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Risk and Crisis Management

Basic Policy

We regard potential negative impacts on the achievement of the management targets and business activities as a "risk," and the manifestation of such risk as a "crisis." We appropriately manage the various risks and crises that could occur across our business following the response priority detailed in the Kao Risk and Crisis Management Policy (1. Protection of human lives, 2. Environmental conservation, 3. Continuation of operations, 4. Protection of assets).

Risk and Crisis Management System

The Risk and Crisis Management Committee establishes the management system and activity guideline for risk and crisis management. Divisions, subsidiaries and affiliates conduct risk management by ascertaining and evaluating risks, and formulating and implementing countermeasures based on the activity guideline. In addition, when a crisis arises an Emergency Response Team is launched corresponding to the severity of the emergency to promptly and appropriately address the crisis in order to minimize physical damages and financial losses. These efforts are reported to the Management Board and the Board of Directors at regular intervals and other times as needed.

Clarifying Main Risks and Enhancing Our Counter Response

The Risk and Crisis Management Committee and the Management Board have defined 14 main risks of special importance as risks that could negatively impact our sustainable and profitable growth, and the contributions we make to the sustainability of society through our business activities. The managing divisions have established response policies for these risks and are managing their progress. Of these main risks, we designate risks that would have a particularly large impact on our management and that we need to strengthen our response to as "corporate risks." Once a year, the Management Board selects risk themes and risk owners (persons responsible for response to themes: Executive Officers) based on internal and external risk analysis and informational interviews with management. The risk owners establish response teams to continue examining the risks, and the Risk and Crisis Management Committee meets four times a year to manage their progress.

Corporate Risks and Main Initiatives

Theme Details of risks Main initiatives
Pandemics Risk including damage to employee health
and temporary business suspensions
occurring due to the global COVID-19
pandemic
  • Ensuring the safety of employees and their
    families
  • Implemented work systems and styles based
    on infection conditions (promotion of remote
    work/teleworking, restrictions on business trips
    and training/events, etc.)
  • Implemented care as applicable for infected
    employees and family members and those who
    were in close contact with infected persons,
    and measures to prevent cluster infections
  • Launched the Infectious Disease Risk
    Assessment Project to reinforce infection
    prevention measures in the workplace and at
    home
  • Continuity of business activities
  • To maintain the supply chain, implemented
    higher-level infection control measures at
    production sites and rolled them out to
    subcontractors and other related parties, in
    addition to conducting relevant activities for
    raw material procurement
  • Enhanced information systems for remote work
    and promoted digitalization of operations
  • Reviewed Group systems for new work styles
  • Formulated and implemented a business
    strategy for dealing with COVID-19
  • Contributions to society
  • Provided a continuous supply of hygiene-related
    products for cleanliness and worry-free daily life
  • Increased production of alcohol disinfectants to
    20 times the previous level and supplied them
    on a priority basis to medical institutions,
    nursing facilities and other locations with
    urgent needs.
  • Through our website, provide information on
    hygiene in daily life. For medical professionals,
    provide a wide range of information on measures
    for preventing the spread of infections
    based on expert knowledge including
    academic papers
  • Contributed to the development of therapies
    and diagnostic tools for COVID-19, including
    the discovery of VHH antibodies that can be
    expected to inhibit infection.
Large-scale
earthquakes and
other natural
disasters
Risk of harm to employees and assets
including facilities and difficulties in
supplying products as a result of large-
scale earthquakes and other natural
disasters such as large typhoons and
floods associated with climate change
  • Conduct surveys of water-related risks at each
    business location, and strengthen physical and
    non-physical countermeasures
  • Conduct disaster preparedness education
    including verifying flood hazard maps and
    evacuation measures
  • Strengthen our response through emergency
    response drills and BCP drills to prepare for
    major earthquakes and other events
Environmental
legislation outside of
Japan
Risk of business or operations being
suspended due to drastic changes to
environmental legislation
  • Monitor using external specialist organizations
    and reinforce our response structure regarding
    impacts on local plants and key suppliers from
    drastic changes to environmental legislation in
    China
Serious quality issues Risks of serious quality issues arising that
would cause the loss of social trust
  • Strengthen company-wide response in the
    event of serious damage arising due to a
    quality problem
  • Strengthen internal awareness-rising to prevent
    serious quality problems from arising
Cyberattacks and
protection of
personal information
Risk of leaks of personal information from
intentional acts including cyberattacks or
negligence
  • Create response flows in the event of an
    incident arising and hold drills
  • Strengthen our global framework for information
    security and protection of personal information
Reputation Risks that cause value and social trust in
our brand to decline due to the spread of
critical reviews and misinformation about
Kao on social media
  • Strengthen the social media monitory system
  • Strengthen the emergency contact system
    used during contingencies
Use of digital media Risks arising from the release of ads and
other communications with inappropriate
expressions, stealth marketing, etc.
  • Continuously strengthen internal education,
    and revise guidelines and the like
  • Develop ad distribution tools to improve and
    sustain our brand value
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