Business Risks

Accidents in our railway operations can not only erode customer confidence and the Group’s social reputation, but can also severely impact business management due to accident-related service interruptions and the expense of customer reparations.
The Group places the highest management priority on safety. We are building a highly safe railway system through both hardware and software measures, and have steadily implemented initiatives under our eighth five-year safety plan since the Company’s founding, titled “Group Safety Plan 2028 - Taking the nature of railway work to heart, imagine the unexpected, reach for safety!”
Specifically, to prevent railway accidents attributable to the Group, we took countermeasures against train derailments and other accidents, such as the maintenance of Automatic Train Stop systems (ATS-P), and we reinforced critical facilities like stations and rail yards to prevent roof collapse.
To prevent accidents at level crossings, we consolidated and eliminated level crossings, installed more level crossing warning systems, updated obstacle detectors, and conducted awareness campaigns under the Zero Grade Crossing Accidents Campaign in collaboration with police and road authorities.
To prevent contact between passengers and trains and falls onto tracks, we are installing platform doors at 758 platforms in 330 stations on major lines in the Tokyo metropolitan area. As of the end of fiscal 2025, installation has been completed at 140 stations (288 platforms). We also carried out joint awareness campaigns with other railway operators, such as the Zero Platform Accidents Campaign.
The environment surrounding the Group is changing drastically, including intensified and more frequent natural disasters, a declining population, and progress in digital transformation (DX). In order to respond to these changes, we will strengthen the foundations of safety, such as the “safety culture” and “safety mechanisms” and “equipment” that we have built up, and will imagine “previously unexpected risks” by understanding their essence, and undertake initiatives to ensure safety, and aim for “the best in safety.”

In recent years, the risk of extreme weather events such as torrential rainfall and larger typhoons has been increasing. These torrential rains and typhoons, as well as natural disasters such as large-scale earthquakes, tsunami, floods, and volcano eruptions, have the potential to cause significant damage to the Group’s railroads and related infrastructure. In addition, large-scale power outages caused by natural disasters could potentially disable railroad operations. Furthermore, in the event of a large-scale disaster, the Group may not be able to receive a stable supply of goods necessary for maintaining operations due to disruptions to suppliers or delivery networks.
The Group is taking the following measures to reduce the risks from natural disasters. For large-scale earthquake preparedness, we are reinforcing elevated bridge piers and utility poles and have introduced an early earthquake detection system that quickly halts moving trains. For the Shinkansen, we are developing and upgrading derailment prevention systems to mitigate damage in the event of a derailment. In response to localized heavy rain, “radar rainfall regulators,” which monitor rainfall in detail and regulate train operations, have been added to the existing operational regulators and are being introduced on all conventional railway sections. As a measure to prevent flooding, the Vehicle Evacuation Judgment Support System is being introduced in rail yards where flooding is likely. We also conduct regular training to strengthen our ability to respond to various natural disasters. We will continue to progress initiatives to reduce risks associated with natural disasters in accordance with the “Group Safety Plan 2028.”
On the other hand, in preparation for large-scale power outages caused by natural disasters and other factors, we are working to extend the operating duration of emergency generators at major terminal stations and other key facilities. In order to increase the stability and resilience of our procurement system, we are promoting efforts to procure from multiple suppliers.

In the event of an outbreak of a serious infectious disease in Japan and abroad, due to restrictions on economic activities, requests to stay-home, or disease contraction among employees, the Group may be unable to continue operations, leading to significant impacts on financial position and operating results of the Group.
When COVID-19 spread in Japan and abroad, the government declared a state of emergency and urged citizens to restrict their economic activities and stay at home. The Group’s business results were also severely impacted by a dramatic decrease in the volume of rail transport, closure of the Group’s commercial facilities, and a decrease in the number of users of commercial facilities, including a decrease in inbound demand due to travel restrictions. In accordance with government guidelines, the Group has installed hand sanitizers inside stations, disinfected and cleaned facilities, ventilated trains, provided information on crowding at stations and on trains, and diligently enforced mask-wearing by employees, etc. to prevent the spread of infection. We will continue to cooperate with the government and local municipalities to ensure continued appropriate transportation services during a significant outbreak or spread of infectious disease, with the safety and security of our customers always our top priority.

The Group faces competition in the railway business from other rail operators, airlines, automobiles, buses, and other alternative modes of transportation. In addition, we also compete with both existing and new entrants in businesses related to lifestyle solutions. In addition to these factors, increasingly rapid changes in the external environment and factors that the Group cannot control may affect the financial position and operating results of the Group.
The following factors may decrease transportation volume and impact the revenues of railway operations: intensifying competition in the transportation market due to the expansion of low-cost carriers (LCCs) routes, the expansion of expressways, the practical application of automated operation technology, as well as a declining population, an aging society with a declining birthrate, and the spread of workstyle reforms such as telecommuting. Furthermore, there is a possibility that normal business operations could be affected by challenges such as supply chain insecurity and labor shortages due to hiring difficulties.
Amidst these circumstances, as part of the Group Management Vision “Move Up” 2027 and Speed Up “Move Up” 2027 announced in September 2020, the Group aims to promote initiatives such as MaaS and eki-net for seamless mobility and a one-stop model that can meet all of our customer’s needs by combining a variety of services such as travel, purchases, payments, and more. Anticipating changes in the business environment, we strive to provide new value to society and are increasingly catering to diversified lifestyles with services such as off-peak commuter passes, Off-Peak Point Service, and Repeater Point Service and expansion of facilities and products designed with teleworking and workcations in mind. In addition, we are working to qualitatively transform our railway operations through technological innovation and productivity enhancements such as conductorless operations, streamlining of facilities, improvements to maintenance systems, and implementation of automatic and driverless operation in the future. In addition, we are working towards securing a stable talent pool and stable procurement of resources through group-wide recruitment efforts and partnerships with new suppliers, respectively.

Criminal and terrorist acts have the potential to threaten the safety of our railway operations and other operations.
To increase railway security, the Group has installed security and self–defense equipment on Shinkansen trains, all conventional rolling stock, and at major stations, as well as additional security cameras on trains and in railway facilities to create a centrally monitored camera network.
In addition, our Group uses many information systems in the various business areas that are linked to the “Mobility Business” and “Lifestyle Solutions Business” for our customers. Information systems also play an important role in other companies that have close ties with the Group, such as RAILWAY INFORMATION SYSTEMS CO., LTD. A serious failure in the functioning of these information systems due to cyber-attacks or human error could affect the Group’s business operations. Furthermore, computer virus infections, unauthorized access, or any other incidents leading to data falsification or leakage of personal information within our information systems could result in a loss of public trust, impacting the financial position and operating results of the Group.
The Group takes measures against failures and security measures on a daily basis, such as improving the functionality of information systems, constantly monitoring security, and educating relevant employees, and in the unlikely event of a problem, we strive to minimize its impact by promptly establishing an initial response system and having each department work together to take countermeasures. In addition, the Group has established internal regulations to stipulate the strict handling of personal information, limit the number of persons who can handle personal information, and manage access privileges, and has built an internal check system, among other measures, to ensure the strict management and protection of personal information.

In the operation of various businesses, including the “Mobility Business” and “Lifestyle Solutions Business” for our customers, the Group complies with the Railway Business Act and other relevant laws and regulations, and conducts its business in accordance with corporate ethics. However, in the event of a violation, the financial position and operating results of the Group may be affected due to administrative sanctions or loss of public trust.
We have established “Policy on Legal and Regulatory Compliance and Corporate Ethics” and regularly inspect compliance with applicable laws across all business operations. Our employee training includes case studies of misconduct from within and outside the Company to support prevention efforts, and we actively promote awareness of internal reporting channels. Following the discovery in September 2024 of improper practices in wheelset assembly work, we designated this incident as a shared training theme across the Company and Group companies to prevent recurrence of similar cases. We are also conducting a Group-wide compliance awareness survey in collaboration with external organizations. Based on the survey results, we will identify issues and consider improvements to further strengthen our compliance initiatives.

Changes in economic conditions in Japan and overseas, as well as trends in interest rates, exchange rates, prices, and other factors may affect the financial position and operating results of the Group, and problems in the supply chain may cause a loss of public reputation.
The Japanese and global economies may be affected not only by economic factors but also by geopolitical risks such as wars and acts of terrorism, global epidemics, and large-scale natural disasters. Such events could cause a prolonged economic slump, which could reduce demand in the Group’s various business segments, including the “Mobility Business” and “Lifestyle Solutions Business” for our customers. In addition, changes in economic conditions in Japan and overseas, as well as trends in interest rates, exchange rates, prices, and other factors could increase the cost of procuring goods and raising funds, which could affect the Group’s revenues. Furthermore, globalized supply chains may be disrupted by various factors, and procurement activities may be affected by the diversification and complexity of human rights issues.
The Group will strive to reduce costs across the board, and at the same time, will fundamentally enhance its management structure by focusing management resources on businesses related to lifestyle solutions to make them new “growth engines.” In addition, we are curbing the rise in procurement costs through a wide range of procurement both domestically and internationally, as well as through price negotiations utilizing economies of scale. The Group is controlling future interest rate and foreign exchange fluctuation risks amidst the rising costs of raising funds by equalizing debt redemption amounts, lengthening debt maturities, paying debts in yen, and fixing interest rates to be paid over a long term. In order to maintain supply chains and avoid disruptions, we are strengthening communication with suppliers and promoting efforts to procure from multiple suppliers. With regard to human rights issues, we are making efforts to ensure that it is widely understood based on the JR East Group Procurement Policy.

As for overseas business, there are various risk factors such as changes in political systems and social factors, changes in local laws and regulations concerning investment restrictions/taxation, environmental regulations, etc., differences in business customs, differences in attitudes toward contract performance and compliance with rules and regulations, delays in construction schedules caused by these factors, economic trends, and fluctuations in exchange rates. The Group conducts detailed management of income and expenditures for each project, as political risks and delay risks may affect the collection of receivables when they emerge overseas. Currently, though, risks due to political upheaval, conflicts, and other factors are becoming more apparent, to ensure that unforeseen changes in circumstances do not affect the financial position and operating results of the Group or the personal safety of Group employees, the Group analyzes these various risks based on the advice of attorneys, consultants, and other experts, and in some cases, we are even making efforts to respond to risks in cooperation with the Japanese government.