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Independent Outside Directors' Message (August 2025)

Risks surrounding companies are diverse. Natural disasters, which must be prepared for based on frequency of occurrence, require predicting probability and impact using data and experience. The goal is to minimize business impact through measures such as damage mitigation and securing alternative sites. For operational risks, such as compliance violations and cyberattacks, it is essential to establish systems for prevention and early response through internal controls, clarification of business processes, employee training, and the implementation of audits. For structural risks such as demographic changes and the trend toward decarbonization, since the trends are clear, it is essential to adapt by incorporating them into medium- to long-term corporate strategies. At MinebeaMitsumi, for example, in response to declining birth rates and an aging society, the Company promotes human resource development, labor savings, and automation, while positioning contribution to a decarbonized society as a pillar of its business strategy.

Responding to uncertainty risks

On the other hand, uncertainty risks, such as geopolitical risks, require different responses. Concerns over rare earth supply due to U.S.-China trade friction and new U.S. tariff policies are now "known risks." They should not be viewed as temporary issues. Instead, they should be recognized as signs of heightened geopolitical risks amid the multipolarization of the international community. These include transformations of the international trade system and instability of logistics and supply chains. In addition, risks in areas such as new pandemics and disruptive technological innovations, particularly those driven by AI, are expected to increase. These risks are challenging to predict in terms of specifics and their potential impact. Once they occur, they can have a serious impact on business activities. Countermeasures must therefore be strengthened.

Requests from Outside Directors

The first important factor in this regard is improving sensitivity to information. As a globally operating company, it is essential to quickly gather information from the front lines and to have forward-looking risk awareness at the management level. With respect to U.S. tariff policies, this time, we, the Independent Outside Directors, strongly requested, and the Board of Directors conducted multifaceted verification of business and financial impacts through stress tests and scenario analyses. Responses to uncertainty risks tend to be postponed, as they may not be directly linked to immediate business performance. However, it is necessary to continue assuming a wide range of risk scenarios, conducting ongoing verification, and taking measures in line with the level of impact.

Enhancing comprehensive responsiveness

Above all, the most important factor is strengthening comprehensive responsiveness to unexpected events. For MinebeaMitsumi, comprehensive responsiveness means a global manufacturing base and the technological and organizational strength to support it. It also includes long-term trust relationships with customers through a stable supply of differentiated products essential to society and customers. In addition, it involves a diversified product portfolio based on the Eight Spears Strategy and integration. For example, during the 2011 floods in Thailand and the COVID-19 pandemic in 2020, the Company was able to ensure employee safety and continue supplying products to customers by mobilizing the full strength of the Company. This was the result of technical, production, and decision-making systems built during normal times functioning in emergencies. Such comprehensive responsiveness manifests itself as differences between companies when the entire industry faces risks and becomes a source of competitive advantage. These already form the core of the Company's strategy and are directly linked to corporate value. They are also indispensable for improving risk responsiveness, so further reinforcement of initiatives is required.

Review of material issues (materiality)

This time, the Company undertook a comprehensive assessment of risks and held company-wide discussions on risk responses and business opportunities, culminating in a review of material issues. This was a very important step. As an Independent Outside Director, I intend to continue playing a part in strengthening governance functions to enhance companywide responses to uncertainty risks.

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