Risk and Crisis Management

Risk and crisis management system

We define a risk as a potential negative impact on the achievement of our management targets and business activities, and define a crisis as the materialization of such a risk. Our Risk and Crisis Management Committee has established a system and activity guideline. Based on these activity guidelines, our domestic divisions and affiliates identify and assess risks, and formulate and implement appropriate countermeasures. Affiliated companies outside Japan are managed through business divisions.
In the event of a crisis, we launch an Emergency Response Team according to the severity of the emergency to minimize physical damage and financial loss. The Management Board reviews these efforts, and the Board of Directors approves them. The Internal Control Committee monitors the status and confirms the effectiveness of risk and crisis management activities.

Management framework during times of crisis

Within the Kao Group, when a crisis occurs, the head of the crisis response team will evaluate the level of severity of the crisis on the basis of the potential impact on the Kao Group (designating the crisis as level one, level two, or level three depending on the severity of the accident, disaster, epidemic, etc. in question), and an appropriate organizational framework will be established for dealing with the crisis in accordance with the level of severity.

Clarifying corporate risks and strengthening responses

The Risk and Crisis Management Committee and the Management Board have selected 15 main risks of special importance as risks that could negatively impact our sustainable and profitable development, and the contributions we make to the sustainability of society through our business activities. We use the term “corporate risks” to refer to those among our main risks that have a particularly strong impact on management and that require stronger response. Once a year, the Management Board selects risk topics and risk owners (Executive Officers) based on an analysis of internal risk surveys and the external environment, as well as interviews with executives. Each risk owner assembles a response team and holds deliberations, and the Risk and Crisis Management Committee meets four times a year to manage their progress.

Corporate risks and main measures

Response to geopolitical risks

Details of risks

  • Risk to human casualties
  • Risk of temporary suspension of operations and changes in consumer purchasing due to friction between countries and regions

Main measures

  • Strengthen response by preparing risk scenarios, providing response systems, and monitoring political and social situations
  • Take countermeasures centered on ensuring the employee safety, securing the supply chain network, and managing reputation

Pandemic response

Details of risks

  • Risk of health damage to employees and temporary suspension of operations due to COVID-19 variants or new viruses

Main measures

  • Revise guidelines and action plans for the next pandemic based on response to the COVID-19

Large-scale earthquakes and other natural disasters and BCP response

Details of risks

  • Risk of harm to employees and damage to assets including facilities and difficulties in supplying products resulting from large-scale earthquakes and other natural disasters such as large typhoons and floods brought on by climate change

Main measures

  • Strengthen countermeasures at each site against natural disasters such as large typhoons and floods
  • Continuously strengthen disaster prevention education to protect employees and their families
  • Formulate BCP assuming long-term suspension of operations and enhance BCP at sites outside Japan

Response to serious product quality issues

Details of risks

  • Risk of serious product quality issues arising that would cause the loss of social credibility

Main measures

  • Strengthen company-wide response in the event of critical damage arising due to product quality issues
  • Strengthen internal awareness-raising to prevent serious product quality issues from arising

Response to cyberattacks and personal information protection

Details of risks

  • Risk of leaks of confidential information or personal information due to an error or to intentional actions including cyberattacks
  • Risk of temporary suspension of business activities such as supply chain management activity

Main measures

  • Strengthen security measures and clarify response procedures in the event of an incident arising
  • Strengthen activities to protect trade secrets, personal information, and information security

Response to reputation risks

Details of risks

  • Risk that causes brand value and social credibility to decline due to the spread of negative evaluations about Kao on social media

Main measures

  • Strengthen the emergency response system in the event of contingencies
  • Strengthen the system for monitoring social media
  • Establish a pre-check system in advertising and social media messages and continuously strengthen internal education

Our Core of Management

Our Core of Management

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