Business Risks

The following are the main risks that the management recognizes that have the potential to significantly influence the financial position, business performance and cash flows of the Company and the consolidated subsidiaries. From these main risks the Company has selected risks requiring particular attention during the fiscal year ending March 31, 2026 taking into consideration factors such as the magnitude of the potential impact on its businesses and the external environment.
Matters concerning the future and the recognition of risks in the text are as determined by the Group as of the end of the fiscal year ended March 31, 2025. The following, however, does not include all risks. Risks that are unpredictable or deemed insignificant at this point in time may impact on businesses in the future.

(Major Risks)

Risk Category		Definition	Main Risk Items
(A)	Investment risk	Risks related to individual investments (real estate investments, corporate investments (M&A), etc.)	1)	Risks associated with real estate investment
(A)	Investment risk		2)	Risks associated with corporate investments (M&A) and new businesses
(B)	External risk	Risks related to external factors influencing business	3)	Risks associated with market changes
			4)	Risks generated by changes in economic conditions
			5)	Risks generated by changes in political/social conditions/systems (law, tax systems, accounting, others)
			6)	Risks due to lagging behind in innovation and changes in the structure of society related to the business
(C)	Disaster risk	Risks generated by disasters that have a large impact on customers and business continuity	7)	Risks related to disasters (earthquakes, typhoons, floods, tsunamis, volcanic eruptions, major fires, epidemics of infectious disease epidemics, etc.) that have a major impact on customers and business continuity
(D)	Internal risk	Operational risks occurring at the Company and each group company	8)	Risks related to the violation of laws and ordinances
			9)	Risks related to quality defects
			10)	Risks related to occurrence of information system crisis
			11)	Risks from inadequate responses to matters related to human resources
			12)	Risks related to occurrence of fraud and negligence

(Risks requiring particular attention)

(A)	Investment risk	Risk of inability to secure the expected business volume and making it difficult to achieve the profit growth projected in the Business Plan due to intensifying competition for land acquisition, etc. Risks related to new construction, such as costs rising above the expected expenses budgeted for in the business plan, extension of the construction period, constraints on acceptance of project orders by general contractors and other risks that could detrimentally affect project revenue Risk of delays in anticipated project schedule or significant revisions or interruptions of projects due to changes in economic conditions and the rise of construction costs for projects with long-term project timeframes and large investment budgets, such as redevelopment projects
(B)	External risk	Risk arising from the impacts to sale prices on housing and properties for sale, as well as the lease revenue from held assets, due to changes in Japan’s real estate market and financial conditions Risk of increased financial costs due to interest rate rises beyond expectations, which may impact the Company’s financial position Risk arising from deterioration in profitability and delay in profit recovery timing in overseas business due to deterioration in economies and real estate markets, deterioration in the financial condition of general contractors and JV partners, and other factors in countries overseas Risk of a reduced competitive advantage of the Company’s businesses due to delays in response to changes and diversification in lifestyles and values, response to the increase in inbound travelers, high net worth individuals, and single-person households, response to the continuous rise in real estate investment needs, response to accelerating advances in digital technology, and response to sustainability and human resources, etc.
(C)	Disaster risk	Risk of inability to continue business due to increasingly intense natural disasters such as earthquakes, typhoons, and torrential rains
(D)	Internal risk	Risk due to inadequate design and construction in the real estate development business Risk due to delays in the penetration of personnel systems and development of environments that enable diverse talent to continue playing an active role, which may hinder talent acquisition Risk due to information leak by cyberattack and system failures, impact on business continuity, and incurrence and expansion of damage, etc. Risk of violating laws and regulations and hindering the realization of smooth transactions with counterparties due to insufficient efforts to ensure the appropriate passing of increased labor and raw material costs onto the Company

The details of each major risk item and main initiatives are as follows.

Risk item	1) Risk associated with real estate investment	Risk Category	(A) Investment risk
Risk details	Risk that the Group’s business performance, etc. may be affected as a result of delays in the timing of sales recording and deterioration of profitability due to unexpected discovery of soil pollution, delays in obtaining permits and licenses, occurrence of additional construction work, constraints on acceptance of construction project orders by general contractors, extensions of project construction periods, and increases in construction and energy costs.
Main initiatives	Decisions on the real estate investment/development business are made at the meetings such as the Board of Directors or the Management Committee of the Company or of group companies upon identifying, analyzing and evaluating risk in advance and considering risk taking or risk avoidance policies. In particular, regarding risks of increases in construction costs, the Company takes certain measures when acquiring land for development such as allowing for additional costs, and at the Board of Directors meetings or Management Committee meetings, we conduct regular monitoring of the trend of construction costs and the impact of that on construction cost increases. Following the acquisition of the land for development, the department in charge of the business ascertains the risk of any schedule delay and the state of construction costs. Should an especially important event occur, after deliberation by the Board of Directors or the Management Committee of the Company or group companies when necessary, the department shall respond to the issues. In addition, for businesses that are in progress and completed, the progress of each business is monitored, and the results are reviewed so that issues and trends, etc., for each business type are grasped and analyzed.

Risk item	2) Risk associated with corporate investments (M&A) and new businesses	Risk Category	(A) Investment risk
Risk details	Risk associated with corporate investments (M&A), wherein the Group’s financial position and business performance, etc. may be affected if the Group fails to achieve profit growth or synergy expected by the target companies in which it invests. Risk that the Group’s financial position and business performance may be affected due to the inability to execute business according to original plans or achieve synergies with group companies in new businesses and investments in new asset types.
Main initiatives	In executing corporate investments (M&A), factors such as the synergies with the Group’s existing businesses, and business plans, financial details and contract-related matters of target companies shall be carefully examined and considered and corporate investments (M&A) shall be implemented when it is determined that this will contribute to the Group’s business results in the future. In addition, after the M&A is executed, the Board of Directors or the Management Committee shall regularly monitor the status of the integration process between the target company and the Group, management issues, and response policies. In considering new businesses, the Company carefully investigates and examines business plans. The Company enters a new business when judgement is made that it will contribute to the business performance of the Group in the future. After entering a new business, its performance is regularly monitored, and if deemed necessary to make modifications, it will put to deliberation by the Board of Directors or the Management Committee of the Company or group companies.

Risk item	3) Risk associated with market changes	Risk Category	(B) External risk
Risk details	Risk that the Group’s financial position and business performance, etc. may be affected by trends of competitors, the emergence of innovative new entrants, changes in economic, political, and social conditions, and the emergence of geopolitical risks, and the occurrence of disasters, etc., which may lead to changes in the business environment and market conditions.
Main initiatives	The Group regularly updates its awareness of the external environment of each business and works to ascertain impacts on business results, monitor the progress of business and improve precision. When making investment decisions in the real estate investment/development business, our basic policy is to understand and forecast the current and future market conditions and confirm past market trends and curb to a certain extent the impact from changes in market conditions. Moreover, we formulate an investment budget upon undertaking risk assessment to ensure a certain level of soundness regarding our financial position even if market conditions change rapidly.

Risk item	4) Risk caused by changes in economic conditions	Risk Category	(B) External risk
Risk details	Risk that the Group’s financial position and business performance, etc. may be affected by a decline in customers’ purchase appetite in the housing sales business, a decline in the rent level of office buildings, etc., and an increase in the vacancy rate due to domestic and overseas economic recessions. Risk that the Group’s financial position and business performance, etc. may be affected by an increase in the Group’s financing costs, a decline in customer desire to purchase in the housing sales business due to higher housing loan interest rates, resulting from a rise in market interest rates, and a decline in asset prices owing to a rise in cap rates. Risk that the Group’s financial position and business performance, etc. may be affected by fluctuations in the amounts of investment and collection translated into yen and fluctuations in assets and liabilities denominated in foreign currencies on the consolidated financial statements, due to fluctuations in exchange rates. Risk that the Group’s financial position and business performance, etc. may be affected by deterioration in the profitability of overseas businesses and delays in the timing of collecting profits due to deterioration in the financial condition of general contractors and JV partners in overseas countries, etc.
Main initiatives	Regarding changes in economic conditions, the Group regularly updates its awareness of the external environment and works to ascertain impacts on business results. In our funding through borrowings, we respond to the risk of rises in short-term interest rates by using mainly long-term and fixed-rate borrowings. In the real estate investment and development business, we make investment decisions that limit the impact to a certain extent even in the event of a decline in asset prices due to a decline in rents and a rise in cap rates. For foreign exchange fluctuation risk, we have established a foreign exchange hedging policy that considers the types of businesses we undertake overseas and we operate in accordance with this policy. In addition, with regard to the status of general contractors and JV partners in overseas business, in addition to regular monitoring by Line 1 and Line 2, we regularly confirm and deliberate on events that affect our business and their responses through the Overseas Business Risk Committee, etc., and deliberate at the Board of Directors or the Management Committee of the Company or group companies as necessary.

Risk item	5) Risk caused by changes in political/ social conditions/ systems (law, tax system, accounting, others)	Risk Category	(B) External risk
Risk details	Risk that the Group’s financial position and business performance, etc. may be affected by rising construction and energy expenses, the occurrence of delays in business schedule, etc., due to disruptions in the foreign exchange market, energy market, and supply chain in the event of changes to the political and social situations, such as the emergence of geopolitical risks. In overseas business, risk that the Group’s financial position and business performance, etc. may be affected due to obstacles to promote business in case there are changes in political and social situations that have been unexpected at the beginning of conducting business in each country, as there are risks specific to each country’s political and social situations. Risk that the Group’s financial position and business performance, etc. may be affected as a result of the occurrence of new obligations and expenses in case there are changes in various types of laws and regulations in Japan and overseas applicable to each of the Group’s businesses or other new laws and regulations become applicable due to an expansion in the business scope in the future. Risk that the Group’s financial position and business performance, etc. may be affected as a result of increased costs for acquiring, holding, and selling assets, a decline in customer desire to purchase, a shift in corporate facility strategy, and revision of investment plans in the case of changes to various tax systems and accounting systems in Japan and overseas that have an impact on the real estate business. Risk that failure to take appropriate response to human rights issues within the value chain could result in restriction of business activities due to cessation of transactions with clients or other limitations, or damage to brand value of the Group.
Main initiatives	We collect and analyze information on trends in political and social situations, various laws and regulations, tax systems and accounting systems in Japan and overseas from industry groups, external experts, business partners, and consider responses at each of the Company’s respective organizations on the “second line” and discuss those matters expected to have a significant impact at the Board of Directors or the Management Committee depending on the details. In overseas business in particular, we seek the knowledge of external experts regarding the forecast of the future political and social situations as well as applicable laws, regulations and tax laws when starting a business overseas, and after starting a business we regularly confirm the state of changes to the political and social situations as well as important related laws and regulations that have an impact on business strategy, revenue and expenditures, and progress in countries where we do business through the Overseas Business Risk Committee, etc. In the case that there are any changes, discussions are carried out at the Board of Directors or the Management Committee upon evaluating the impact and discussing response policies. Concerning human rights, we are working on building and operating a human rights due diligence process based on the United Nations “Guiding Principles on Business and Human Rights.” The Sustainability Committee, chaired by the President and Executive Officer (Group CEO), and its subordinate body, the “Human Rights Subcommittee,” develop policies aligned with the “Nomura Real Estate Group Human Rights Policy,” monitor progress towards various goals, and deliberate on action plans.

Risk item	6) Risk from lagging behind innovation and changes in the social structure related to the business	Risk Category	(B) External risk
Risk details	Risk that the Group’s financial position and business performance, etc. may be affected by a decline in the competitive advantage of the Company’s products and services if there are delays in responding to changes in the social structure and changes in the industrial structure resulting from rapid technological innovation and the emergence of innovative new participants. Risk that difficulties in securing human resources due to the declining birthrate and aging population will limit the Company’s ability to develop products and services. Risk that the Group’s financial position and business performance, etc., may be affected by a decline in the competitive advantage of the Company’s products and services if there are delays in responding to changes in demands related to the customer environment, energy conservation and disaster prevention resulting from the implementation and strengthening of greenhouse gas reduction regulations, etc., and technologies related to high environmental performance and energy performance.
Main initiatives	In the midst of a changing business environment, the Group has been creating new and highly unique value for society and customers by leveraging its strengths, such as real estate development capabilities based on the “market-in” concept and a commitment to quality in urban development and real estate-related services. Drawing on these strengths, in order to respond to changes in social and industrial structure and the growing awareness of society and customers toward sustainability, we have established dedicated organizations, which are responsible for the research and development of new business fields, planning, and promotion of innovation creation, digital strategies, as well as initiatives for sustainability, etc. We have also established the “Innovation Promotion System” with the Corporate Planning Dept. serving as the secretariat. This system allows employees of each Group company to conduct initiatives beyond the boundaries of their daily work with the objective of nurturing innovative talent and advancing exploration activities in new areas. Additionally, through corporate venture capital which we invest in, we continue to collaborate with venture companies that possess innovative technologies and services, while providing services utilizing digital technology. To help foster a corporate culture of embracing challenges for creating value and to strengthen collaboration within the Group, we have established the Nomura Real Estate Group Awards, an internal award system with the Corporate Communications Dept. serving as the secretariat. Furthermore, in response to the difficulty of securing human resources, we are working to improve operational efficiency and conserve labor by utilizing digital technology, while also assigning, promoting, developing and securing human resources, which will lead to the “right people in the right positions,” and taking various measures for diversity & inclusion and wellness, which will lead to the “creation of the work environment.” Please refer to P.22 to P.23 of Annual Securities Report issued on June 25, 2025 (Japanese only) for the Group’s initiatives on the human capital management. In addition, please refer to P.15 to P.23 of Annual Securities Report issued on June 25, 2025 (Japanese only) for the Group’s sustainability initiatives, including reducing greenhouse gases and improving the environmental and energy performance of the Company’s products and services.

Risk item	7) Risk caused by disasters (earthquakes, typhoons, floods, tsunamis, volcanic eruptions, major fires, epidemics of infectious diseases, etc.) that have a major impact on customers and business continuity	Risk Category	(C) Disaster risk
Risk details	Risk of difficulty in continuing business of the Group due to delays in securing the human resources necessary for business continuity due to disasters, including large earthquakes, storms and flood damage, and infectious disease epidemics, that threaten the lives and physical safety of the Group’s executives and employees. Risk of damage to properties, etc. sold, leased or managed by the Group due to disasters, including large earthquakes, storms and flood damage, and of threats to the safety and security of customers, etc. related to those properties, etc.
Main initiatives	The Group recognizes that the increasing severity and frequency of disasters in recent years is an important social issue. Based on discussions with government and disaster preparedness experts, we are working to ensure the safety and security in the event a disaster occurs. We engage in disaster preparedness activities to ensure that, if a disaster occurs, its impact is minimized and the Group and its employees are able to continue business and their normal lives. We have formulated a business continuity action plan (BCP) in the event of a disaster. In preparing for an earthquake, and storm and flood damage, under the BCP we have determined an emergency chain of command, assigned duties to ensure business continuity, and established a system to minimize the impact of disasters. Once per year we hold Disaster Task Force Establishment Drills to ensure the prescribed details are effective, ensuring the safety of executives and employees and establishing a chain of command system, so that we are prepared for restoring business after an emergency. Concerning infectious diseases, based on the Group’s response results to novel coronavirus infections (COVID-19), we have formulated a BCP for infectious diseases that summarizes responses according to the expansion phases of the infection situation (establishment of a chain of command system, selection of core businesses for business continuity, formulation of common rules for infection prevention, etc.) from the time of infection confirmation to the spread of new infectious diseases in preparation for the emergence of new infectious diseases in the future. We have also formulated a BCP for not only in Japan but also overseas, stipulating initial responses, standards for evacuation from countries and other measures regarding various geopolitical risks, terrorism, natural disasters, and so forth. Regarding earthquakes, storms, floods, and other sudden accidents caused by disasters, we have set up regulations in quality manual for responses to torrential rains and flooding, formulated a disaster response manual, and created a disaster preparedness guidebook for distribution to residents, management associations, tenants, and facility users in the properties we own to ensure their safety and bring them peace of mind when a disaster occurs.

Risk item	8) Risk of violations of laws and ordinances	Risk Category	(D) Internal risk
Risk details	Risk that the business performance may be affected by violation of the Real Estate Brokerage Act, the Building Standards Act, the Financial Instruments and Exchange Act, Companies Act, Act on the Protection of Personal Information, Antimonopoly Act, Subcontract Act, and other related laws and regulations, resulting in loss of credibility and the imposition of administrative penalties and fines, etc.
Main initiatives	The Group has formulated the Nomura Real Estate Group Code of Action for executives and employees to comply with laws and regulations and internal rules established by each Group companies, and act with higher ethical standards, and it also has provided education on an ongoing basis. For primary laws such as the Real Estate Brokerage Act, we formulate a business work flow specific to each law to ensure legal compliance, ensure a thorough awareness through training and on-the-job training (OJT), and implement regular voluntary inspections for the status of compliance. Concerning the Antimonopoly Act, etc., in order to realize an appropriate passing of price increases on to customers that takes into account increases in material prices, energy costs, etc., we are working to strengthen our legal compliance system by formulating business rules according to the business characteristics and the scale of each Group company’s business, creating manuals, and conducting training. In addition, regarding the inappropriate entertainment of foreign public officials and other civil servants, the Company has established regulations, etc. The Company is implementing regular training for executives, employees and overseas local hires related to overseas businesses.

Risk item	9) Risk of quality defect	Risk Category	(D) Internal risk
Risk details	Risk that the business performance may be affected by the loss of trust, unexpected costs and delays in development plans and operation plans due to management deficiencies such as design and construction defects, etc. in the real estate development business or in the case of a management deficiency in the properties for leasing or under management.
Main initiatives	In the real estate development business, to secure quality in design and construction upon placing an order for the design and construction work of a building with a third party who has a certain level of creditability and technical capabilities, the Group prescribed the Design and Construction Standards (structure, construction, equipment, and electrical), the Quality Manuals, etc. and ensure thorough compliance from the parties while also checking the state of construction and carrying out quality inspections as the ordering party (However, in joint ventures with other companies and redevelopment projects led by redevelopment associations, different methods may be adopted depending on the business form.) Regarding leased and managed properties, we will prepare business standard documents related to property management and safety and temporary construction guidelines for repair work as we undertake business. We will also provide property insurance for damages in the unlikely event of a deficiency or accident.

Risk item	10) Risk of occurrence of information system crisis	Risk Category	(D) Internal risk
Risk details	Risk that the Group’s business performance, etc. may be affected as a result of the delays in the Group’s sales activities and business processing and the loss of credibility, and the resulting decrease in sales and damage compensation costs in the unlikely case the Company’s information system cannot be used normally or in case personal information is leaked to the outside due to unexpected circumstances such as cyberattacks, system failures and unauthorized access.
Main initiatives	In a situation where we are actively promoting DX initiatives to realize business transformation and sustainable growth using the Internet and cloud services, ensuring information security is becoming more critical than ever. We have installed security systems that block unauthorized access from the Internet, scan information terminals for viruses, and detect the behavior of malware, bots, and other intruders to prevent unauthorized transmission if they enter. In addition, alerts from these systems are monitored to ensure that the ICT environment is prepared for cyber-attacks and information leaks. Also, security checks are conducted prior to the use of cloud services to ensure that they are used safely. As a response to system failures impacting business continuity, we monitor the operation of networks and systems, and are actively working on expanding and improving rapid recovery measures and alternative business operations in readiness for such failures. The Company is also striving to comply with relevant laws and regulations for personal information and to ensure proper handling of this information. Moreover, with the aim of realizing organized management of information and maintaining and improving security levels within the Group, we have prescribed the Information Security Regulations and the Information Handling Guidelines, regularly provide information security enlightenment to our officers and employees, protect the rights and interests of our customers and ensure the stable operation of an ICT environment within the Group. In addition, the Company has cyber insurance in preparation for an unlikely accident such as an information leakage.

Risk item	11) Risk of inadequate response to matters related to human resources	Risk Category	(D) Internal risk
Risk details	Risk that long working hours damage the health of employees in the event that the working hours of Group employees are not properly ascertained. Risk that the Group’s business performance, etc. may be affected as a result of the outflow of the Group’s human resources, the loss of trust, and the imposition of fines in case we receive administrative sanctions from government authorities because our personnel system and its operation do not comply with labor standards and related laws and regulations. Risk that delays in the establishment of a labor environment that takes in a diverse range of human resources (employees that work short hours mainly due to childcare and nursing, sexual minorities, people with disabilities, seniors, foreign nationals and others) may result in the Group being unable to secure the necessary personnel, or the inability of secured personnel to continue working, leading to a decline in corporate competitiveness. In terms of personnel and labor management at overseas bases, risk of administrative sanctions by government authorities for introducing or operating a system that violates local labor laws and customs, risk of losing know-how due to the retirement of local employees, and risk that the health of employees will be damaged due to the lack of systems to provide appropriate support for living in a foreign country.
Main initiatives	The Group prescribes working with vigor and achieving wellness as its action guideline. The Group aims to provide wellness management so that all its executives and employees can carry out their work energetically and in good physical and mental health, which leads to sustainable corporate growth. Along with introducing various systems, including recommendations to take paid leave, the promotion of teleworking, and a program for taking time off or working shorter hours for childcare and nursing and to build a labor environment conducive for a diverse workforce, we are working to improve the level of understanding related to diversity among executives and employees through regular training sessions. In addition, some group companies, such as Nomura Real Estate Development, have partially implemented paid leave for male employees’ birth childcare leave and introduced an accumulated paid leave system. In order to properly grasp working hours, we have introduced an attendance management system to manage it, and especially for long working hours, we regularly monitor the situation. Furthermore, the compliance of our personnel system and its operation is regularly verified by outside experts to prevent the emergence of risks. Moreover, overseas there are local laws, cultures, and customs. Therefore, we utilize the knowledge of external experts to build personnel/labor systems, establish consultation desks for staff stationed overseas, and provide services to help the staffs find, and provide support for visits to, medical institutions. In order to promote the success of diverse talent, we formulated and announced our Group’s D&I promotion policy and medium- and short-term promotion roadmap. We have engaged in fostering D&I awareness as Step 1. Going forward, we will further promote “D&I awareness cultivation” and aim for Step 2, which is to “create a culture where D&I is integrated into business activities” by advancing initiatives such as building a framework for inclusive design efforts. Additionally, our Group has established the Human Resource, Wellness, D&I Committee, which is chaired by the President and Executive Officer (Group CEO), with the aim of promoting human capital management linked to business strategy. This committee discusses matters such as the placement, appointment, development, and retention of talent, wellness, and ensuring diversity of talent across the Group companies. Please refer to P.22 to P.23 of Annual Securities Report issued on June 25, 2025 (Japanese only) for the Group’s policy on the human capital management.

Risk item	12) Risk of occurrence of fraud and negligence	Risk Category	(D) Internal risk
Risk details	Risk that the business performance may be affected as a result of the loss of credibility and the resulting decrease in sales and damage compensation costs due to fraud perpetuated by executives and employees, information leakage due to improper management, and operational negligence.
Main initiatives	Group executives and employees comply with laws and regulations as well as with the internal rules, etc. established by each company of the Group. Furthermore, we have established the Nomura Real Estate Group Code of Ethics with the aim of acting in accordance with even higher ethical standards, and we continuously provide education and training sessions to executives and employees. In addition, the Company has established a system to enhance the effectiveness of compliance activities in each workplace by assigning a compliance promotion officer to each department, office and branch of the Company and Group companies. Furthermore, with the “Nomura Real Estate Group Risk Helpline,” an internal whistleblowing system shared by all Group companies, the Company has set up internal and external contact points for reporting wrongdoing and seeking advice on how to proceed, and has developed and implemented systems based on the Whistleblower Protection Act.