Risk Management

Philosophy of Total Risk Management

The Morinaga Group identifies total risk that potentially exists in its business activities and takes appropriate measures against the risk based on the philosophy of total risk management.

(1) To Fulfill Corporate Social Responsibility

(i) Ensuring of the safety of employees and visitors
(ii) Safeguarding of assets
(iii) Early business recovery and ensuring of business continuity

(2) To Gain Corporate Social Responsibility

(i) Timely and appropriate information disclosure
(ii) Contribution to local communities
(iii) Humanitarian considerations

Major Risks and Responses

In an effort to respond to potential risks existing in its business activities, the Morinaga Group established the “Total Risk Management Rules” in FY2002/3 as part of its internal control system. Based on the Rules, we classify and assess possible risks and implement preventive measures in normal times. See the table below for major possible risks and countermeasures.
The Total Risk Management Rules includes various manuals such as the Natural Disaster Crisis Preparedness Manual, which sets out measures to ensure an early resumption of business in case of crisis. In FY2018/3, in an attempt to take our business continuity plan (BCP) a step further, we began to work on the development of business continuity management (BCM), a framework of continuous improvements that allow the Company to continue operations even when being affected by a disaster or accident, or resume operations as early as possible after an interruption.
In the event of a crisis, we will assess and judge the situation promptly, take necessary actions such as the establishment of a task force and information disclosure, while conducting a cause analysis and implementing recurrence prevention measures.
Further, to demonstrate our strong stance against anti-social forces, we appointed a person in charge of preventing unreasonable demands. We also work to collect information from related administrative agencies, and, in case of an emergency, we will take organization-wide actions swiftly, working closely with these agencies.

Morinaga Group's Total Risk Management System

Major Risks Anticipated by the Morinaga Group and Responses Thereto

Risk Items Assumptions Anticipated Risks Response by the Morinaga Group
  1. Risks related to food safety
The Group recognizes that ensuring food safety is the highest priority issue for a food company. There is a risk that, if a large-scale recall or product liability compensation occurs due to an unexpected quality accident, our performance and financial position are negatively affected as a result of incurrence of significant costs and the Group’s reputation being damaged severely.
  • Establishment of the Quality Policy and the Quality Assurance Rules to build a systematic quality assurance framework
  • Introduction of FSSC 22000 and strengthening of the Quality Assessment System
  • Crisis Response Manuals should be referred to in case of a quality accident.
  1. Risks in the production system
Basically, the Company adopts the one product/one factory production system. There is a risk that the Group's business performance and financial position are negatively affected in the event of a large-scale disaster or accident that may have a significant impact not only on the Group's production and sales activities but on consumers’ purchasing behavior.
  • Identification of possible measures for core products as part of the business continuity management (BCM).
  1. Raw material procurement risk
  • Our primary raw materials are agricultural products such as wheat flour, cacao beans, and vegetable oils/fats.
  • We use petroleum products as packaging materials.
There is a risk that the Group’s performance and financial position are negatively affected in the event of price hike or difficulties in acquiring a sufficient volume of raw materials due to such reasons as poor crops resulting from unseasonable weather or political instability in the country of origin.
  • Strengthening of information collection, diversification of procurement sources, maintenance of appropriate inventory levels, forward exchange contracts, etc.
  1. Weather, natural disasters, infectious diseases, etc. (environmental and social risks in the supply chain)
  • Products purchasing behavior of which are susceptible to weather conditions.
  • Unforeseen, large-scale natural disasters and infectious disease pandemics
There is a risk that the Group’s performance and financial position are negatively affected by a stagnation of supply chain (mainly production and logistics).
  • Flexible production management based on the collection and analysis of weather information
  • Prompt establishment of a task force as well as a production and supply system in case of a natural disaster, infectious disease, etc.
  1. Leakage of corporate and/or personal information
Information systems cover all of the business operations and handle classified data. In the event of an unexpected information leakage due to, for example, an unauthorized access using an unforeseen technology, there is a risk that our performance and financial position are negatively affected as a result of incurrence of significant costs and the Group’s reputation being damaged severely.
  • Enhancement of the Group’s preparedness through the establishment of Personal Information Handling Policy
  • In the unlikely event of information leakage, restore our reputation by immediately announcing the incident and taking specific measures.
  1. Business expansion into overseas markets
As a global strategy, we expand our business into overseas markets through our subsidiaries in the United States, China, Southeast Asia, etc. There is a risk that the Group’s performance and financial position are negatively affected in case of unpredictable events such as a war, terrorism, political and social changes, changes in local regulatory and taxation frameworks, business practices, and sudden exchange rate fluctuations.
  • Strengthening of business and risk management systems through information collection in host countries
  1. Corporate Social Responsibility
Compliance with laws and social norms A regulatory violation or anti-social behavior will entail a risk of legal punishment, social sanctions, loss of trust, and damage to the reputation and brand.
  • Strengthening of compliance with laws, rules, and regulations by establishing the Morinaga Group Code of Conduct
  • Management of compliance risks by the Compliance Committee