Square Enix 2015 Annual Report Download - page 37

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(6) Information and network systems
The Group appropriately develops and manages the information and network
systems necessary for its operations. However, operations could be disrupted
as a result of system failures and operational errors, which, in turn, could
result in the Group incurring opportunity losses and additional expenses. In
addition, the Group has developed and implemented solid preventive and
defensive measures against so-called security incidents, including
unauthorized access to the systems and infection by a computer virus.
However, in the event that a security incident of such magnitude occurs that
cannot be prevented by the above measures, operations could be disrupted
and the Group could incur opportunity losses and additional expenses, as well
as suffer a loss in the Group’s social credibility as a result of leakage of trade
secrets, including the personal information of the Group’s customers and
employees, to third parties, and the occurrence of opportunity loss and
additional expenses.
(7) Management of personal information
In conjunction with the enactment of the Personal Information Protection Law,
the Group has established a rigorous internal system for the management of
personal information, in addition to conducting training on the protection of
personal information, as necessary, for its directors and audit & supervisory
board members and employees. However, in the event that a security
incident, as described in (6) above, occurs, and personal information is
leaked to third parties, the Group’s business performance may be affected.
(8) Exchange rate fluctuations
The Group includes consolidated subsidiaries located in North America,
Europe and Asia. The risk of foreign exchange loss has been reduced as
foreign currency gained by those subsidiaries is expended for settlement or
reinvestment in the applicable countries. However, sales, expenses, assets,
liabilities and net assets of the foreign subsidiaries are converted into
Japanese yen amounts in the consolidated financial statements.
Consequently, exchange rates may affect the Group’s financial results if they
fluctuate beyond management forecasts.
(9) Entertainment industry laws
The operation of amusement facilities is subject to government control under
the Law for Proper Control of Entertainment and Amusement Businesses and
other related laws and regulations. These laws and regulations include an
approval and licensing system for the opening and operation of amusement
facilities, regulations on business hours, age restrictions, area restrictions on
outlet opening, and regulations concerning facility structures, interiors,
lighting and noise. The Group operates its facilities appropriately in strict
compliance with these laws and regulations. However, if the regulations were
to be reinforced, the Group’s business performance may be affected.
(10) Accidents and disasters
The Group periodically carries out accident prevention checks, facility
inspections and emergency drills to minimize the impact of earthquakes and
other major natural disasters, fires, blackouts, system and network failures,
terrorist attacks, outbreaks of infectious diseases, and other accidents and
disasters. However, should devastating accidents or disasters occur, the
Group’s business performance may be affected.
(11) Litigation and other claims
The Group thoroughly complies with laws and regulations and maintains full
respect for third parties’ rights while carrying out its operations. However, in the
course of its business development in the global arena, the Group is inevitably
open to the risk of becoming a party of dispute, in particular, patent litigation in
the United States. Should a litigation in which the Group is named as the
defendant or other dispute occur, despite the Group’s efforts for early
settlement under conditions that are favorable for the Group, the outcome
thereof may lead to an adverse impact on the Group’s business performance.