G: Risk management

Challenge

Management of all risks surrounding the entire Group
Crisis response (responding resiliently to natural disasters, infections and other crises)

Relevant stakeholders

Direct: Employees, suppliers, local communities
Indirect: Shareholders and investors, creditors, NGOs, industry groups

Our policy

The risks considered likely to impact Toyo Tire Group business activities are growing increasingly diverse and complex. We believe pursuing risk management that fully grasps, assesses, classifies and responds to these latent company-wide risks will help generate sustainable growth, maintain corporate value and fulfil our responsibility to all our stakeholders. The Group takes a two-pronged approach to risk management: comprehensive risk prevention and appropriate crisis response.
We comprehensively and regularly inspect and manage any risks that we could potentially face across the value chain in which we conduct our business. We have positioned risks that would have a significant impact on our business if they were to materialize as “significant risks” and work continuously and strategically to prioritize our response to these risks in our risk management processes. If a crisis event should occur, we would establish an emergency response headquarters as necessary to help implement individual measures while maintaining organizational control.

Responsible executive (as of April 2026)

Senior Corporate Officer and Vice President of the Corporate Headquarters (Chief Risk Management Officer)

Organizational responsibilities (April 2026)

The Group has a Risk Management Committee that oversees risk management. It sits under the Executive Committee, which is the decision-making body for business execution. The Risk Management Committee meets four times a year to review and improve risk management and crisis management frameworks and monitor their progress. The details of that progress are reported twice a year to the Executive Committee and once a year to the Board of Directors.

(1) Risk management

The Group has also established a Risk Management Secretariat that operates under the Risk Management Committee. The secretariat conducts risk management on a regular annual cycle based on the Risk Management Rules established in accordance with various regulations including the COSO-ERM* risk management framework. This process involves identifying risks, assessing their degree of impact and frequency of occurrence to define significant risks, and establishing and implementing control measures. In addition, the Risk Management Promotion Division, the Sustainability Committee and other special committees monitor the status of risk control in each department and at Group companies on a quarterly basis and provide feedback on the results. We also organize lectures by experts and e-learning programs for managers to help foster a culture of risk management throughout the organization.

* COSO-ERM is an enterprise risk management (ERM) framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) based in the United States. It was originally published in 2004 and revised in 2017.

(2) Crisis management

Toyo Tire Corporation has established a crisis management system that is overseen by the Chief Risk Management Officer (in charge of the Corporate Headquarters) based on the Company’s Risk Management Rules. We appoint a crisis management officer for each significant crisis event* expected to have a significant impact on the Toyo Tire Group, prepare individual response manuals, and determine measures for addressing these risks in both regular times and times of emergency.
If an emergency event were to occur, the Chief Risk Management Officer would convene an emergency response meeting to determine the optimal response based on the degree of impact that the event would likely have on the Group and its stakeholders, and help resolve any issues.

* Disasters and accidents, quality, purchasing, legal violations, information management, labor

Crisis management leader duties

Leaders carry out the following duties for the type of crisis they are assigned to.

Develop and maintain crisis management systems, measures, rules and structures, and create and manage individual management manuals.
Report to the Risk Management Committee once a year on (i) progress in creating a crisis management structure, (ii) evaluation of that structure and plans for improvement, and (iii) implementation of the improvement plans.
Immediately report to the Chief Risk Management Officer if they hear concerns of an emergency from a head office manager, business site manager, or division manager.

Activities

Risks pertaining to the Toyo Tire Group

We categorize risks pertaining to the Group according to the likely cause of any potential occurrence. Target risks for each category are then identified and their frequency of occurrence and degree of impact are assessed. We define significant risks as those that would have a serious impact on both current and future Group business activities, and have made them of top priority to address. We review those significant risks as necessary in light of changes in the external environment or Group business conditions.

Significant risks and other major risks

Category	Definitions	Major applicable risks
Health and safety, disaster prevention	The occurrence of occupational accidents, fires, etc. that hurt employees or damage the business	Toxic pollutant spills, infectious diseases, mental health Fire, explosion, occupational accidents
Quality	Products or services that fail to comply with customer demands, standards, or regulations	Product liability
Human resources	A situation in which excessive working or violations of labor-related laws and regulations threatens the physical and mental health of employees	Harassment, higher turnover rate, human resource recruitment, accidents involving employees assigned overseas or business travelers Traffic accidents
Supply chain	The suspension of factory operations due to suspended supply of raw materials or distribution network disruptions	Supply chain disruption, increased price of raw materials Delivery delays, incidents relating to product theft or damage Interrupted operations
Legal and compliance	The company gets sued for insider trading, the falsification of data, violations of the Unfair Competition Prevention Act, or intellectual property rights infringements	Antimonopoly Law violations, issues relating to contractual deficiencies Unfair trading and subcontract law violations, employee scandals and export control incidents Intellectual property litigation
Information security	Interrupted operation of core systems caused by viruses or the hijacking of systems	Information system failures and information leaks caused by cyberattacks Other information system failures and information leaks
Finance and accounting	Significant monetary damage is incurred as a result of fraudulent accounting or sudden changes in financial market	Interest rate fluctuations, exchange rate fluctuations, stock price fluctuations, banknote theft, regulations on capital transactions
Natural disasters	Business suspension due to earthquakes, typhoons, or other natural disasters	Earthquakes, volcanic eruptions, tsunami, lightning strikes, wind, snow and water-related disasters (weather-related)
Business environment	Sharp decline in sales caused by changing marketing needs or unsuccessful marketing	Market changes, changes in the competitive environment, shorter product life cycles
Management strategy	Inability to achieve the scenarios envisaged in management strategies	M&A, geopolitical risk, bond collection risk, legal and regulatory changes in individual countries
Governance	Financial losses and reputational damage caused by poor governance	Inappropriate implementation of timely disclosure Media reports and posts that impact the company’s reputation

In recent years, we have placed greater priority on addressing risks relating to information security and management strategy.
We are currently prioritizing measures to address information security-related risks such as system failures and information leaks resulting from cyberattacks, and management strategy-related risks such as national conflicts, policies and other geopolitical risks.

We identify risks associated with climate change and human rights risks in all our business activities, including our supply chain, and assesses their significance, as well as formulates countermeasures in cooperation with relevant divisions and reports on such activities to the Sustainability Committee. The Risk Management Committee, which oversees company-wide risk management, investigates and confirms the effectiveness of the risk management activities conducted by various special committees and organizational functions within the Group, including any measures taken to counter the above-mentioned type of ESG risks, on a quarterly basis. The Risk Management Committee regularly reports the results of its investigations to the Executive Committee and the Board of Directors.

Business continuity plan development and business continuity management drills

The Toyo Tire Group has developed business continuity plans (BCP) based on impact assessments and damage estimates derived from scenarios for large-scale disasters, such as a megathrust earthquake, and infectious diseases. We have also been working to improve our plans through regular BCP drills.
In 2019, our US subsidiaries established an emergency response plan and BCP in preparation for a disaster. These include emergency communication protocols in the event of a pandemic or natural disaster, emergency medical procedures (such as securing resuscitation equipment and training on its use), and measures to ensure business continuity.
Since 2021, we have been using drills at the Toyo Tire Corporation headquarters and Tire Technical Center in Japan to confirm whether our BCP functions properly based on information from each department. We review each department’s action plan if any issues arise, which also helps improve our master plan.

TOYO TIRES WORLDWIDE