Risk Management System

Advantest defines as risk factors those uncertainties that may hinder the realization of its corporate vision: "Be the most trusted and valued test solution company in the semiconductor value chain." Advantest seeks to enhance corporate value over the medium- to long-term by mitigating such risks. Advantest takes a strict stance and maintains a zero-tolerance approach toward conduct that violates applicable laws and regulations or conflicts with its corporate philosophy, "The Advantest Way," as such conduct may impair Advantest's fundamental value foundation. On the other hand, with respect to risks that contribute to the achievement of strategic objectives and value creation, Advantest places importance on translating stakeholder expectations into growth initiatives through deliberations at the Executive Management Committee, while taking into account acceptable risk levels, in order to realize Advantest's corporate vision.

With respect to risks that may have a significant impact on Advantest’s management, the Executive Management Committee continuously monitors response policies and the status of related actions, with Senior Executive Officers being directly involved as part of discussions on the direction of key strategies and cross-functional initiatives. With respect to risks related to the execution of business at the unit-level (each corporate function, business division, and major overseas site), each unit implements risk management tailored to its business characteristics and operating environment, and the status of such activities is monitored by the Internal Control Committee from a group-wide perspective. Furthermore, matters determined to be of high importance are reported to the Board of Directors, as necessary, and are addressed appropriately under its oversight.

Advantest seeks to broadly identify major risks across a wide range—from changes in the macroeconomic and market environments to responses to country specific laws and regulations, and from the short-term to the long-term—through a two-way approach linking value creation strategies and key risks affecting corporate value. These risks are regularly reviewed at the Executive Management Committee and other relevant meetings. For each risk, a response policy and the party responsible for the response are defined. In addition, in accordance with the established response policies, Advantest’s responsible departments agilely implement risk mitigation measures, and the Executive Management Committee continuously monitors the progress of such measures.

Based on the mid-term management plan and the status of business progress, each unit formulates annual business targets, identifies factors that may hinder the achievement of such targets as unit level risks, and seeks to mitigate those risks. Each unit reports the status of its risk management activities to the Internal Control Committee twice a year. Upon reviewing such reports, the Internal Control Committee provides feedback and proposes improvements, as necessary.

Advantest has established a framework under which, when urgent matters arise, the Crisis Management Group ensures business continuity through prompt and agile responses. Through this framework, Advantest seeks to reduce its own losses and minimize impacts on stakeholders.

While Advantest conducts risk management under the structure described above, the business environment surrounding Advantest is becoming more complex and uncertain than ever before, against the backdrop of global political and economic trends, geopolitical risks, and policy and regulatory trends in various countries. In light of these circumstances, Advantest will further enhance its risk management framework by strengthening its readiness to respond promptly in the event of a crisis and, from the perspective of business continuity, by safeguarding critical management resources such as its financial base, human capital, intellectual property, and supply chain.

Advantest has established a "Risk Universe," which comprehensively organizes risk factors that may hinder the realization of its corporate vision. The Risk Universe is formulated based on information such as macroeconomic conditions, industry trends, laws and regulations, and stakeholder expectations, and systematically organizes the risks recognized by Advantest, regardless of whether such risks arise from internal or external factors. It consists of four risk categories: "Strategic Risk," "Operational Risk," "Financial Risk," and "Legal, Compliance, Group Governance, and Intellectual Property Rights Risk." Strategic Risk refers to "risks that affect corporate value creation and the achievement of growth strategies, such as changes in the external environment and critical business decisions," while the other categories refer to "risks that affect the maintenance of the management foundation and the smooth execution of management policies and strategies." In addition, in light of the rapidly changing business environment, Advantest includes in its Risk Universe extreme risks—events that are currently considered to have a low probability of occurrence in the short-term but may have a significant impact should they materialize—and seeks to strengthen preparedness for such events.

For details on each risk included in the Risk Universe, please refer to the "Item 2. Business Overview 3. Risk Factors," section of the Annual Securities Report and Business Report for the fiscal year ended March 2026.

Advantest is working on the key theme of “enhancing risk management” in our Sustainability Action Plan, with KPIs in place.