Toshiba 2014 Annual Report Download - page 103

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TOSHIBA Annual Report 2014
7. Risks related to laws and regulations
(1) Information security
The Group maintains and manages personal information obtained through business operations. Even though the Group
makes every effort to manage this information appropriately, the Group’s brand image, reputation and business
performance may be subject to negative influences, or the Group may be found to be liable for damages in the event of
an unanticipated leak of such information which results in illegal retention or usage of such information by a third party.
The Group also maintains and manages trade secrets regarding the Group’s technology, marketing and other business
operations. The Group is implementing measures to prevent leakage of such trade secrets outside the Group through
maintaining and tightening control of its information management system, training its employees, and other measures.
However, in the past, situations have occurred in which leakage of trade secrets was suspected. The Group’s competitive
power may be weakened and the Group’s business, operating results and financial condition may be subject to negative
influences, in the event of an unanticipated leak of such information which results in illegal retention or usage of such
information by a third party.
Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group
makes every effort to ensure the stable operation of its information systems, there is no assurance that their functionality
would not be impaired or destroyed by computer viruses, software or hardware failures, disaster, terrorism, or other
causes, and in such cases the Group’s business performance may be adversely affected.
(2) Compliance and internal control
The Group is active in various businesses in regions worldwide, and its business activities are subject to the laws and
regulations of each region. The Group has implemented and operates necessary and appropriate internal control systems
for a number of purposes, including compliance with laws and regulations and strict reporting of business and financial
matters.
However, there can be no assurance that the Group will always be able to structure and operate effective internal
control systems. Moreover, such internal control systems may themselves, by their nature, have limitations, and it is not
possible to guarantee that they will fully achieve their objectives. Therefore, there is no assurance that the Group will not
unknowingly and unintentionally violate laws and regulations in future. Changes in laws and regulations or changes in
interpretations of laws and regulations by the relevant authorities may also cause difficulty in achieving compliance with
laws and regulations, or in continuing business in certain regions or business categories, and may result in increased
compliance costs. Furthermore, if the Group is in violation of these laws and regulations, the Group may be subject to
administrative sanctions, such as fines, or criminal penalties, and legal actions claiming damages may be filed against the
Group. In such cases, the Group’s reputation may be adversely affected, and the Group’s business, operating results and
financial condition may be adversely affected.
(3) The environment
The Group is subject to various environmental laws, including laws on air pollution, water pollution, toxic substances,
waste disposal, product recycling, prevention of global warming and energy policies, in its global business activities.
While the Group pays careful attention to these laws and regulations, it is possible that the Group may encounter legal or
social liability for environmental matters, such as liability for the clean up of land at manufacturing bases throughout the
world, regardless of whether the Group is at fault or not, with respect to its business activities, including its past activities.
It is also possible that, in future, the Group will face more stringent requirements on the removal of environmental
hazards, including toxic substances, or on further reducing emissions of greenhouse gases, as a result of the introduction
of more demanding environmental regulations or in accordance with societal requirements.
The Group’s operations require the use of various chemical compounds, radioactive materials, nuclear materials and
other toxic materials. The Group takes maximum care of such materials, giving first priority to human life and safety.
However, the Group may incur damage, or the Group’s reputation may be adversely affected, as a result of a natural
disaster, the threat or occurrence of a terrorist incident, or of an accident or other contingency (including those beyond
the Group’s control) that leads to environmental pollution or the potential for such pollution.
(4) Product quality claims
While the Group makes every effort to implement quality control measures and to manufacture its products in
accordance with appropriate quality-control standards, in the past, the Group recalled certain products, and lawsuits and
other claims relating to product quality were filed against the Group, and there is no assurance that all products are free
of defects that may result in such product quality claims due to unforeseen reasons or circumstances.
8. Risks related to material legal proceedings
(1) Legal proceedings
The Group undertakes global business operations and is involved from time to time in disputes, including lawsuits and
other legal proceedings, and investigations by relevant authorities. It is possible that such cases may arise in the future.
Due to the differences in judicial systems and the uncertainties inherent in such proceedings, the Group may be subject