Risk Management

Governance

Risk Management

The Oji Group undertakes business activities with a strong sense of ethics set forth in the Oji Group Corporate Code of Conduct, and implements appropriate risk management practices. In response to the rapid expansion of the areas where we operate businesses, we will reinforce our risk management structure globally to ensure business continuity and the steady development of our businesses.

Flow of Risk Management

Under the development and supervision by the Board of Directors, the Oji Group has established Group Risk Management Regulations and works to manage risks in the flow described below.
Oji Holdings Directors are responsible for reporting to the Board of Directors on risks in the businesses and divisions under their control.
The Oji Holdings Board of Directors reviews the effectiveness of the risk management process annually.

The Oji Group's risk management system is structured as shown in the diagram below and operates separately from the Audit & Supervisory Board and the Internal Audit Department.
The Audit & Supervisory Board and the Internal Audit Department also audit the status of risk management.

Measures for Information Security

The Oji Group positions information obtained through its business activities as important assets. We have enacted Information Systems Usage and Risk Management Regulations to respond promptly to changes in the ever-sophisticating IT environment, and have established all group system to prepare for cyber threats such as unauthorized across prevention and disasters. The Oji Business Center, as a department that oversees our information system risk management, inspects the information system risks across the Group, and maintains, manages and improves IT security. In addition, it regularly provides educational activities and information on the latest risk trends it has captured to employees using company newsletters, and conducts targeted email training for employees to deal with phishing e-mails that are becoming more sophisticated every day. In FY2021, we revised regulations to respond to changes in work styles, such as the spread of cloud computing and teleworking in times of COVID-19. We will work to make sure that these measures will take hold and further strengthen our efforts to improve IT security from a global perspective.

The Oji Group categorizes major risks that may have a material effect on its financial position, etc. into three groups: risks of long-term issues, risks associated with its management strategies, and risks arising from the execution of business. At the same time, the Group takes the following measures to address each risk group.
Icons to the right represent material issues

You can see this table by scrolling horizontally.

Type of risk		Content of risk	Main countermeasures against risks
Risks of long-term issues	Climate change	The Task Force on Climate-related Financial Disclosures (TCFD), see
Risks of long-term issues	Pandemic	Risk of health damage to employees or temporary suspension of operations being caused by the global spread of infection similar to COVID-19	We have the Group Risk Management Regulations in place, and in the event of a serious incident to be addressed by the overall Group, we establish the Group emergency headquarters to confirm the safety of employees and check the damage suffered. We work to minimize the effect on our business activities by continuously reviewing a business continuity plan (BCP), and promoting digital transformation (DX) in manufacturing, marketing, administrative processing, and other activities.
Risks associated with our management strategies	Structural changes in demand arising from development of innovation	Risk of structural changes in demand arising from the movement towards digital transformation (DX), which brings significant changes to people’s lifestyles and business activities.	Facing a shrinking market, we restructure domestic business production systems and pursue rationalization such as through business collaboration with other companies in our industry. We also strive to secure cash flow through thorough cost reduction and efficient CAPEX. We expand portfolio by investing the cash thus obtained in domestic businesses where growth in demand is expected, and overseas markets where economic development is expected, and allocating it for the development of new material products, etc. In order to enhance our medium- and long-term corporate value and achieve a sustainable development, we work to promote working style reforms and diversity to ensue active participation of various human resources.
	Fluctuations in demand	Risk of decline in demand for products arising from domestic business fluctuations and a continuing decline in population	We work to strengthen our business foundation that can tolerate market fluctuations through thorough cost reduction, etc. In the field of industrial materials, we work to differentiate us from other companies by promoting total packaging and strengthening product development capabilities with the integrated material and processing management, thereby curbing the effects on sales and securing cost competitiveness in case of any demand fluctuation. In other business fields, as well, we work on the development of new products such as paper products that support the shift to plastic-free materials and functional paper with new properties in order to improve profitability.
	Fluctuations in global market conditions	Risk associated with procurement prices of raw materials and fuels which are influenced mainly by fluctuations in demand, countries’ changes to their trade policies, and wars Risk of sales prices of pulp being influenced by global market prices	We have established a department in charge of the Group-wide procurement strategy in order to monitor markets in relation to the procurement of raw materials and fuels and strive to maintain a variety of suppliers, and promote advantageous procurement. Having established the Oji Group Sustainability Action Guidelines for Supply Chains, we confirm with all of our suppliers the safety and legality of raw materials. We work to ensure stable procurement through more environmentally- and socially-friendly procurement practices and enhanced relationships with suppliers. In terms of procurement of recovered paper, we strive to maintain recovered paper recycling systems. We also strengthen coordination with relevant companies with the aim of ensuring stable recovered paper procurement.
	Overseas business	Geopolitical risks, including war, political or social instability, decelerating economic growth, revisions to laws, regulations, and tax systems, destabilizing financial conditions, human rights issues, etc. taking place in overseas markets where the Group operates	We have established regional headquarters that specializes in gathering information on the political, economic, and social conditions of neighboring countries to prepare for and respond to all relevant risks before they emerge. We also diversify risks by having operations in a wide range of countries. To reduce risks, we enhance our ability to collect information and reduce the amount of investments through joint ventures operated with local leading companies. With regard to human rights issues, we ensure that personnel are familiarized with the Oji Group Human Rights Policy we established, and implement initiatives aimed at ensuring respect for human rights.
Risks arising from execution of business	Occurrence of disasters, etc.	Risk of production bases and supply chain in and outside Japan being affected by natural disaster Risk of fire, occupational accident, environmental accident and other unexpected circumstance occurring	We have formulated a business continuity plan (BCP) taking into consideration the risk of an interruption in our business due to disasters, etc. and provide emergency education and conduct disaster drills on a regular basis. In addition, we have established the Group Disaster Control Office as a permanent organization, thereby establishing a system for obtaining the latest information promptly. We also share information about the causes of and measures against disasters across the Group, and work to minimize damage. With regard to environment, we have set voluntary management values that are stricter than the environmental regulatory standards for example, thereby striving to prevent environmental accidents. With regard to safety, we have developed safety measures and safety operation manuals for production facilities and ensure that personnel are familiarized with them. We have also built safety and health management structures and work to prevent occupational accidents.
	Laws, regulations, and other rules	Risk of not being able to comply with laws and regulations of various countries, and their revisions and amendments	We place adherence to compliance at the top of material management challenges in our business activities. We translated the Oji Group Corporate Code of Conduct and the Oji Group Behavior Standard into the respective languages of each of the overseas bases where we operate to ensure that personnel in and outside Japan are familiar with their content as well as their adherence. We also ensure that responsible divisions take the lead in providing training on relevant laws, regulations, and other rules to prevent any violation. We have put in place the Oji Group Tax Policy and are working to enhance our corporate value and become a social trusted company by ensuring the proper payment of taxes in compliance with the tax laws and regulations of each country in which we operate.
	Litigations and other actions	Risk of being a party to litigations, disputes, or other legal proceedings in the course of business	With respect to litigations and other actions filed against us, we prevent a dispute from occurring by discussing with business partners and clarifying contract terms. We also have in place a system to deal with any litigation and other actions filed against us in collaboration with law firms. If an event which may have a negative impact on our reputation arises as a result of litigation and other actions, we promptly respond to the event, and publish appropriate information as necessary to maintain our reputation.
	Product liability	Risk of damages based on product liability being claimed	We provide safe and secure products by establishing the Group Quality Control Regulations, building a quality control system, and implementing quality design and manufacturing in compliance with relevant laws and regulations and in accordance with voluntary management values. We work to prevent risks associated with product liability from occurring by establishing the Group Product Safety Management Regulations, and ensuring the department in charge of overseeing quality management across the Group provide assistance in and conduct audit on the safety product management implemented by quality management divisions of Group companies.
	Exchange rate fluctuations	Risk of fluctuations in exchange rates in product sales, raw material purchases and other transactions using various currencies	We monitor currency movements and their impact on our results from time to time, and hedge risks using derivatives such as exchange forward contracts, currency option trading and currency swaps transactions, as necessary. In Japan, we hedge a certain portion of exchange rate fluctuation risks by buying and selling within Group companies foreign currency obtained from operating activities.
	Information leakage	Risk of confidential information being leaked due to willful conduct including external cyberattacks or negligence	In the Group Information System Usage and Risk Management Regulations, we clarify the risk management operation system and organization and their roles and comprehensively set out matters to be complied with by information system users, thereby managing risks across the Group. With stricter rules on the system usage applying to highly confidential information, we take measures to prevent unauthorized access, data theft, spoofing email, and the like.