Risk Management Activities

We use a significant amount of naturally derived resources, such as palm oil and paper/pulp, as raw materials in its products. These materials are not only susceptible to external factors such as price fluctuations and climate change, but in recent years, increasing attention has been placed on ensuring environmental and human rights considerations throughout the procurement process. The palm oil and paper/pulp that we use are sourced through multi-layered supply chains (from plantations and farms to processors and suppliers), and it remains a challenge to fully grasp the conditions of smallholder farms and primary producers, particularly in the palm oil supply chain, as well as to ensure full traceability.

If environmental or human rights issues arise at raw material suppliers within the supply chain, or if our efforts to address such issues are deemed inadequate, we may face procurement disruptions, product supply delays, or even suspension of business operations. These outcomes could lead to the loss of brand image or credibility, a decline in business performance, and severe threats to business continuity.

In light of these risks, we recognize risks related to responsible law material procurement in consideration of environment and human rights as an emerging risk that could have a significant impact on future operations. And we are promoting it through the following key initiatives:

Geopolitical risks have remained high in Europe and East Asia, where we conduct businesses. In addition, such risks may increase in countries and regions where we procure raw materials.

If destabilization of political and social conditions, diplomatic tensions, or other reasons cause a deterioration in the environment surrounding our business, human casualties, a temporary suspension of operations due to supply chain disruptions, or changes in consumer purchasing behavior, our targets for net sales and profit may be unattainable.

From these situations, we recognize geopolitics as an emerging risk that could have a significant impact on future operations. And we prepare risk scenarios for countries and regions with heightened geopolitical risks, provide systems for response where needed, and monitor the political and social situations. In addition, we have established guidelines for ensuring employee safety and are working to strengthen its supply chain networks. We address geopolitics as a corporate risk.

In recent years, cyberattacks leveraging AI and other technologies have become increasingly advanced and targeted, with a growing trend of attacks not only on individual companies but across interconnected supply chains. As global business networks expand, supply chains are becoming more complex, making it structurally difficult for a single company to fully defend itself. In manufacturing environments, efforts to improve efficiency have led to the digitization and networking of control equipment and robots, creating new potential entry points as previously closed control networks become connected to external systems.

Cyberattacks can cause factory shutdowns and system failures at partner companies, which may lead to delays in product supply and interruptions in business operations. Such disruptions can severely affect performance and business continuity.

From these situations, we recognize cyberattacks targeting production facilities and business partners as an emerging risk. To strengthen cybersecurity in factory control systems, we are working to detect risks early and minimize potential damage by implementing centralized management of security logs, promoting real-time monitoring, and introducing systems to detect network anomalies. In particular, we consider the potential impact to be significant in areas where control systems are connected to the internet—such as remote sensing, remote maintenance, and the use of external cloud services—and are taking both technical and operational countermeasures tailored to each connection type. As part of our broader supply chain cybersecurity initiatives, we assess the security measures of key business partners and conduct follow-up activities as needed. We address response to cyberattack risk as a corporate risk.