Principal Risks and Countermeasures

The Hankyu Hanshin Holdings Group’s approaches to risks related to businesses and other risks that may be of concern toinvestors are stated below.
Further, forward-looking statements in this report reflect the Group’s assessments as of 31st March 2016. Moreover,these statements do not negate the possibility of the said risks affecting the Group’s business results or financial position.

Principal risks

The Group’s countermeasures

Risks related to economic conditions
B orrowing rates could increase due to changes in financial
markets or fund-raising from markets could become difficult.
Sudden changes in financial markets could affect the Group’sbusiness results or financial position.

Changes in the economic climate could cause exchange rate
volatility.
G reater-than-expected volatility could affect the Group’s business results or financial position.

T he Group limits exposure to the risk of interest rate increases bygiving priority to the undertaking of long-term loans with fixedinterest rates.
T he Group secures financing by establishing backup lines ofcredit based on commitment lines set up with correspondent
financial institutions.
The Group uses forward exchange contracts, currency swap
contracts, and currency option contracts to mitigate exchange
rate fluctuation risk associated with certain foreign currencydenominated monetary payables and receivables.	  Further, the Group’s overseas sales were less than 10% ofconsolidated revenues from operations as of 31st March 2016.

Risks related to businesses
The further aging of society is expected to increase capital investment for safety countermeasures and construction to make facilities barrier-free.
Due to population decline resulting from lower birthrates, the Group’srailways, buses, and taxis could see demand for passenger transportation decrease. Also, demand could decrease in other business.

Through continuous initiatives to heighten the value of theUmeda area and other areas served by the Hankyu and Hanshinlines, the Group creates line-side areas in which people want tolive in long term or visit frequently.
The Group has set its sights on growing by developing suchnew markets as the Tokyo metropolitan area market and overseas markets.
For details about business strategies for medium-to-long-term growth, please see
pages 18 to 21.

An accident in the railway business could cause customers greatsuffering.

The Group is keenly aware that being entrusted with passengers’
lives is a serious responsibility. Therefore, placing first priority on
ensuring the safety of customers is the basis of its businessmanagement.
Based on its strong commitment to putting customers first andgiving the highest priority to safety, the Group is implementing awide range of measures to upgrade tangible and intangible infrastructure and provide customers with improved safety.
For details about safety measures in the Urban Transportation Business, please seepages 68 to 72.

P ower supply shortages could disrupt train operations and otherservices. Also, higher electric utility rates could increase power andother costs.

T he Group is steadily introducing energy-saving equipment tocurb power consumption as much as possible.
T he Group takes rigorous measures to ensure employees areaware of the importance of cost reductions.
For details about the introduction of energy-saving rolling stock in the Urban
Transportation Business, please see page 43.

Principal Risks and Countermeasures

Principal risks

The Group’s countermeasuresA loss of trust in the quality and safety of products and services
that the Group sells and offers or in the information it provides
about them could lower revenues and lead to a deterioration inbusiness results.

T he Group ensures the quality and safety of its products and services
and the appropriateness of the information it provides about them byconfirming compliance with relevant laws and regulations andchecking quality and hygiene management and food labelling.

Natural disasters, such as earthquakes, typhoons, or floods, or actsof terrorism could significantly damage the Group’s businesses ortransportation network infrastructure.

In the areas alongside their railway lines, Hankyu Corporation andHanshin Electric Railway have installed water meters for rivers andrain and wind gauges for collecting observation data. Also, they
use real-time information from meteorological observatories toensure safe train operations.
If seismographs detect an earthquake with a seismic intensity offour or above, or if earthquake early warning systems forecast anearthquake of the same seismic intensity, the Group immediately
begins procedures for the emergency suspension of the operations of all trains on line segments in earthquake zones.
If the Group recognises that continued vigilance is required withrespect to acts of terrorism or other acts, or if suspicious items or
persons are discovered or damage is incurred, it conducts crisis
management appropriate to the threat level.
T he Group has established emergency response systems for minimising the effect on society in the unlikely event of an incident
that causes a long disruption to transportation services or results
in a large number of casualties.

An outbreak or epidemic of an infectious disease such as severe
acute respiratory syndrome (SARS) or a new strain of influenza
could restrict economic activities or discourage customers fromgoing out.

In preparation for the spread of an infectious disease, such as a newstrain of influenza, the Group’s core companies have directed theestablishment of business continuity plans for each business division.	  During the outbreak of a new strain of influenza in 2009 and 2010,
the Group minimised the effect on its businesses by determining thelevel of risk through ongoing surveys of each business division in relation to infection rates among employees and their families.
In the railway business, which provides a particularly importantpart of society’s transportation infrastructure, the Group has established specific response plans in advance. For example, it has
prepared multiple timetables based on scenarios envisaging
shortages of transportation personnel due to the sudden spreadof an infectious disease.

For further information on risks related to businesses and other risks, please see page 77.

Safety Initiatives in the Railway Business

The shared mission of Hankyu Corporation and Hanshin Electric Railway is to ensure the absolutesafety of railway transportation. All day-to-day safety enhancement measures as well as measures
to ensure safety in emergencies reflect the safety policy and safety objective below.

Safety Policy andSafety Objective
Hankyu Corporation 
Safety Objective• Maintaining the elimination of accidents for which we bear responsibility
For the fiscal years from fiscal 2016 onward, we again set elimination of accidents for which we bear responsibility as our safety objective.
This has been our safety objective since 2006, and we will continue to do our utmost to achieve it.
Safety Policy and Safety Priority Measures
Provide safe, high-quality transportation services that fully justify public trust—Hankyu Corporation: Safety and comfort
1. Promote awareness to prevent accidents caused by customers
2. P revent accidents by using accident precursor information andaccident examples
3. U
 pgrade and introduce equipment and facilities to realise evensafer railways
4. Identify risks that threaten business continuity and prepare andimplement countermeasures
5. C onduct highly effective training to realise rapid, reliable
emergency responses

Positions and Roles

Safety Management System
PresidentDirectors
Head of Urban Transportation Business(Chief Safety Manager: director)
Deputy Head ofUrban Transportation Business

Manager, Urban
Transportation
Planning(Head of Investmentand Financing Team)Manager,
Transport Division(Chief TrainOperations Manager)

Manager,
Technical Division(Chief CivilEngineeringFacilities Manager)

Manager,
Kobe LineOperations

Manager,
Takarazuka LineOperations

Manager,
Kyoto LineOperations

Deputy Operations
Manager (CrewTraining Manager)

Deputy Operations
Manager (CrewTraining Manager)

Deputy Operations
Manager (CrewTraining Manager)

Manager,
Technical Division(Chief ElectricalFacilities Manager)

Manager,
Technical Division(Chief RollingStock Manager)

Business Division Safety
Management Promotion Committee

Technical Division (civilengineering facilities)
Safety Management
Promotion Committee

Investigative Committee forMeasures to Prevent Accidents

Technical Division(electrical facilities)
Safety Management
Promotion Committee

Chief Safety Manager
In order to prioritise securing the safety of railway facilities and rolling stockand the handling of operations, and to control and manage transportation
operations in each division, the Chief Safety Manager works to disseminate
safety management regulations and to ensure compliance with related laws
and ordinances; to increase awareness of safety as the Group’s most important priority; to confirm the implementation of transportation operations,management conditions, and the progress made in implementing the safety
improvement measures stipulated in the Medium-Term Management Plan;
and to implement improvement measures.

Chief Crew Training Manager
Based on the instructions and orders of the Chief Train Operations Manager,
the Chief Crew Training Manager maintains and manages the capabilities oftrain crews and periodically confirms and submits reports on the progress
being made in improving their capabilities.

Group Safety Management
Promotion Committee

Investigative Committee to Improve
the Safety and Security of OperationsPresident
The President determines the implementation, management organisation,and rules of the railway business. In addition, when formulating the MediumTerm Management Plan, which includes facilities and transportation, per­sonnel, investment, and budget, the President verifies and ascertains thesituation from the perspectives of safety and feasibility and instructs onimprovements.

Chief Train Operations Manager
The Chief Train Operations Manager manages operations-related duties,
including utilising the employees involved in operations, railway facilities, androlling stock; setting and revising the operations plan; managing train crews,
the operations of rolling stock, and train operations; and providing training fortrain crews and maintaining their capabilities.

The Safety Management Promotion Committees

Transport Division
Safety Management
Promotion Committee

6. Facilitate transition to new Total Traffic Control (TTC) systemand enhance emergency responses that are compatible with
the new system
7. Conduct training to heighten employees’ safety awarenesseven further
8. Continue training aimed at ensuring personnel development
and the passing on of skills
9. Establish workplaces with an open atmosphereTechnical Division(rolling stock)
Safety ManagementPromotion Committee

Other Managers and Responsible Persons
In each division, other managers and responsible persons maintain andmanage the facilities they are responsible for in order to ensure there are noobstacles to realising safe transportation.

Safety Management Promotion Committee
The Safety Management Promotion Committee discusses, investigates, andreports on a variety of proposals for transportation safety. This committee
includes the Group Safety Management Promotion Committee, on which thePresident serves as chairperson; the Business Division Safety Management
Promotion Committee, on which the Chief Safety Manager serves as chairperson; and the divisional safety management promotion committees.

Safety Initiatives in the Railway Business

Hanshin Electric Railway Safety Objective• Maintaining the elimination of accidents for which we bear responsibility
We have maintained elimination of accidents for which we bear responsibility as our safety objective since April 1985.

Safety Policy

Maximum priority on safety

Compliance with laws and regulations

The President, directors, and employees
shall do everything possible to ensure safetyof operations, based on the understandingthat putting the highest priority on ensuringsafety is the mission of railway businesses.

T he Company shall comply with all laws andregulations related to safety and apply themrigorously and sincerely in its operations.

President
The President has the ultimate responsibility for ensuring transport safety.

President

Chief Safety Manager (Head of Urban Transportation Business)

The Railway Safety Council has been established
as an organisation that specialises in promoting
safety management.

Directors

The Chief Safety Manager is responsible for overseeing all activities related toensuring transport safety.

Urban TransportationBusiness

Chief Train Operations Manager (Transportation Division Manager)
Under the direction of the Chief Safety Manager, the Chief Train Operations
Manager is responsible for operations including train operations, maintaining
the capabilities of train crews, and other related operations.

Railway Safety Council
Chief Safety Manager(Head of Urban
Transportation Business)
Deputy Head of Urban
Transportation Business

Manager,
Electrical Division

Chief Crew Training Manager(Head, East Rolling Stock Yard)(Head, West Rolling Stock Yard)

T he Company shall implement continuous verification procedures to ensure thatsafety management systems are operating
appropriately.

Positions and Roles

Safety Management System

Chief Train
Operations Manager(Manager,Transportation Division)

Maintenance of safety management
systems

Manager,
Rolling StockDivision

Manager,EngineeringDivision Chief Crew Training Manager (the Heads of the East Rolling Stock Yardand the West Rolling Stock Yard)
Under the direction of the Chief Train Operations Manager, the Chief Crew
Training Manager is responsible for ensuring all crew are properly qualified.
Electrical Division Manager
Under the direction of the Chief Safety Manager, the Electrical Division
Manager has overall control of items relating to electrical facilities.
Rolling Stock Division Manager
Under the direction of the Chief Safety Manager, the Rolling Stock Division
Manager has overall control of items relating to rolling stock.
Engineering Division Manager
Under the direction of the Chief Safety Manager, the Engineering Division
Manager has overall control of items relating to track, civil engineering, andconstruction facilities.

Safety Initiatives in the Railway BusinessInitiatives to Reinforce the Safety
Management System (Using thePDCA Cycle)

By applying our safety management system (the PDCA cycle) to a range of safety
initiatives, we are aiming to create a virtuous cycle of improvement based on even highersafety goals.

Revisions to the Railway Business Law in October 2006 required railway
companies to create new safety management systems dedicated toDO

transport safety. Under our new safety management system,
we are realising even higher levels of safety by applying the plan–

Safety management
implementationand operation

do–check–act (PDCA) cycle, ensuring compliance with all related
laws and regulations, conducting operations that place the highestpriority on safety, and fostering greater awareness of safety issues
among employees from directors down.

PLAN
Creation of safetycontrol plans
and systems

Continuous
improvement

CHECK
Safety management
and operational checks

ACT
Improvements (proposalsfor improvements) andrevisions to safety
management plans
and systems

Safety Enhancement Initiatives

To ensure the safety of customers, we are proactively taking personnel-related measures toenhance education and training as well as infrastructure-related measures to improveequipment and facilities.

1. Training and Education 
At government designated in-house training centres, Hankyu

on-site training. Even after personnel have passed certification

Corporation and Hanshin Electric Railway foster train drivers andexams, we maintain and heighten the skills, awareness, and quali-train conductors. During the training period, trainees receive edu-

fications of drivers, conductors, and operations personnel bycation on academic subjects and practical skills in accordance

holding safety workshops and seminars and by conducting train-with a national curriculum. Also, experienced drivers and train

ing based on a range of scenarios.

conductors act as instructors and provide rigorous one-on-one,Safety Initiatives in the Railway Business

Renewal of the Total Traffic Control System
Hankyu Corporation is renewing its control centre with a view tocontribute to the safety of train operations by enabling the control

beginning full-fledged operations at the end of fiscal 2017. Thecentre to monitor the status of railway crossings and platforms.

main aim of the renewal of the operations control centre—which
controls train operations, signals, the provision of information on

We intend to continue improving services with safe transportation as our first priority.

train services, and a range of other functions—is to introduce thelatest Total Traffic Control (TTC) system to Hankyu Corporation’s
Kobe, Takarazuka, and Kyoto lines.
In renewing the TTC system, we undertook development
aimed at (1) improving control capabilities, (2) improving the provision of information on train services to passengers, and (3)strengthening monitoring capabilities. For example, the newsystem will enable train controllers to organise train services
rapidly when accidents or other events disrupt timetabled train
services. Also, when timetabled train services are disrupted, thenew system will provide passengers with more information on train
services than the current system. In addition, the system will

2. Initiatives for Natural Disasters 
1. Responding to rain storms
During rain storms, we direct trains to reduce speed or suspend

3. Responding to actions of third parties, such asacts of terrorism

operations based on information obtained from the rain gauges, wind

If there is a warning that the actions of third parties, such as acts ofgauges, and water meters installed alongside our railway lines andterrorism, could cause serious incidents with extremely significant

meteorological information from the Japan Meteorological Agency.

effects on society, or if such a warning calls for continued vigilance,
or if suspicious items or persons are discovered or damage is

2. Responding to earthquakes
If earthquake early warning systems forecast an earthquake with aseismic intensity of four or above, or if seismographs that we haveinstalled alongside our railway lines detect an earthquake of thesame seismic intensity, we immediately begin procedures for theemergency suspension of operations of trains on line segments inearthquake zones.

incurred, we take measures appropriate to the threat level.
Further, we have installed security cameras in railway stations andstation concourses to prevent crime.

Safety Initiatives in the Railway Business

3. Maintenance Work: Indispensable for Safe, Comfortable Operations 
1. Inspecting electrical equipment

We have many different types of electrical equipment, including signal safety equipment, secure communication equipment, railway
crossing safety equipment, power equipment, railway track equipment, and substation equipment, which we inspect regularly basedon prescribed inspection schedules.

Scheduled inspection of a signal

Scheduled inspection of secure communication equipment

Abrasion measurement by an overheadwire inspection vehicle

Inspection of substation equipment

2. Inspecting railway tracks

Inspection of railway tracks is indispensable to ensuring the safe operation of trains. Further, we implement corrective grinding of slightly
uneven parts of rail surfaces to improve ride comfort and implement corrections to reduce noise and vibration.

Railway track inspection vehicle

Vehicle for the corrective grinding of rails

3. Inspecting structures
We inspect elevated tracks, bridges, tunnels, and other railway civil engineering structures regularly.

A structure inspection

A scheduled inspection of a tunnel

4. Inspecting rolling stock
We conduct inspections at our plants and train depots to maintain the safety of rolling stock. Regular inspections include train inspections,monthly status and function inspections, main component inspections, and overall inspections. In addition, we conduct unscheduledinspections as required.

A monthly status and function inspection

An overall inspection