The management principle of Komatsu is to maximize its corporate value through the commitment to “Quality and Reliability.” Any uncertainty that hinders this pursuit is considered a “risk,” and measures are taken to address all risks threatening the sustainable development of the Komatsu Group.
Komatsu identifies risks that may affect its business activities from an enterprise-wide perspective and evaluates them based on “impact on business performance,” “likelihood of occurrence,” and “impact duration in case of risk occurrence,” to determine the priority of risks. Furthermore, the company identifies “corporate risks,” which are significant enterprise-wide risks, and “regional risks,” which are risks specific to each country or region that may affect business activities in each region. After determining the departments responsible for countermeasures, Komatsu carries out activities to avoid or minimize risks and maximize opportunities. In FY2025, the Risk Management Committee met twice to identify risks and opportunities reflecting changes in the business environment and evaluate their priority.
Komatsu has established the Risk Management Committee to formulate Group-wide policies on risk management, identify “corporate risks” through the selection and evaluation of risks from an enterprise-wide perspective, inspect and follow up on the implementation status of risk countermeasures, and control risks when they materialize. The committee is chaired by the President, with the Executive Officer Supervising General Affairs serving as Vice Chairman and the Risk Management Group of the General Affairs Department acting as the Secretariat. In FY2025, the committee was convened in November and February, and the content of its deliberations and activities is regularly reported to the Board of Directors.
The risk map (risk prioritization) based on FY2025 risk assessment results is as follows. For details on the risks, please refer to the 157th Securities Report.
Risk assessment results
| Category | Item | Impact on operating results | Possibility of occurrence | Impact period |
|---|---|---|---|---|
| Strategic risk | Product and solution strategy | Big | High | Long-term |
| Business environment | Big | High | Short-term | |
| Business investment | Big | High | Medium-term | |
| Response to social issues | Big | High | Long-term | |
| Operational risk | Supply chain | Small | Medium | Short-term |
| Talent acquisition and development | Big | High | Long-term | |
| Information security | Big | High | Short-term | |
| Intellectual property | Small | Low | Short-term | |
| Financial risk | Fluctuations in financial markets | Small | High | Short-term |
| Changes in tax systems | Small | Low | Short-term | |
| Foreign exchange fluctuations | Small | High | Short-term | |
| Hazard risk | War, terrorism, and geopolitical | Big | High | Long-term |
| Natural disasters, accidents, and infectious diseases | Medium | Medium | Short-term |
The corporate risks for FY2025 are as follows.
| Risks related to product and solution strategies | |
|---|---|
| Risk description | Komatsu defines its purpose as “creating value through manufacturing and technology innovation to empower a sustainable future where people, businesses, and our planet thrive together.” In line with future market and societal needs, Komatsu is promoting the creation and market introduction of new products and solutions through machines compatible with various power sources, Smart Construction®, mine automation, and data-driven businesses such as Komtrax. However, as global movements such as the advancement of low-carbon technologies and compatibility with various power sources, including electrification, accelerate, Komatsu may lose its competitiveness in the market if it is unable to develop products and solutions that meet customer needs by the time they are required by the market, or if the products and solutions it develops fail to gain customer acceptance. In particular, as the diversification of power sources progresses toward decarbonization, Komatsu’s business model is also required to adapt to these changes. Failure to adapt may not only result in the loss of existing revenue sources but also lead to a decline in market competitiveness. |
| Impact on business | If we are unable to provide products and solutions that maintain an advantage over competitors, it could affect our business performance, and this impact could be prolonged. |
| Risk mitigation actions | Komatsu is further advancing solution development and promoting initiatives for compatibility with various power sources, as well as more advanced automation and remote control. From 2020 to 2025, Komatsu introduced eight models of electrified construction equipment, primarily in the European and Japanese markets. Going forward, we aim to expand the product lineup to offer more options for customers. To address the challenge of power supply infrastructure for electrified construction equipment, we have jointly developed a generator using hydrogen co-firing engine technology with partner companies and are conducting a proof-of-concept (PoC) project as a power supply unit for electric mini excavators. In addition, in December 2025, Komatsu, together with Obayashi Corporation and Iwatani Corporation, conducted a demonstration test of a medium-sized hydraulic excavator equipped with a hydrogen fuel cell at a construction jobsite in Japan. To accelerate technological innovation, Komatsu acquired American Battery Solutions Inc. (ABS), a U.S.-based battery manufacturer. By combining ABS’s battery technology with Komatsu’s expertise, we are advancing the development and production of batteries for construction and mining equipment adapted to various environments. Going forward, we will expand the range of models equipped with ABS batteries and accelerate the in-house production of key components related to electrified construction equipment. Through these efforts, we will also work to establish a value chain business that supports the lifecycle of electrified construction equipment. In addition, Komatsu operates a global remanufacturing (reman) business that collects and regenerates components such as engines and transmissions after long-term use at customer sites. This resource-circulating business is an important element supporting Komatsu’s component strategy. In Japan, Komatsu also remanufactures key components of hybrid hydraulic excavators, such as capacitors and inverters, and nearly all key components developed and produced by Komatsu are now eligible for remanufacturing. These initiatives contribute to reducing customer costs and environmental impact. Furthermore, in February 2026, Komatsu strengthened its supply capacity to meet growing global reman demand through the acquisition of SRC of Lexington’s business. For construction jobsites, in December 2024, Komatsu fully redesigned its 20-ton class hydraulic excavator, a mainstay model in the civil engineering field, and launched it in Japan as the “PC200i-12.” The model has now also been introduced in Europe and North America. As a new-generation hydraulic excavator equipped with standard 3D machine guidance that integrates with Smart Construction®, it improves safety and productivity and is designed to allow even less-experienced operators to work without stress. In September 2025, Tier IV, Inc., Komatsu, and EARTHBRAIN Ltd. also began collaborating toward the practical application of autonomous operation technology for construction equipment. Komatsu is promoting the automation of its articulated dump trucks and rigid dump trucks for civil engineering and quarry sites in Japan, aiming to put an autonomous operation system into practical use by FY2027. At mine sites, in July 2025, Komatsu began operation of a diesel-trolley 930E at Boliden’s Aitik copper mine in Sweden as the first model in its “power agnostic truck” series, which offers high compatibility with various power sources. The truck adopts a modular design that enables multiple power sources, such as diesel, battery, and hydrogen, to be interchangeable on the same vehicle platform, allowing flexible response if it becomes necessary to switch power sources in the future. In addition, in September 2025, Komatsu began collaborating with Applied Intuition to develop software-defined vehicle (SDV) architecture and an automated vehicle platform, which will serve as core technologies for next-generation mining equipment, with the aim of technological innovation including the full autonomy of mine sites. As of the end of March 2026, the cumulative number of ultra-large autonomous haulage trucks equipped with the Autonomous Haulage System (AHS) for mining trucks reached 1,016 units. |
| Risks associated with addressing social issues （a）Response to climate change |
|
|---|---|
| Risk description | Komatsu operates globally and recognizes various social issues, including climate change, water resource depletion, and human rights issues. Amid growing social interest in climate change and other issues, Komatsu has incorporated climate change into its business strategy targets as one of its important management issues. Komatsu aims to sincerely address social issues, including climate change, fulfill its social and environmental responsibilities as a global company, and contribute to society through its business activities. However, because the standards expected by society are constantly changing, there is a risk that Komatsu’s responses may be deemed insufficient by society. As a result, a decline in brand image and social credibility may adversely affect Komatsu’s business performance. |
| Impact on business | Komatsu has long positioned environmental activities as one of its top management priorities. In 2021, to realize DANTOTSU Value, which represents a virtuous cycle of solving ESG issues and improving earnings through customer value creation, Komatsu declared its aim to achieve carbon neutrality by reducing CO2 emissions to net zero by 2050. Komatsu has also set this declaration as a challenge target in its mid-term management plan launched in April 2025 and is actively promoting related activities. However, if Komatsu’s responses to social issues are insufficient, or are deemed insufficient by stakeholders, this may affect Komatsu’s business performance, and such impacts may be prolonged. |
| Risk mitigation actions | To reduce climate change risks, Komatsu is working to significantly reduce emissions during product operation, which account for the majority of CO2 emissions over the entire lifecycle, by advancing the market introduction of electrified construction equipment and conducting advanced research into fuel cells, hydrogen engines, and other technologies. In response to carbon neutrality needs at mine sites, Komatsu is developing “Power Agnostic Trucks,” which can operate with any power source, through a GHG Alliance with 12 major resource companies. As an industry leader, Komatsu will also promote activities toward the realization of a low-carbon society by enabling efficient jobsite operations through autonomous driving and remote control using advanced digital technologies. Based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), Komatsu assesses the risks and opportunities that climate change poses to the company, and identifies short-term (three years or less), medium-term (more than three years and up to 10 years), and long-term (more than 10 years) climate-related risks and opportunities. Komatsu also assesses the resilience of its strategy by considering multiple climate-related scenarios, including scenarios of 2°C or lower. In addition, across the value chain, including upstream, own operations, and downstream, Komatsu assesses acute physical risks, such as operational shutdowns caused by typhoons and heavy rain; chronic physical risks, such as deterioration of operating environments due to rising temperatures; regulatory risks, including currently applicable regulations such as carbon pricing and emissions regulations, as well as new policies and regulations expected to be introduced or strengthened in the future; technology risks, such as delays in responding to electrification; legal risks related to environmental laws and regulations, such as violations of emissions standards and reporting obligations; market risks, such as changes in customer needs for decarbonization; and reputational risks, such as a decline in trust due to delays in environmental response. Komatsu incorporates the processes for identifying, assessing, and managing these risks into its enterprise-wide risk management framework. Komatsu identifies risks related to social issues, including climate change, from an enterprise-wide perspective, evaluates them based on “impact on business performance,” “likelihood of occurrence,” and “impact duration in case of risk occurrence,” and determines their priority. For identified risks, Komatsu clarifies the departments responsible for countermeasures and promotes responses to avoid or minimize risks and maximize opportunities. Komatsu has also integrated its response to biodiversity into its enterprise-wide risk management process as an important initiative that contributes to climate change mitigation and adaptation. Furthermore, Komatsu promotes initiatives related to climate change and water security through constructive dialogue with stakeholders. Through these activities, Komatsu aims to effectively reduce CO2 emissions by 50% by 2030 compared with 2010, and to increase the use of renewable energy to 50%. These efforts will lead to Komatsu’s challenge target of achieving carbon neutrality by 2050, which means effectively reducing CO2 emissions to net zero by balancing CO2 emissions and absorption. |
| (b) Reputational risk related to the forestry equipment business | |
| Risk description | Forests have an important function of absorbing carbon dioxide from the atmosphere and contribute significantly to the mitigation of climate change. Timber, one of the benefits derived from forests, can store the carbon dioxide absorbed during tree growth for a long period as long as it is not burned. Wood and paper are also renewable materials and have recently attracted attention as alternatives to plastics. Because these benefits can be achieved at relatively low cost, healthy forest growth and proper forest management are required. Meanwhile, forestry remains one of the industries with a high number of occupational accidents globally, and the introduction of forestry equipment is extremely important for both improving work efficiency and ensuring worker safety. Promoting mechanization contributes to the realization of safer and more sustainable forestry. In light of this external environment, Komatsu aims to contribute to “circular forestry,” which seeks to sustainably use and regenerate forest resources while achieving harmony among the environment, economy, and society. However, if the importance of the sustainable use and regeneration of forest resources is not sufficiently communicated, and Komatsu’s initiatives and the important role of forestry are not properly understood, misconceptions may arise that Komatsu contributes to deforestation or lacks consideration for the environment, particularly if only logging equipment or logging scenes are emphasized. Such misconceptions may lead to the misinterpretation of Komatsu’s environmental initiatives and social responsibility, increasing reputational risk. |
| Impact on business | Komatsu positions the forestry equipment business as its third pillar, following the construction and mining equipment business, and is working to strengthen it. This business has expanded through M&A and provides mechanization in the areas of logging, processing, forwarding, and planting, as well as fleet management and solutions related to logging and timber transport. However, if the above risks materialize and Komatsu is perceived as giving insufficient consideration to the environment, evaluations by environmentally conscious customers and investors may decline, which could lead to damage to brand value, a reduction in business transactions, and a decline in sales. Furthermore, amid the tightening of ESG and environmental regulations, if the costs required for Komatsu to adapt to these regulations increase, this may reduce the profitability and competitiveness of the overall business and adversely affect Komatsu’s growth strategy. |
| Risk mitigation actions | Komatsu believes it is important to properly communicate to society the significance of forestry equipment in contributing to sustainable forest management and the promotion of circular forestry. Komatsu actively communicates the positive aspects of forestry, including initiatives for reforestation after logging, the carbon fixation benefits of timber, the significance of improving safety through mechanization, and the efficient absorption of carbon dioxide by forests. In addition, to clarify its consideration for the environment and social responsibility, Komatsu is strengthening information disclosure based on ESG and SDGs frameworks. In addition to reducing CO2 emissions from construction and mining equipment, Komatsu also focuses on the importance of the role forests play in environmental conservation and the circular economy. In particular, because forest management and planting operations still rely heavily on manual labor, Komatsu is developing the planting machine “Planter” and Smart Forestry solutions, aiming to improve the efficiency of forestry operations, establish regeneration cycles, and support sustainable, high-quality forest management. Komatsu is also working to rehabilitate former mine sites as forests and farmland and expand green areas. Employees are engaged in tree-planting activities at former mine sites in North America, as well as in China and Indonesia, contributing to the restoration of local environments. |
| Product safety and quality risk | |
|---|---|
| Risk description | Komatsu strives to maintain and improve the quality and reliability of the products it provides based on strict internal standards established within the company. During the design and quality verification stages, Komatsu anticipates not only hazards that could cause harm to people, but also potential impacts on property, the environment, and the public, as well as hazards throughout the product lifecycle from shipment to disposal and hazards arising from increasingly diverse product usage. Based on these assumptions, Komatsu implements protective measures, including inherently safe design measures and safeguarding/additional protective measures. However, in recent years, product regulations and standards in various countries and regions have become increasingly stringent year by year. Komatsu is required to comply with a wide range of laws and regulations, including emissions regulations, radio certifications for ICT construction equipment, and the Cyber Resilience Act (CRA) in Europe. If Komatsu’s response to these frequently changing product regulations and standards is delayed, there is a concern that business opportunities may be lost. In addition, if an accident or similar incident occurs due to unexpected defects arising from product design or manufacturing, Komatsu may incur compensation and other costs for damages, and its reputation and credibility may be damaged, which could adversely affect its business performance. |
| Impact on business | Under our basic stance of “commitment to Quality and Reliability,” we place the highest priority on ensuring “safety” and “peace of mind” in our quality assurance activities. However, if a serious safety or quality issue were to arise, particularly given our global business operations, it could have a significant impact—such as loss of business opportunities, deterioration of brand image, erosion of customer trust, and reduced market share. Furthermore, costs associated with product recalls, sales suspensions, and compensation to customers may increase Komatsu’s financial burden. In addition to these economic impacts, safety and quality risks may cause long-term damage to Komatsu’s reputation, which could also lead to the loss of future business opportunities. |
| Risk mitigation actions | Komatsu’s manufacturing framework has an organizational structure in which the research and development department responsible for design, the manufacturing department responsible for production, and the quality assurance department responsible for verification operate independently. By sharing quality-related information across departments and maintaining mutual checks and balances, Komatsu strengthens overall governance. In addition, all departments work together, from product planning to development, production, sales, and service, to continuously create safe, high-quality products. At each stage of development and production, Komatsu evaluates conformity through multiple review and assessment meetings and promotes built-in quality activities aimed at achieving defined targets. Through this process, Komatsu conducts quality assurance activities to ensure “quality and reliability.” Through these initiatives, Komatsu strives to provide products and services that are considerate of the global environment, comply with international standards and laws and regulations, and ensure customer safety and improve customer satisfaction. Komatsu is also improving product safety by adopting safety assistance devices that support the prevention of collision accidents through detection of people, objects and hazards, as well as devices that support the prevention of rollover accidents. In addition, Komatsu will enhance product security by ensuring compliance with the CRA. To respond to increasingly stringent product regulations and standards in each country and region, Komatsu has established a dedicated regulatory compliance department within its development function. The department has created a database of information on laws and regulations in each country and is promoting the systemization of related operations. In particular, regarding engine emissions regulations, Komatsu has separated the testing department from the certification application management department, thereby enhancing organizational independence and strengthening the accuracy of operations, the prevention of misconduct, and the early detection of anomalies. Furthermore, to quickly and accurately understand the latest trends in each region, Komatsu collects information on relevant laws and regulations through the use of external consultants and global collaboration with regulatory personnel in North America and Europe. Komatsu also assigns regulatory personnel to major overseas sites and works with local law firms to strengthen its legal compliance systems. |
| Supply chain risks | |
|---|---|
| Risk description | Under the philosophy of aiming to build a Win-Win relationship with our business partners, who are on an equal footing with us, and encouraging each other, Komatsu evaluates and selects suppliers accordingly. However, if our efforts toward sustainable and responsible procurement are deemed insufficient for any reason within the supply chain, there is a risk that the Komatsu Group’s brand image and credibility may deteriorate. In addition, Komatsu’s procurement of parts and materials is affected by fluctuations in raw material markets and energy prices. Sharp increases in the prices of materials such as steel, and energy such as crude oil and electricity, can lead to higher manufacturing costs for Komatsu products. Shortages of parts and materials, supplier bankruptcies or production discontinuation, import/export regulations among countries, and disruptions in international transportation may also make timely procurement and production difficult, resulting in lower production efficiency and lost sales opportunities. In addition, prolonged disruptions in global supply chains, unexpected surges in material and energy prices, and sustained supply constraints pose risks that could adversely affect Komatsu’s business performance. |
| Impact on business | In the construction and mining equipment business, Komatsu conducts business with approximately
2,500
business partners worldwide, which are primary suppliers. Establishing strong partnerships with business partners in the supply chain is extremely important for Komatsu’s business operations. However, if a supplier violates compliance requirements or fails to address environmental issues, this could affect Komatsu’s ability to secure raw materials and continue production. Procurement from business partners accounts for a large portion of Komatsu’s manufacturing costs. For major construction equipment, such as medium-sized hydraulic excavators, this ratio reaches approximately 90%. Supply chain-related risks are diverse and include the management and SLQDC conditions of individual business partners, natural disasters, pandemics, international trade friction, and import/export regulations. If these risks materialize, they could cause production interruptions and cost increases, ultimately leading to delivery delays to customers and declines in quality. |
| Risk mitigation actions | In 2020, Komatsu formulated the “Declaration of Partnership Building” to promote mutual prosperity and enhance mutual added value in the supply chain. Through this declaration, Komatsu is strengthening collaboration with business partners and working to build new partnerships. Since 2022, Komatsu has held price negotiations with all primary suppliers in Japan, including auxiliary materials manufacturers, to optimize purchasing prices. In 2024, Komatsu continued to hold price negotiations with 1,207 companies and made necessary price revisions. Komatsu plans to continue holding price negotiations with business partners at least once a year. To maintain proper procurement activities, Komatsu has established a “whistleblowing system for suppliers” to receive inquiries and reports from suppliers regarding issues including violations of the Subcontract Act, and has put in place a system to promptly identify and correct compliance and transaction-related issues. In response to Japan’s 2024 logistics issue, Komatsu has also established a “whistleblowing system for drivers,” where drivers can consult on transportation-related matters. Through this system, Komatsu collects opinions and issues from external parties and responds appropriately. For important suppliers, Komatsu visualizes risks through regular risk assessments and works to reduce those risks. Specifically, Komatsu monitors the workload conditions of companies in the Komatsu Midori-kai in Japan on a monthly basis, watches for impacts on their management, and provides necessary support. In 2020, Komatsu also announced its voluntary action declaration for logistics improvement and joined the Ministry of Land, Infrastructure, Transport and Tourism’s “White Logistics” Promotion Movement. Komatsu continues initiatives to realize sustainable logistics, including efforts to reduce driver working hours through the use of modal shifts and optimization of unloading area layouts, as well as efforts to set appropriate freight rates. To strengthen its production and procurement system so that it is resilient to changes in the operating environment, Komatsu has introduced global cross-sourcing, which enables flexible changes to production plants and product supply destinations in response to changes in the external environment, as well as multi-sourcing, which involves procuring parts from multiple suppliers, in preparation for the risk of plant damage caused by natural disasters such as heavy rain and flooding. Through these initiatives, Komatsu has built a production and procurement system that can continue business operations even in emergencies. In 2023, Komatsu reinforced its Asia Procurement Center and expanded local sourcing in ASEAN member countries and South Asia. Komatsu is also promoting global multi-sourcing, which involves placing parallel orders with suppliers in multiple regions, by utilizing cross-sourcing to reduce dependence on specific regions. |
| Risks associated with talent acquisition and development | |
|---|---|
| Risk description | Komatsu considers talent to be one of its important management resources for creating new value. Based on this view, Komatsu continuously invests in its people and aims for the sustainable growth and development of both the company and its employees, while taking into account changes in internal and external environments and alignment with management policies. However, due to factors such as the decline in the working population, the number of experienced engineers is decreasing, and there is a shortage of engineering talent. In particular, competition to acquire talent in key areas required by Komatsu, such as digital technologies and EV-related technologies, is intensifying globally. If Komatsu is unable to acquire such talent as planned, or if it is unable to develop employees with the skills required in these specialized fields and secure the capabilities necessary for product research and development, this could have a significant impact on the execution of Komatsu’s management plan and its sustainable growth. |
| Impact on business | Komatsu has set out three growth strategy pillars in its mid-term management plan: 1) value co-creation through innovation, 2) pursuit of growth and profitability, and 3) innovation of the management foundation. Under the innovation of the management foundation, Komatsu has positioned “promoting the acquisition and empowerment of talent to support business growth” as one of its key activities. In promoting this initiative, it is necessary to acquire and develop digital talent with expertise in areas such as software development. If the acquisition and development of such talent do not proceed as planned, this could affect the mid-term management plan and the company’s sustainable growth. In addition, to advance the solution business, Komatsu needs to accelerate technological innovation by integrating its core technologies with external knowledge through collaboration with partners, M&A, and other means. If these initiatives do not proceed as planned, this could affect the mid-term management plan and the company’s sustainable growth. In an environment where talent acquisition is difficult, retaining and developing the employees Komatsu has hired becomes important. If Komatsu does not understand employees’ engagement with the company and implement appropriate measures, there is a risk that talent outflow may increase due to declining engagement, which could affect the company’s sustainable growth. |
| Risk mitigation actions | Komatsu promotes Diversity & Inclusion to create workplaces where employees with diverse backgrounds can work with peace of mind, foster an environment where innovation is more likely to emerge, improve individual motivation, encourage changes in corporate culture, and ultimately contribute to the growth of the company as a whole. As part of these efforts, Komatsu is working to increase the ratio of female employees, support LGBTQ employees, promote the employment of people with disabilities, and disclose human capital information. In conjunction with the reconstruction of its headquarters building, Komatsu aims to strengthen its functions as an urban innovation center that revitalizes co-creation and collaboration activities, including industry-academia and industry-industry collaboration, as well as the expansion of open innovation. In addition, Komatsu will utilize its global headquarters as an important base for creating innovation and communicating its corporate culture. By conveying Komatsu’s values and appeal to talent around the world through a variety of touchpoints that combine in-person and online formats, Komatsu will strengthen its recruitment competitiveness. In addition, because it is difficult to acquire digital talent, Komatsu is promoting internal talent development. Komatsu has defined the type of talent it aims to develop through education and has established an integrated education system ranging from basic training to selective practical programs. Through this system, Komatsu promotes value co-creation through innovation and works to maintain and strengthen its competitiveness. Furthermore, to improve employee engagement, Komatsu regularly conducts engagement surveys on a global basis. Through these surveys, Komatsu understands and analyzes employee engagement, identifies strengths and issues by region and organization, and reflects these findings in various human resources measures. |
| Information security risk | |
|---|---|
| Risk description | In recent years, the threat of cyberattacks has become more advanced and sophisticated at an extraordinary pace year by year, posing an urgent and serious threat. In particular, techniques such as unauthorized access, ransomware, phishing, and DDoS attacks have evolved, and if Komatsu is affected by such attacks, it faces risks such as business interruptions and information leaks. As a result, this could not only lead to the loss of customer trust, but also have a serious impact on corporate management through a decline in brand value, the imposition of legal penalties, and an increased risk of litigation. Furthermore, in recent years, countries and regions have been enacting and strengthening laws and regulations related to the protection of personal information, the enhancement of cybersecurity, and data localization, from the perspectives of privacy protection, cybersecurity, and economic security. If Komatsu is unable to meet these requirements, it may incur legal liability due to violations of laws and regulations, and this could affect Komatsu’s credibility, brand image, and relationships with customers. |
| Impact on business | Komatsu is developing businesses such as ICT-enabled “connected factories,” Smart Construction®, automation of mining equipment such as the Autonomous Haulage System (AHS), and data-driven businesses such as Komtrax. However, as cyberattacks become increasingly sophisticated, the risk that these systems may be targeted is also increasing. Komatsu reduces the risk of unauthorized control of its systems by implementing multiple countermeasures. However, if damage such as the leakage of important information or system shutdowns caused by cyberattacks were to occur, Komatsu’s information security measures could be regarded as insufficient. This could lead to the suspension of transactions with customers or refusal by customers to share data, which may hinder Komatsu’s solution business. In addition, Komatsu operates its construction equipment and vehicles business globally through 62 production sites, 56 sales sites, and 208 sales and service distributors in 151 countries. If Komatsu is unable to respond fully to the strengthening of laws and regulations in each country and region and fails to meet legal requirements, it may incur legal liability due to violations of laws and regulations, which could have a serious impact on Komatsu’s credibility and business performance. |
| Risk mitigation actions | To address these risks, Komatsu operates a CSIRT (Computer Security Incident Response Team) covering its sites worldwide. During normal operations, the CSIRT works to prevent information security incidents through information gathering, various system countermeasures, employee education, and other activities. In the event of an incident, the CSIRT aims to respond quickly, minimize damage, and restore systems as early as possible. To address risks specific to production sites, Komatsu has established an FSIRT (Factory Security Incident Response Team) and has built a response structure to prepare for cyberattacks on plant networks and production equipment. In the event of an incident, the FSIRT and CSIRT work together to minimize damage and enable an early resumption of production. In addition, to continue providing customers with safe and secure products and solutions, Komatsu works to ensure security from the product planning and development stages, and has established appropriate management of vulnerability information and response processes for cases where vulnerabilities are identified. Komatsu also continuously monitors international regulatory trends, including the Cyber Resilience Act (CRA) and the NIS2 Directive, as well as advanced security requirements from customers, and is working to establish processes to address them. Furthermore, Komatsu is strengthening collaboration with the dealers and business partners that make up its supply chain and is promoting the enhancement of cyber resilience across Komatsu as a whole and throughout the entire value chain. |
| Geopolitical risks | |
|---|---|
| Risk description | Komatsu operates globally, with development, production, and sales sites in countries around the world, and heightened social, political, and military tensions in specific regions may affect its business. To minimize the impact of diversifying geopolitical risks, such as fluctuations in resource prices, import/export regulations, and impacts on the supply chain, Komatsu monitors political and economic conditions as well as trends in laws and regulations in each country, analyzes the situation, and takes appropriate actions. However, global political divisions and military tensions may cause supply chain disruptions and affect financial and economic conditions. In response to such circumstances, Komatsu gathers and analyzes information on trends in economic security-related laws, regulations, and other rules, including the Economic Security Promotion Act in Japan. Nevertheless, if Komatsu faces unexpected situations, there is a risk that its business performance may be adversely affected. |
| Impact on business | Heightened social, political, and military tensions in specific regions, such as the Russia-Ukraine situation and the situation in the Middle East, may affect Komatsu’s business performance if they lead to a decline in demand in certain regions or an increase in procurement and transportation costs due to higher crude oil and fuel prices. In addition, Komatsu’s electronics-related products incorporate advanced technologies, some of which are subject to export controls under the Export Trade Control Order, the Foreign Exchange and Foreign Trade Act, and other applicable laws and regulations, including controls on goods, technologies, and services. Although the current impact is limited, if regulations are further strengthened in the future, this could result in lost opportunities for main unit sales and disruptions to service support, potentially affecting Komatsu’s business. |
| Risk mitigation actions | To address such risks, Komatsu has established a flexible production structure known as global cross-sourcing, which enables the mutual supply of products and parts across regions. Under this structure, Komatsu supplies products and parts to each market from the optimal sites, taking into account factors such as exchange rate fluctuations, production capacity at each site, cost competitiveness, and regional demand trends. In addition, Komatsu is strengthening multi-sourcing, which secures multiple procurement sources for the same parts, as part of its efforts to diversify risks. In response to the situation in the Middle East, Komatsu continues local operations while taking necessary measures, such as supplying main units and parts using routes other than the Strait of Hormuz, with safety as its top priority. In addition, to respond to regulatory trends arising from revisions to the Export Trade Control Order, the Foreign Exchange and Foreign Trade Act, and other applicable laws and regulations, as well as similar laws and regulations in each country, Komatsu has established a dedicated internal department. This department promptly collects information, shares it with relevant business divisions, and maintains a structure to respond in a timely and appropriate manner. Furthermore, in preparation for the strengthening of export controls on advanced technologies, Komatsu is working to reduce the risk of a decline in profitability due to regulations. In addition to diversifying regions by selling products outside regulated areas, Komatsu is working to enhance competitiveness through product differentiation and functional improvements, as well as to improve the profitability of the parts business. |
| Risks associated with AI utilization | |
|---|---|
| Risk description | The evolution of AI has the potential to change the fundamental assumptions of Komatsu’s business. Komatsu believes that the effective use of AI is essential to its strategy, which is built on three growth strategy pillars: 1) value co-creation through innovation, 2) pursuit of growth and profitability, and 3) innovation of the management foundation. If Komatsu is unable to strategically incorporate AI, it may lose new business opportunities and the competitiveness of its products and services. |
| Impact on business | Generative AI is currently a rapidly evolving field, and there is much public debate about its opportunities and risks. Rather than viewing these changes as threats, Komatsu needs to see them as opportunities and make effective use of generative AI. If Komatsu is unable to respond quickly to such rapid changes in new technologies and improve productivity and efficiency not only for Komatsu but also for customers and dealers, this could affect its competitiveness. On the other hand, inappropriate use of generative AI could lead to information leaks caused by the input of confidential information, or violations of the rights of others. |
| Risk mitigation actions | In January 2024, Komatsu established a cross-functional internal project led by the CTO (Chief Technology Officer) as a framework to deepen collaboration among sites around the world and respond quickly to changes brought about by the use of generative AI. Through this project, Komatsu is responding quickly to changes associated with the use of generative AI. Through the development and implementation of advanced use cases, Komatsu is gaining knowledge of the potential and use of new technologies in the field of generative AI and ensuring safe implementation. In addition, as part of risk management for the use of generative AI, Komatsu has established global policies and rules for generative AI use, including the appropriate protection of company information and personal information, and conducts internal training based on these policies and rules. Through these efforts, Komatsu is safely incorporating generative AI into its business while preventing information leaks and violations of the rights of others. In April 2026, Komatsu also established a core function in Japan to promote the safe and rapid use of AI, and in May of the same year, appointed approximately 500 AI promotion leaders. Going forward, Komatsu will use these promotion leaders as a starting point to solve frontline issues and create successful use cases, while strengthening the foundation that supports global deployment. Through these initiatives and collaboration, Komatsu will further accelerate AI utilization across the company and globally, leading to the establishment of a global CoE (Center of Excellence) in and after 2027. Going forward, Komatsu will expand AI utilization across the entire value chain and globally share and deploy practical knowledge accumulated at each frontline site. Through these efforts, Komatsu will advance the sophistication of business processes, products, and services, further enhance the value it provides to customers, and contribute more fully to solving social issues. |
Regional risks for FY2025
| Risk related to local communities and Indigenous peoples’ rights | |
|---|---|
| Risk description | As it becomes increasingly important for companies to respect human rights and act responsibly, the emergence of human rights violations in business activities can lead to risks such as backlash from local communities, boycotts, loss of corporate reputation due to social criticism, business delays or interruptions, and cessation of transactions. In the mining business in particular, customers expect respect for the rights of Indigenous peoples. If the rights of Indigenous peoples are infringed upon when Komatsu’s products are used, Komatsu’s business may be affected to a certain extent. There is also concern about reputational impact if Komatsu is perceived as a company that does not give sufficient consideration to Indigenous peoples’ rights. |
| Impact on business | Of Komatsu’s revenue of 4.1 trillion yen for the fiscal year ending March 2026, approximately 1.9 trillion yen was derived from mining equipment, meaning that sales from the mining business account for about half of the company’s total revenue. Given this, if Komatsu’s efforts regarding the rights of local communities and Indigenous peoples are insufficient, or if Komatsu fails to respond appropriately, this could lead to a decline in sales or a slowdown in growth, and may result in significant losses to Komatsu’s financial position. |
| Risk mitigation actions | In 2019, Komatsu established its “Policy on Human Rights,” declaring that it would conduct business by applying respect for human rights in line with international standards across its global organization. This human rights policy has been reflected in Komatsu’s Worldwide Code of Business Conduct and is thoroughly communicated to all employees of the Komatsu Group worldwide. Based on this human rights policy, Komatsu continuously conducts due diligence to identify, prevent, mitigate, and address human rights issues in its business activities, with the cooperation of external experts. In FY2022, Komatsu conducted web-based human rights surveys targeting all Group companies in Japan and overseas, as well as major suppliers. The results were provided as feedback to the responding companies, and Komatsu is working on risk mitigation measures. In addition, Komatsu conducted an impact assessment in the Republic of South Africa, where it engaged in focused discussions on human rights with various stakeholders. These discussions led to meaningful outcomes, including the sharing of issues and values with customers and a deeper mutual understanding. In FY2024, as part of stakeholder engagement in downstream business, Komatsu held meetings with an independent distributor covering West African countries. These discussions extended beyond human rights to cover a wide range of sustainability-related topics, including environmental initiatives, local human resource development, and community contribution activities. In FY2025, Komatsu conducted a gap analysis to understand whether its existing initiatives are aligned with the requirements of the EU Corporate Sustainability Due Diligence Directive (CSDDD), which is scheduled to begin applying in July 2029. As a result, Komatsu confirmed that its existing initiatives have established procedures and reporting systems to a certain extent for the continuous management of human rights and environmental risks. Komatsu also mapped business activities conducted by Komatsu, its subsidiaries, and business partners in the value chain as a whole, and conducted a human rights and environmental risk assessment in the business areas of construction and mining equipment and industrial machinery. The assessment found that risks were relatively high in the area of human rights related to materials procurement, which Komatsu should pay particular attention to. Going forward, Komatsu will conduct further surveys and analysis with a focus on the upstream supply chain. Furthermore, Komatsu is working on human resource development in regions where human resource development has become a social issue, in collaboration with national and local governments and customers. In the mining business, for example, as part of its human resource development initiatives, Komatsu provides proprietary human resource development programs in South America, the Republic of South Africa, and other regions for people who have limited access to educational opportunities due to various national and regional circumstances, offering basic education and practical technical training. Going forward, Komatsu will continue to give consideration to the rights of local communities and Indigenous peoples through its business activities in various countries and regions, toward the realization of a sustainable society. |
Greater political divisions globally may lead to tighter regulations in some countries. The Komatsu Group collects and analyzes information on trends related to the Economic Security Promotion Act and other economic security-related regulations.
As part of its risk management activities, Komatsu has conducted compliance risk audits (CR audits) every year since FY2008. These audits are intended to visualize potential compliance risks within the company, particularly by confirming and evaluating the status of legal compliance, in areas not covered by J-SOX audits, which are conducted under the Financial Instruments and Exchange Act of Japan to evaluate internal controls over financial reporting. An internal specialist team conducts internal audits with an emphasis on periodic audits, covering Komatsu, its subsidiaries in Japan and overseas, independently owned distributors in Japan, business partners, and distributors. Through these activities, Komatsu aims to further improve the management level and compliance awareness of each company and department. Komatsu also reviews audit areas and methods in response to changes in the business environment and works to improve the quality of CR audits. The status of CR audits is reported monthly to the President and annually to the Board of Directors.
The audited areas in FY2025 are as follows:
1. Occupational safety and health, 2. Environment, 3. Labor, 4. Finance, accounting, and taxation, 5. Quality assurance and recall, 6. Emissions regulations, 7. Vehicle inspections and specific voluntary inspections (inspections required by law), 8. Export control, 9. Information security, 10. The Anti-Monopoly Act, 11. The Proper Transactions Act
In addition, cross-sectional CR audits covering the above areas include field instruction sessions conducted at each sales company site (occupational safety and health, environment, vehicle inspections and specific voluntary inspections), sales company site audits (finance and accounting, labor, information security), and overseas representative office audits (occupational safety and health, labor, finance and accounting, information security).
