GovernanceRisk Management

Basic ApproachBack to Top

Risks surrounding corporations continue to diversify and grow more complex. The most pressing risks include global shifts in political and economic landscapes, environmental shifts brought by climate change, the growing sophistication of cyber-attacks with the advance of digital transformation, and human rights issues such as forced labor.

As a group of companies engaged in manifold businesses, the TOPPAN Group views accurate detection, appropriate management, and steady prevention of these impending risks as one of its principal management challenges. In keeping with this viewpoint, we identify a set of “significant risks” affecting us through annual risk assessments and take steps to prevent their occurrence.

When a significant risk actually arises, we immediately collect the necessary information and take comprehensive and strategic countermeasures under our risk management structure to minimize losses, ensure business continuity, and maintain the trust of society.

Promotion FrameworkBack to Top

We manage individual risks specific to organizations such as business divisions, subsidiaries, and Group companies.

Risks associated with diverse businesses are assessed every year. The frequency and severity of possible risks are evaluated, and countermeasures are formulated based on the results. Midway through each fiscal year, we monitor the progress of mitigation measures designed at the beginning of the year.

Among the risks identified, we define those that can exert severe adverse impacts on management as “significant risks.” Working as part of the Corporate ESG Project, the Risk Management Working Group (led by the Director in charge of Risk Management; attended by persons in charge of risk management at the responsible head office divisions; and administrated by the Compliance Department in the Legal Division) set under the Sustainability Promotion Committee (chaired by the President & Representative Director) reviews the results of risk assessments performed by relevant business divisions, subsidiaries, and Group companies. The working group also considers social conditions, the possibility of risks arising over the medium to long term, and various other risk-related circumstances surrounding the TOPPAN Group. Based on the review results, a significant risk designation for the current year is finalized with authorization from the Sustainability Promotion Committee.

The Risk Management Working Group regularly reports activity results to the Sustainability Promotion Committee. The committee members discuss risk management independently and objectively, in cooperation with the TOPPAN Group ESG Management Promotion Committee, which includes independent external directors.

Under the leadership of the Director in charge of Risk Management, the working group manages risks from a position independent from the business divisions within the Group.

Risk Management Structure

We designated 25 significant risks in fiscal 2023. The responsible head office divisions spearhead Groupwide efforts to plan countermeasures against these risks and implement comprehensive measures to control them. The Director in charge of Risk Management regularly reports the outcomes of those measures to the Board of Directors.

Significant Risks and Countermeasures for Fiscal 2023
Significant Risks Main Initiatives
1 Human injury or damage to physical assets caused by infectious diseases or earthquakes, storms, floods, or other natural disasters BCP / BCM
2 Climate change risks Climate Change Disclosure According to TCFD Recommendations
3 Risks associated with market shifts
  • When failing to implement sufficient measures to address
    market shifts such as globalizing social trends,
    innovations in information technology, progress in digital
    networking, and the growing expectations for a sustainable society
  • Transform the business portfolio centered on the Group’s
    three growth businesses: DX business, SX in
    Japan/overseas Living & Industry business,
    and new businesses (frontier)
4 Risks associated with strategic partnerships, investments, or acquisitions
  • When failing to continue partnerships or gain expected results
  • Enhance due diligence efforts, intensify monitoring
    activities, devise improvement plans, and so on
5 Risks associated with research and development
  • When progress is halted by delays in commercialization, launches, etc.
  • Prevent delays by monitoring progress, judging step-up timing, and identifying risks
6 Securing human resources to sustain business growth Human Assets
7 Securing financing
  • Diversify financing methods and time spans
  • Maintain and solidify a sound financial position
  • Review financial plans
8 Risks associated with control of the Group
  • Manage and control under the Related Company Administration Regulations
  • Disseminate the TOPPAN Group Conduct
    Guidelines as basic compliance standards
9 Intense market and price competition
  • Declining prices or a loss of product or service
    competitiveness due to fiercer competition
    in prices or product development
  • Devote resources to and reinforce
    development capabilities in DX business
  • Advance BX, develop Hybrid-BPO™ services,
    and develop mono-material-based sustainable
    packaging materials and promote their growing
    share in the global market
10 Non-performing or long-term retained inventory
assets, etc. due to inadequate asset management
  • Improve the stock turnover ratio by
    promoting sales interdepartmentally
  • Regularly check asset quality and
    monitor inventory management
11 Incidents related to receivables (bad debt,
customer bankruptcy, etc.)
  • Set credit limits and review credit periodically
    based on in-house credit management standards
  • Take credit protection measures in response to
    credit uncertainties or credit collection delays
12 Fluctuations in the current value of marketable securities
  • Periodically review strategic shareholdings and ascertain the
    financial condition, etc. of issuing companies
13 Fluctuations in foreign exchange rates
  • Formulate a set of risk management guidelines
  • Use hedging instruments such as foreign exchange contracts
14 Information security risks (cyber-attacks, information leakage) Information Security
15 Risks associated with IT system shutdowns (production
lines, digital services, etc.)
  • Formulate a set of guidelines for the construction of core IT systems
  • Confirm the extent of impact on business, ascertain
    priorities and procedures for restoration, and organize training
16 Product quality risks
  • Outflow of unsafe products to the market
  • Self-imposed product recalls
 Total Quality Assurance
17 Procurement risks
  • Accidents, disasters, or bankruptcies affecting
    business partners, human rights incidents or violations
    of environmental regulations committed by business
    partners, or supply stoppages, significant supply
    shortages, delayed delivery, soaring prices for
    energy or raw materials, etc. caused by
    geopolitical disruptions, etc.
 Supply Chain Management
18 Risks associated with the leakage of toxic substances or environmental pollutants Control of Chemical Substances
19 Risks associated with waste
  • Unauthorized dumping, inappropriate disposal, etc. by waste-disposal service vendors
 Building of a Recycling-oriented Society
20 Human rights risks Human Rights
21 Fires or occupational accidents Employee Health & Safety / Work-Life Balance
BCP / BCM
22 Risks associated with labor issues (violations of labor-related laws, labor disputes, etc.) Human Rights
23 Infringements of patents, copyrights, or other intellectual property rights
  • Risk of being seen to have infringed the intellectual
    property rights of other parties; risk of being
    drawn into lawsuits; risk of being unable to
    prevent the unauthorized use of the Group’s
    intellectual properties; etc.
  • Regularly survey the intellectual property rights of
    other parties in Japan and overseas and
    follow up on the survey results
  • Construct a strong intellectual property rights
    portfolio by obtaining rights in accordance
    with individual countries and regions where we do
    business
24 Misconduct (serious improper conduct or
inappropriate actions, etc.) or compliance violations
(collusion, bribery, or other legal or
regulatory violations)		 Strict Compliance
25 Overseas business risks (other matters not included
in the paragraphs above, such as regulatory
violations, geopolitical risks, lawsuits,
labor disputes, or issues to do with
international taxation)
  • Clarify an ideal Group management approach, build
    optimal governance structures/systems and
    operate them with overseas Group subsidiaries
  • Develop governance structures through internal
    and financial audits
  • Assess risks in the business environment using
    tools provided by third-party institutions, etc.
*
For details, see the securities report (in Japanese)

Risk Management Structure

In accordance with the Rules on Risk Management, we have set up a risk management structure under which the responsibilities for risk management are allotted to specific divisions in the head office based on the types of risk involved.

When a risk actually arises somewhere in the Group, the responsible head office division coordinates with relevant business divisions to minimize the negative impacts on business and reports to the Board of Directors if the incident is severe. When emergency response actions are needed, the President & Representative Director or the Executive Vice President & Representative Director is responsible for forming an emergency taskforce to properly handle the issue. The taskforce is composed of directors in charge of the relevant head office divisions, audit & supervisory board members, legal consultants, and other outside experts.

Risk Management Liaison Meeting

All of the personnel in charge of risk management in the head office divisions assemble on a regular basis to share information at the Risk Management Liaison Meeting. When a risk actually arises, the responsible persons from relevant head office divisions convene an extraordinary meeting to take necessary actions and develop preventive measures.

Fostering Risk AwarenessBack to Top

Our internal website posts a set of Rules on Risk Management along with a list of risks facing the Group, details on the division-specific structures set up to address individual risks, and various other risk management materials. This site is constantly updated to keep Group employees apprised of the latest risk-related information.

Based on the division-specific risk management structure, the responsible head office divisions spearhead Groupwide efforts to organize regular training and audits to foster employee awareness of the risks to be addressed. The impending risks facing us include information and cyber security incidents, natural disasters, infectious disease outbreaks, occupational accidents, environmental issues, and compliance violations.

The TOPPAN Group ESG Management Promotion Committee is a forum where officers from Group companies share and pool their experience to deepen their understanding of ESG and SDG issues. Experts from outside of the Group present risk management lectures for the committee members. The external directors on the committee also provide additional information and draw senior managers into discussions.

We will continue to hold annual risk management seminars and workshops at the committee.

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