Risk Management Structure and Compliance System<Risk Management Structure>

Risk Appetite Framework

Ethics Policy
The Group has established its “ethics policy” with a view to establishing unshakable confidence from society through establishing highbusiness ethics and thorough permeation of the spirit of legal compliance.
The ethics policy consists largely of two sections, namely, “business ethics of the Group” and “code of conduct for officers andemployees of the Group.” The former manifests sense of ethics and values which the Group as a corporation must adhere to formaterializing its management philosophy, while the latter is a compilation of the code which the officers and employees of the Group must
follow in conducting business based on the aforementioned business ethics.

The Group has clarified the type and amount of risk to be taken
appropriately as “risk appetite,” and introduced a “Risk Appetite
Framework (RAF)” for business and risk management using the risk
appetite as a starting point.
In order to achieve our “Vision” in the Group management
philosophy, we seek to “optimize profits, risks and capital” throughRAF management, and enable the pursuit of more profit opportunities
and more appropriate risk control. By doing so, we are improving theeffectiveness of our business strategies including management plans
and comprehensive budgets.

Overview of the Risk Appetite Framework
Management plan
Comprehensive budget, etc.

Risk appetite
Business strategy

Risk management

Group-wide Risk Management Structure and Compliance System
We have established the Group Risk Management Division to oversee risk management and compliance, and are working to improve therisk management structure and compliance system of the Group, while senior management actively involves in the process of risk
management for verifying and monitoring its effectiveness and adequacy.
Specifically, the Group Risk Compliance Meeting chaired by the President has been organized to grasp the status of risk management andcompliance within the Group, engaging in deliberation or debate on the analysis, evaluation, and activities for improvement thereof. Officer incharge of the Group Risk Management Division reports to the Board of Directors on the status of risk management and other matters on abi-annual basis or as appropriate if
Risk management structure / compliance system
required, to ensure that the adequacy
Juroku Financial Groupand effectiveness of risk
Audit & Supervisory
Board of Directors
Committee
Group Risk Compliance Meeting
management as well as status ofGroup Management Council
Group Risk Compliance Committee
compliance system are appropriately
Group Management
Audit Division<Whistleblowing system>
deliberated and verified.
<<Integrated risk management / compliance divisions>>
Audit
Lawyers
Group Risk Management Divisionmonitoring
Participate
Meanwhile, the GroupManagement Audit Division,
Group companies
The Juroku Bank
Integrated Risk Management Meeting
which is the internal audit
Audit
Integrated Risk Management Committeemonitoring
ReportOperational Risk Management Meeting
department, is committed toCompliance Meeting
ReportCompliance Committee
verifying and improving theAnti-Money Laundering Meeting
Other subsidiaries
Risk management /<<Integrated risk management / compliance divisions>>
adequacy and effectiveness of risk
compliance divisions
Risk Management Division
management structure, while
ReportRisk management /conducting audit of the compliance
Subsidiaries ofcompliance divisions
The Juroku Banksystem of the Group as a whole.

The Company positions risk
management and compliance as
an important duty to ensure thesoundness and safety of groupmanagement, and has establishedpolicies and regulations related torisk management and compliance.
Each group company has alsoestablished its own policies andregulations based on the
Company’s policies andregulations, and strives to conduct
appropriate business.

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Recognition of Top Risks
From the perspective of probability and degree of impact, the Board of Directors has chosen as top risks for the Group the “risk events that
may have a significant impact on our financial position and business performance, such as disrupting our business strategy and reducing
profitability within the next year.” We are taking necessary measures in advance to control such risks, and striving to manage them inorder to respond dynamically even if they manifest.
In addition, all employees are regularly kept informed on the top risks through meetings and other means.
Risk event
Intensified competition in the market
environment where interest-bearing
financing has become the reality after
decades of absence

Intensified competition for attracting borrowers as well as savers
Soaring acquisition cost for deposits and increase in liquidity risk

Recession and disturbance in the financial
marketDeterioration in valuation gains and losses of securities due to increase in interest rate anddownturn in stock market
Recession attributable to recurrent inflation and real estate slump in China and the U.S.

Political and geopolitical risks

Division of the world attributable to emerging homeland-first ideology, and tariff hike resulting
from the U.S.-China friction
War in Ukraine, tension in the Middle East
Possible outbreak of military conflict between China and Taiwan as well as that in the Korean
Peninsula

Climate change risks

Degradation of the Group’s corporate value due to failure to catch up with the trend of
decarbonization
Business interruption and deterioration of collateral value due to extreme weather
Deterioration of business results and increased credit-related expenses due to delay in thetransition to decarbonization

Natural disaster risks

Impairment of assets and difficulty in business continuity due to large-scale earthquake,windstorm and flood

Cyber-attacks, rapid progress of DX

Decline in customer confidence due to cyber-attacks
Intensified competition with other industries due to progress in digitization and digitalization

Increase in credit-related expenses

Rising raw material cost attributable to recurrent inflation, and deterioration of business results
due to manpower shortage

Personnel and compliance risks

Degradation of the Group’s corporate value due to inappropriate conduct

Inadequate response to antisocial forces andanti-money laundering measures

Loss of credibility due to transactions with antisocial forces
Administrative disposition and loss of credibility due to failure in anti-money laundering
measures and violations of foreign exchange laws and others

System failure risks

Decline in customer confidence due to system failure

Risk management and compliance-related policies and regulations, etc.
Juroku Financial Group[Risk management]

Integrated Risk Management Rules

Operational Risk
Management Rules

Compliance Policy

Compliance Rules

Whistleblowing System
Implementation Rules

Money Laundering
Prevention Policy

Risk Management Regulations for
Money Laundering and Financingof Terrorism

Integrated Risk Management Policy

Risk scenario

Code of Ethics[Compliance][Anti-money
laundering measures]Group Companies

JUROKU Financial Group ANNUAL REPORT 2024

Business operations in accordance with Juroku Financial Group’s policies and regulations

50

Risk Management Structure and Compliance System<Compliance System>

well as training or study sessions for all employees (including
part-timers and temporary workers) are continually organized,
presenting case study of the questionable conducts recently reported
at corporations involving compliance, such as legal complianceviolations, wrongdoings, corruption and harassment.
*1 Bribery, embezzlement and giving and receiving entertainment/giftbeyond social norms*2 Procedures to be followed in the event of discovery of a complianceviolation or other conduct that can be considered as such (summary)(1) [Report of occurrence] The person who discovered the complianceviolation or the like must report to the Group Risk Management
Division, or alternatively report to or consult with the external lawyer
designated for this purpose according to the internal reporting system.
(2) Report to the Group Management Council, etc. The Group Risk
Management Division shall report to Group Management Council, etc.,
as appropriate.
(3) [Fact-finding and investigation] The Group Risk Management Division
shall instruct or execute fact-finding. Specific procedure or method forinvestigation, etc. shall follow the Incident Response Manual.
(4) [Report] Follow-up report shall be made to the Compliance Meeting, etc.
as appropriate based on the results of the fact-finding exercise.
(5) [Remedial measures and recurrence prevention measures] Report shall bemade to the Board of Directors, etc. on the remedial measures andrecurrence prevention measures based on the results of the investigation.

Internal Reporting System
The Company has established a whistleblowing system for the entire
Group. In order to early detect, correct and prevent complianceviolations (such as legal compliance violations, wrongdoings, corruption, violation of internal rules, and harassment), the Company andother group companies have each set up whistleblowing contact
points.
The whistleblowing system applies to all officers, employees andpart-time workers, etc. (including those who were Executive Officers,
employees, part-time workers before resignation or retirement lessthan one year ago) of the Company and its consolidated subsidiaries,and expressly guarantees that whistleblowing/consultation by thewhistleblower be kept strictly confidential, that the whistleblower
should under no circumstances be disadvantageously treated becauseof his/her act of whistleblowing/consultation, and that any suchdisadvantageous treatment if actually done at all should be dealt within a rigorous fashion, to ensure that all officers and employees can use
this system with peace of mind. In addition to internal contact points,
we are working to enhance and improve our whistleblowing system
via designated external lawyers as contact points for reporting andconsultation.
We have appointed a Chief Whistleblowing Officer as the generalmanager of the whistleblowing system, and are working to raiseawareness of the whistleblowing system among officers and employees
throughout the Group.
The whistleblowing system and how it works are broadly communicated across the Group via the internal intranet, while being madeviewable by smartphones for business use.

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JUROKU Financial Group ANNUAL REPORT 2024

Designated dispute resolution organizations
with which The Juroku Bank has anagreement

Hours of operation
Monday through Friday, 9:00 a.m. to 5:00 p.m.
(excluding national holidays and bank holidays)
Japanese Bankers Association (Contact: JBA Customer Relations Center)

Telephone: +81-3-5252-3772
Trust Companies Association of Japan (Contact: Trust Consultation Center)

Telephone: +81-3-6206-3988

Customer Information Management
The Company recognizes the secure management of customer information as one of its most important issues.
We are fully aware of various risks such as leakage and loss of
information to external parties with regard to customer informationacquired by each group company. As such, we have established the“Information Security Management Rules” to ensure proper handlingof customer information, and also disclose a “Personal Information Protection Policy” (Privacy Policy).
Based on these regulations, we have appointed a Chief Information
Officer as the general manager of the protection of information assets,
and designated responsible divisions according to the type of information assets, as efforts to protect information assets more effectively.

Elimination of Antisocial Forces
The Company has established the “Basic Policy against Antisocial
Forces” for the entire Juroku Financial Group, and the Group as awhole has developed systems to firmly confront and exclude relationships with antisocial forces that threaten the order and safety of society.

Specifically, we work closely with external expert organizations andother institutes, and enhance effectiveness through training for officers
and employees and other measures.

Initiatives to Prevent Money Laundering, etc.
There is a growing threat of international terrorism, and fund transfers
by criminal organizations and terrorists are spreading and becominginternational. As such, there is a stronger international demand for financial institutions to prevent money laundering, financing of terrorism,
and proliferation financing (hereinafter “money laundering, etc.”).

The Company’s Group Risk Management Division oversees theGroup’s overall anti-money laundering, etc. measures, and each groupcompany appoints a person responsible for anti-money laundering, etc.
measures from among its officers.

Risk management system
We have positioned the prevention of money laundering, etc. as a top management issue, and we have built an effective risk
management system and are working to further enhance it.

Risk assessment documents
We identify and assess risks we are facing associated with money laundering, etc., and plan “documents prepared by specified
companies (risk assessment documents),” in order to implement mitigation measures commensurate with the risks.

Training for officers and employees
We continuously implement training for officers and employees, so that they can gain deeper knowledge and understanding
regarding measures against money laundering, etc., and improve their expertise and adaptability according to the roles of various
divisions.

Audits on compliance status
The Audit Division conducts internal audits from an independent perspective on a regular basis and as necessary. Based on the
results of these audits, we strive to further improve our systems.

Customer Protection
The Company has established a Group-wide “Customer Protection
Management Policy,” and is striving to protect customers and improve
convenience for the whole Group. The Juroku Bank and Juroku TT
Securities have planned and announced a “Customer-oriented Business
Operation Policy,” and are working to further improve the quality of
their products and services from a customer-oriented perspective.
The “Customer Protection Management Policy” is aimed at
protecting customers and improving convenience through thefollowing measures.

The Juroku Bank has concluded an agreement with the following designated dispute resolution organizations. By involving a neutral and fair
third-party organization, we are appropriately responding to the financial ADR system, which are procedures intended for simple and swift dispute
resolution without resorting to litigation.

Contact for consultations, inquiries, opinions
and complaints about the Bank

Compliance Structure
The Company has designated the Group Risk Management Division
to oversee compliance and manage the status of compliance for theentire Group.
Every fiscal year, the division formulates a Group Compliance
Program, a concrete action plan for compliance, and conducts appropriate compliance risk management for the entire Group. The division
is engaged in confirming that the Group is properly practicing
compliance, as well as monitoring the progress in the Group Compliance Program and status of compliance including whistleblowing andcorruption*1, while holding meetings of the Group Risk Compliance
Meeting and the Group Risk Compliance Committee regularly and asneeded for deliberation and instruction on the compliance system. The
content of the deliberations at the Group Risk Compliance Meeting isreported to the Board of Directors to ensure appropriate supervisionby the Board of Directors.
Procedures*2 to be followed by officers and employees who discovered a compliance violation or other conduct that could be considered
as such are specified in the Compliance Rules and Compliance
Manual, as part of the framework for fact-finding and investigation ofthis type of wrongdoing.
For the purpose of fermenting compliance awareness across theGroup, the ethics policy is being thoroughly permeated among allconcerned, while training for officers including Outside Directors as

Designated dispute resolution organization

Giving appropriate explanations and providing information on
products and services to customers
Appropriately handling customer requests, consultations, inquiries,
complaints, etc.
Appropriately managing customer information
Appropriately managing outsourced businessAppropriately managing conflicts of interest in order to prevent unduly infringement on the interests of customers

Initiatives for Prevention of Corruption
The Company prohibits in its ethics policy all corrupt practices
regardless of whether in Japan or overseas or whether directly or
indirectly, including bribery involving public officials and/or all stakeholders concerning the Group’s business, embezzlement, breach oftrust, receiving or giving money and kind or entertainment and otherbenefits, in an effort to eliminate corruption.
With a view to eliminating corruption including bribery, embezzlement, giving and receiving of entertainment/gift beyond social

norms, the Company has had its ethics policy thoroughly permeatedwithin the Group, and continually implements training or study
sessions for all officers and employees on the matters including
prevention of corruption.
Furthermore, the Company conducts internal inspection of payments to third parties and other expenditures as needed, while
preparing accurate and complete ledgers and records to maintain andadminister them appropriately.

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