Approach to Risk Management
The Takasago Group values the environment, society and the sustainability of its business. To fulfill our responsibilities to every stakeholder, we regularly monitor and identify risks that could potentially affect the stability of our business while striving to maximize stakeholder value. For managing the risks, the Takasago Group review company’s risk twice a year at Risk Management Committee. We identify and evaluate the risks that may hinder business continuity and affect our financial position and operations, and the Risk Management Committee weighs their impact. Since our products are used in many final products as raw materials and our production stopping would impact the supply of many final products, we consider the issues that may affect the continuity of production to be major risks. Therefore, we consider countermeasures for each identified risk and review them periodically. For the risks related to compliance, we also conduct internal/external audits or due diligence as our risk management.
The risks identified at the committee are reported at Board of Directors Meetings for further review. The committee is consisting of boards of director and general managers, so we can monitor the identified risks at both board and executive levels.
Risk Management Structure
The internal control system and risk management process are reviewed by Board of Auditors, and our Audit Department conduct various internal audits for assuring the effectiveness of risk management and compliance processes. In addition, our group is verified by external audits to further ensure its adequacy and effectiveness. The Takasago Group has acquired and maintained management systems for quality and safety, etc. to strengthens risk management.
Promoting Risk Assessment and Management
We identify and evaluate the risks that could affect our financial position and operations after the Risk Management Committee weighs their impact. Since our products are used in many final products as raw materials and our production stopping would impact the supply of many final products, we consider the issues that may affect the continuity of production to be major risks. Therefore, we consider countermeasures for each identified risk and review them periodically. For example, we have been managing our inventories for several months to maintain a safe zone where supply will not be stopped, using production management items such as inventory volume and delivery lead-time as indicators.
Enhancement of Information Security Measures
In response to the growing threat of cyberattacks, our Group is strengthening its information security measures on a global scale. Under the supervision of the director in charge of the Information Systems Department, we have established a global IT framework, led by the head of the Information Systems Department at our headquarters, which ensures round-the-clock monitoring 365 days a year based on the basic policy below.
Basic policy Continuously improving information security systems Ensuring integrity and protection of data Monitoring and responding to information security threats Establishing individual responsibilities for information security for the entire workforce Establishing information security requirements for third parties |
From a technical perspective, we have implemented vulnerability assessment tools and a multi-factor authentication system to prevent unauthorized access. On the organizational side, we continuously enhance employee awareness through globally standardized e-learning programs and phishing email training.
For remote work, we have introduced secure systems and digital tools to ensure safe connectivity, including:
- Secure cloud-based connections for accessing internal systems from home via the Internet.
- Automatic security patch updates for antivirus systems, even while telecommuting.
- Updated policies on the use of applications and digital tools to accommodate remote work.
Identified Risks
Climate Change
The Takasago Group’s financial performance could be significantly impacted by climate change caused by greenhouse gas emissions, such as unexpected fluctuations in the weather, extreme weather events or irregular, unseasonable weather. For example, as the group sources and uses a variety of natural raw materials, shortages and price increases of these natural raw materials caused by climate change could restrict our operations. Also, unseasonable weather in summer could affect the sales of our flavor products in the beverage market, which is one of our main categories.
Exchange Rate
The Takasago Group develops, manufactures, and supplies products on a global scale, taking advantage of its 11 overseas consolidated subsidiaries. Due to fluctuations of exchange rates, the non-consolidated financial statements, when converted to Japanese yen, could potentially affect the financial condition of the consolidated financial statements. In foreign currency transactions, significant fluctuations of the exchange rate could impact the group’s business results and financial condition.
Globalization
The Takasago Group conducts business globally. The disruption of politics, the economy, society or many other factors caused by emergent situations such as terrorism, war, pandemic, etc., could significantly affect the group’s business performance and financial condition.
Procurement/Sales
The Takasago Group sources raw materials and supplies its products around the world. Natural disasters, changes in consumer preferences, changes in international and local regulations and other significant changes are factors that influence our procurement and sales activities. These factors can significantly affect our business performance and financial condition.
Accidents/Disaster
Natural disasters or accidents that occur in areas where our production sites are located could damage production facilities and disrupt procurement, distribution and sales. Consequently, accidents and disasters can negatively affect Takasago’s business performance and financial condition.
New Products Research and Development
The Takasago Group continues to research and develop new products well ahead of the potential needs of the market. However, the delay of development or unforeseen changes in consumer’s preferences could negatively affect the results of investments in research and development.
Information Security
The Takasago Group handles confidential information related to research and development, production, marketing and sales, as well as the personal information of many customers. The Takasago Group‘s business performance and financial condition could be affected by a leak of confidential or personal information held by the group caused by an attack on its servers, the illegal access of its systems, a computer virus, or other factors that are out of our control.
Economic Conditions
A future recession or economic downturn of our main markets, both in and outside Japan, could affect our sales performance. They could also lead to a change in consumer demand, causing consumers to hold off on purchases of household products, foods and other products in a stagnant economic situation. A decline in consumer demand in the Takasago Group’s main markets could impact our business performance and financial condition.
Compliance
To conduct our business globally, the group complies with laws, regulations and relevant standards on product quality and safety, the environment, chemical substances, accounting, tax, labor and transactions in each country and region. When new laws, regulations, or relevant standards are put into effect, it is possible that they significantly impact our business performance, hindering the group’s business activities and forcing additional investment to address the situation.