List of Main Risks

Parts procurement risks from certain suppliers

General description of risk
  • A supplier parts shortage or quality problem with supplier parts could interfere with Epson’s manufacturing and selling activities.
Main countermeasures
  • Procure parts and materials from multiple suppliers whenever possible.
  • Work with suppliers to maintain or improve quality and reduce costs to ensure stable and efficient procurement.

Intellectual property rights risks

General description of risk
  • An objection might be raised to, or an application to invalidate might be filed with respect to, an intellectual property right of Epson, and as a result, that right might be recognized as invalid.
  • A third party to whom we originally had not granted a license could come to possess a license as a result of a merger with or acquisition by another party, potentially causing us to lose the competitive advantage conferred by that intellectual property.
  • New restrictions could be imposed on an Epson business as a result of a buyout or a merger with a third party, and we could be forced to spend money to find a solution to those restrictions.
Main countermeasures
  • Independently develop technologies we need; acquire patent, trademark, and other IP rights for them; and license the rights for products and technologies.
  • Strengthen our intellectual property portfolio by placing personnel in key positions to manage our IP.

Environmental risks

General description of risk
  • An environmental problem could arise that would require us to pay damages and/or fines, bear costs for cleanup, or halt production.
  • New regulations could be enacted that would require major expenditures.
Main countermeasures
  • Take environmental action in line with a midrange action plan and“ Environmental Vision 2050,” a statement of our long-term goals for reducing our environmental impacts. Drive programs to develop and manufacture lowimpact products, reduce energy use, recover and recycle end-of-life products, ensure compliance with international substance regulations, and improve environmental management systems.

Hiring and personnel retention risks

General description of risk
  • We may be unable to hire and retain talented personnel to develop advanced new technologies and manufacture advanced new products.
Main countermeasures
  • Secure talent by providing role-based compensation and actively promoting good people internationally.

Risks from natural or other disasters

General description of risk
  • Our operating results could be adversely affected by any number of unpredictable events, including but not limited to natural disasters, pandemics involving new strains of influenza virus, infection by computer viruses, leaks or theft of customer data, reputational damage on social media, failures of missioncritical internal IT systems, cyber attacks, supply chain disruptions, and acts of terrorism or war.
Main countermeasures
  • Conduct disaster drills, prepare earthquake disaster management and response plans, and establish business continuity plans to mitigate the effects of disasters to the extent possible.
  • Insure against losses arising from earthquakes. (However, the scope of indemnification is limited.)

Legal, regulatory, licensing and similar risks

General description of risk
  • Epson conducts business worldwide and could incur reputational damage, higher costs, or other negative consequences such as large civil fines and constraints on its activities if it were to violate international law, be investigated by authorities, or be subjected to stricter laws or regulations.
Main countermeasures
  • Ensure compliance by building a robust compliance framework in each country and business and through internal awareness campaigns.
  • Treat compliance as a high management priority, and develop measures to prevent and control potential issues as appropriate.

Note: The content of the list was excerpted from“ Risks related to Epson’s business operations” in Epson’s Annual Report. Please see the Annual Report for additional details.

Epson’s Annual Report 2019

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