Risk and Crisis Management

Risk and crisis management system

We define risk as the effect of uncertainty on the achievement of our management targets and the execution of business activities. The Risk and Crisis Management Committee has established a system and activity guideline for risks that result in threats and the state of crisis, which is the materialization of risks. Each division and affiliate conducts risk management based on these activity guidelines. 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 losses. The Management Board reviews risk and crisis management activities, and the Board of Directors approves them. The Internal Control Committee confirms the effectiveness of risk and crisis management activities.

Management framework during time 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 particularly significant risks as the “main risks” that could have a negative impact on its sustained profitable growth and contribution to the sustainability of the world. Among these main risks, the Kao Group determines themes for and addresses risks that would have a major impact on management and require an enhanced response as “corporate risks”. The Management Board decides upon risk themes and risk owners (Executive Officers) based on its analyses of an internal risk survey and the external environment as well as interviews with management, and the Risk and Crisis Management Committee manages progress.

Corporate risks, main themes, and measures

Response to social Issues

Details of risks

  • Risk of initiatives to resolve social issues being perceived as inadequate
  • Risk that failure to adequately show progress toward the KPIs committed to in the KLP being perceived as “greenwashing”

Actions

  • Understanding the evaluations of our initiatives for social issues from stakeholders and other parties on a global scale and reducing reputation risks

Response to geopolitics

Details of risks

  • Risk of deterioration of business environments in countries and regions where we develop business and procure raw materials
  • Risk of human casualties, temporary suspension of operations, or changes in consumer purchasing

Actions

  • Developing risk scenarios and response systems, and monitoring political and social situations
  • Establishment of guidelines for ensuring employee safety
  • Strengthening the supply chain networks for raw material procurement, etc

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

Actions

  • Enhancing hardware and software measures based on flood risk studies at each site, and providing disaster prevention education to protect employees and their families
  • Formulating BCP for long-term suspension of operations in Japan and strengthening BCPs 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

Actions

  • Strengthen company-wide responses in the event of serious 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 errors or intentional actions, including cyberattacks
  • Risk of temporary suspension of business activities, such as supply chain activity

Actions

  • Reinforcement of security measures and response system in case of incidents
  • Strengthen global protection of 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

Actions

  • Strengthen the emergency response system in the event of contingencies
  • Strengthen the social media monitoring system
  • Establishment of a pre-check system and in-house training for using advertising and social media

Pandemic response

Details of risks

  • Risk of temporary suspension of operations due to pandemic outbreak
  • Risk of shrinking cosmetics market, etc., due to changes in purchasing behavior

Actions

  • Reviewing the guidelines, action plans, etc., in preparation for the next pandemic, based on past responses to the COVID-19 pandemic

Our Core of Management

Our Core of Management

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