Risk Management

• Loss of society's trust and confidence in SoftBank due to a failure to appropriately address heightened public interest and awareness surrounding privacy and the protection of personal information.
• Alienation of customers and loss of society's trust and confidence in SoftBank due to mismanagement or mistaken use of the personal information of customers, etc., causing anxiety or disadvantage to individuals.
• Sanctions could be imposed by regulatory authorities and our social credibility and trust will be lost if we misuse information assets held and violate laws and regulations.
• Leakage or loss of information due to intentional or negligent actions on the part of SoftBank, or unauthorized access such as cyberattacks by third parties.
• Loss of society's trust and confidence in SoftBank due to contractors (including agencies) improperly acquiring company information or using the same beyond the intended purpose.

SoftBank offers customers in Japan and overseas various products and services that leverage cutting-edge technology from telecommunications business to 5G, AI, IoT, RPA, cloud services, and big data, and as such, we possess a large amount of information assets related to telecommunications and other businesses, such as personal information of customers (both individuals and corporations) and information of business partners including communication terminals and base station equipment.

At the same time, there has been in recent years a growing awareness around the world of issues related to managing information, including personal information. Legislation is moving forward, as seen in such examples as the EU's General Data Protection Regulation (GDPR) and China's Personal Information Protection Law as well as discussions on the enactment of federal data privacy laws in the US and movement toward tightening of regulations on personal information protection in Southeast Asian countries. In Japan, revision of the Act on the Protection of Personal Information Protection was followed by revision to the Telecommunications Business Act, and now more than ever before, we are required to engage in information protection that takes the rights and interests of individuals into account and ensure the reliability of telecommunications services, including the handling of user information.

In addition, security risks have become more diverse and sophisticated in recent years, including the increasing sophistication of cyberattacks, the increase in relentless attacks by international hacker groups, attacks targeting remote work environments, and internal fraud, with the environment around our business growing tougher year by year.

Given these circumstances, in the event of any infringement of the rights of customers (including customers' employees) due to inappropriate management or use of information assets (including personal information) held by the company, or failure to respond appropriately to the wants and needs of society, including customers, trust and confidence in the company may be damaged, making it difficult to retain and acquire customers, and causing our ability to compete to potentially suffer.

There is also the possibility of leakage or loss of information due to intentional or negligent actions on the part of our company (including executives and employees as well as contractor personnel involved) or cyberattacks, hacking, computer virus infection, or other unauthorized access by third parties with malicious intent, and a large amount of expense being incurred for repairing security systems.

Under the leadership of our CDO (Chief Data Officer) and CISO (Chief Information Security Officer), we are working to further strengthen our internal system for managing the information assets (including personal information) held by our company and their security.

For example, to protect personal information and respect privacy, in addition to establishing a Privacy Center that presents our efforts to protect personal information, we have formulated guidelines for handling information assets and conduct training for all executives and employees for thorough management of information assets in business and increased employee awareness. In addition, work related to customer information and other confidential information is limited to designated areas, and at SOC (Security Operations Center) or the like within those areas, we maintain and manage security levels through such measures as stronger detection of internal improprieties using AI.

In addition to the Telecommunications Business Act that must be complied with when developing business, we pay close attention not only to revisions to laws and regulations concerning personal information protection in Japan and other countries, but also to new risks due to technological advances and changes in social concerns and awareness, and take appropriate measures such as reviewing our internal rules at the proper time, providing additional training, and ensuring greater transparency for our customers. Moreover, while carefully monitoring and researching social and technological trends that pose threats, we proactively adopt AI and other cutting-edge technologies to create a sophisticated security environment and further enhance our security monitoring and immediate response systems.

• Delays/difficulty in procuring base stations, network equipment, purchased products (mobile devices, etc.), or development materials from domestic/international suppliers
• Increased cyber attacks in retaliation for sanctions on countries in conflict, such as the conflict between Russia and Ukraine.
• Difficulty in procuring energy (fossil fuel, gas, etc.) due to political factors such as the conflict between Russia and Ukraine; impact of rising procurement costs on revenue
• Regulations excluding foreign products that pose a threat from core infrastructure (such as base stations)
• Delays in starting service due to prior inspection of core infrastructure by countries, etc.
• Tightened legal regulations in each country due to global data governance

SoftBank has offices, subsidiaries and affiliated companies in Europe, America, Asia, and around the world, provides products and services to domestic and international customers, and procures telecommunications equipment, products for our customers, and development materials from a wide range of domestic and international suppliers. We work with many international suppliers in the telecommunications business in particular, creating the potential for substantial business impacts from issues such as confrontation between countries on the international stage, regional conflicts, terrorism, and military action. In addition, our telecommunications business uses large amounts of electricity at base stations, network facilities, data centers, etc. to provide our customers with a high-quality communication environment, and 5G requires more power than 4G. Based on these conditions:

In the short term, there is a possibility of global shipping delays for telecommunications-related equipment due to aviation or marine shipping restrictions imposed by countries in conflict or related countries, shortages of semiconductors for mobile devices, etc. due to logistical delays in affected regions, supply chain disruptions due to delays or suspension of suppliers' business activities caused by cyber attacks in retaliation for sanctions on countries in conflict, etc. These may have a large impact on SoftBank's telecommunications business.

In the medium- to long-term, there is a possibility of costs involved in changing suppliers or equipment for base stations or network equipment as a result of conflict increasing crude oil prices and leading in turn to cost increases for shipping, etc. in the supply chain, or changes in the international political landscape leading to changes to national policy or regulations. There is also a possibility that SoftBank's business development, financial condition, and performance will be impacted in the event that changes in the international political landscape lead to regulations or restrictions on suppliers and combine with global increases in crude oil prices, etc. to result in continued increases in power prices, or in the event that obstacles to energy procurement will lead to difficulty in providing a stable supply of services and products.

We are monitoring and gathering information on international situations, and laws and regulations in countries where it provides services as well as countries where suppliers are based, as well as consult with external experts as necessary to:
In the short term, we are working on distribution and diversification of suppliers to strengthen the supply chain by distributing risk in case of disruptions.
In the medium- to long-term, we work to reduce risk by continuing to work on research and development for practical use of next-generation batteries, working toward adoption of communications infrastructure with low environmental impact being developed by a subsidiary, and further coordinating with government and industry organizations in order to minimize the impact of rising power prices on our revenue on top of monitoring and gathering information on international developments.

• Increased power costs due to shift to renewable energy
• Damage to society's trust and confidence in SoftBank if customers, etc. decide environmental efforts are insufficient
• Increased tax burden due to adoption of carbon taxes
• Increased restoration/maintenance costs due to frequency and severity of natural disasters and resulting equipment damage
• Procurement delays/difficulties for base station equipment, etc. as a result of supply chain disruptions due to natural disasters linked to climate change
• Revenue impact from difficulty in procuring energy (fossil fuel, gas, etc.) due to climate change and rising procurement costs

SoftBank's telecommunications business uses large amounts of electricity at base stations, network facilities, data centers, etc. to provide our customers with a high-quality communication environment, and 5G requires more power than 4G. As we work toward reducing greenhouse gas emissions:

In the short term, there is a possibility that our business development, financial condition, and performance will be impacted by increased power costs due to the shift to renewable energy. In addition, there is a possibility that business operations will be impacted in the event that the SoftBank group's efforts or disclosures related to climate change are seen as insufficient, or in the event that we are unable to win the understanding of customers, employees, suppliers, investors, communities, nations, government agencies, etc.

In the medium- to long-term, there is a possibility of increased tax burden due to adoption of carbon taxes, etc. as well as a possibility of increased restoration/maintenance costs due to frequency and severity of natural disasters and resulting equipment damage. In the event that energy procurement costs continue to rise as a result of increased demand due to the shift toward renewable energy, there is a possibility that power procurement costs for base stations, data centers, etc. will be affected, impacting our business development, financial condition, and performance.

In May 2021, we made our “Carbon Neutral 2030” declaration, followed by our “Net Zero” declaration in August 2022 to effectively reduce greenhouse gas emissions across the entire supply chain to zero.
We are contributing to the realization of a decarbonized society by switching to substantially renewable energy and energy-saving initiatives that utilize AI, IoT, and other cutting-edge technologies to achieve net zero in Scope 1 (direct emissions of greenhouse gases by the company) and Scope 2 (indirect emissions from the use of electricity, heat and steam supplied by other companies) by 2030, which is the target year for the SDGs (Sustainable Development Goals), and reduce emissions across the entire supply chain, including Scope 3 greenhouse gases emitted by business partners, to net zero by 2050.

In the short term, we bolster our efforts and promote energy conservation by using renewable energy to reduce CO2 emissions for base station power consumption (which makes up the majority of the electrical power used in our business activities), transitioning to energy-saving equipment, and improving the efficiency of energy use by expanding the use of IoT and AI. We are making progress on reducing greenhouse gas emissions, with approximately 70% of base station power converted to renewable energy by FY 2022. We also offer information about our CO2 reduction efforts to help promote understanding of our efforts.

In the medium- to long-term, we continue to work to promote redundancy in the core network and secure communications during disasters using a moored balloon radio relay system in order to bolster efforts to prevent and mitigate disasters. In addition, as one initiative aimed at achieving carbon neutrality in 2030, we are currently working on the joint development of large-capacity, high specific energy density, and lightweight lithium ion batteries.