were made may become uncollectible. In addition, if advanced receivables increase due to a significant deterioration in the economic environment and the allowance for doubtful accounts and provision for guarantee fulfillment are recorded exceeding expectations, the Group's financial position and business results may be affected.
Legal compliance of the property rent guarantee program
The Group provides the property rent guarantee program through its affiliated companies (Entrust Inc. and Premier Life Inc.). Regarding the rent guarantee industry, social problems have arisen, such as some operators taking excessive relocation measures against rent delinquents, and we recognize that discussions are underway regarding the establishment of industry self-regulations and legal regulations. The Group has a policy of thoroughly complying with laws and regulations in its business operations. However, if social problems such as violations of laws and regulations occur, it may become difficult to promote the business, which could affect the performance of this division.