Enterprise Risk Management
Key Philosophy and Activities
The Group regards risks as “factors that could inhibit the achievement of business plans” and works to minimize impact or damage by accurately identifying all risks associated with our business activities worldwide. We are establishing a system based on the belief that it is also an important risk management activity to positively take advantage of these risks as opportunities to maximize returns.
With a director who supervises and promotes risk management from a companywide perspective, and a risk management division serving as the secretariat, the heads of Business Sectors, Group companies and the Administrative Division take the lead in identifying risks to the Company proactively and regularly. In so doing, we understand risks in advance and consider rapid countermeasures in the event of the realization of those risks in order to manage risks and opportunities appropriately.
Risk Management System
The risks* in the business environment surrounding the JVCKENWOOD Group are increasingly diverse and complex, and the Group has established a risk management system to formulate and implement enterprise-wide risk mitigation measures. The Chief Executive Officer is directly responsible for this system.
The Group's risks management process operates on the cycle described below (see diagram).
1. We have established the Company-wide Risk Management Committee hosted by the Chief Executive Officer (CEO), chaired by the director in charge of risk management, and composed of directors and heads of administrative divisions designated by the chairman. Based on business risks faced by business sites and identified by each business unit and region, as well as management issues and business issues, we will formulate measures to resolve “global important risks that should be addressed with the highest priority” extracted in light of their impact on business, urgency, and degree of incident, and designate an officer in charge of managing the relevant risks as the officer responsible for promoting countermeasures as a company-wide measure at the management level.
2. The officer responsible for promoting countermeasures implements a cycle to deploy and improve measures against “global important risks” to business units and regions and monitors progress as business initiatives to be achieved during the current consolidated business year.
3.All the divisions in the Group implement annual risk surveillance to assess “business base risks” based on their impact on the business, frequency of occurrence, and status of response, and formulate and implement countermeasures. In addition, each division implements a cycle of monitoring and improving the progress of countermeasures.
In FY2023 and FY2024, as important risks, we again selected supply chain management and enhancement of information security, and we newly selected our response to laws and regulations and social demands. We also appointed an executive officer in charge as a responsible person. The Board of Directors also receives reports on the status of responses to the identified important risks, and these are appropriately managed and supervised.
Image of risk management structure
Mapping by Risk Assessment and Countermeasures
Risks identified through risk surveillance are evaluated and mapped according to Impact, Urgency, and Response Level and classified as follows.
Countermeasure risks: Risks to be avoided by developing a response implementation plan (see below table (1) to (11) )
Monitoring risks: Risks to be deterred or transferred
Recording risks: Risks to be retained
| Impact | Example of losses | × | Urgency | － | Response levels | ||
|---|---|---|---|---|---|---|---|
| 5 | Significant | More than 1 billion yen | 5 | Within 1 year | Already taken measures | ||
| 4 | Serious | More than 100 million yen | 4 | Within 3 years | Mostly taken measures | ||
| 3 | Standard | More than 10 million yen | 3 | Within 5 years | Taken measures to a certain extant | ||
| 2 | Minor | More than 1 million yen | 2 | Within 10 years | Taken some measures | ||
| 1 | Ignore | Less than 1 million yen | 1 | Beyond 10 years | None | ||
| Urgency | ||||||
|---|---|---|---|---|---|---|
| Long 1 |
Mid-to-long 2 |
Medium 3 |
Short 4 |
Urgency 5 |
||
| Impact | Significant5 | Monitoring risks | Countermeasure risks | 1, 2, 7 | ||
| Serious4 | 6, 8 | 3, 10, 11 | 4 | |||
| Standard3 | 9 | 5 | ||||
| Minor2 | Recording risks | Monitoring risks | ||||
| Ignore1 | ||||||
Global Important Risks for the Group
In FY2023 and FY2024, we identified risks to address as shown in the table below. At meetings of the Company-wide Risk Management Committee, we also selected global important risks from among risks to address that had been identified, based on management and business issues, and formulated countermeasures along with other risks to be addressed. For global important risks ((1), (2), and (7) in the table below), we selected supply chain management and enhancement of information security, as in the previous fiscal year, and we newly selected our response to laws and regulations and social demands. We also appointed an executive officer in charge as a responsible person. The Board of Directors also receives reports on the status of responses to the identified important risks, and these are appropriately managed and supervised.
| Risk item | Impact | Urgency | Risk assessment | Countermeasures | ||
|---|---|---|---|---|---|---|
| Changes in the business environment | 1 | Compliance with laws, regulations, and social demands | Significant | Urgent | Important | Respond to various regulations and laws enforced in each country through a cross-functional project system within the Company. Also promote strengthening of internal control system, which is the core of the Company's operations |
| 2 | Changes in supply chain management | Significant | Urgent | Important | Prevent cost deterioration and suspension of activities at domestic and overseas production factories through measures such as securing development backup and multiple suppliers, holding BCP inventory, adopting general-purpose parts, and securing inventory through the use of intermediaries. These measures are incorporated into the business management and daily management cycles | |
| 3 | Economic fluctuations and changes in preferences | Serious | Short | Countermeasure | Monitor changes and take measures according to the scale of risk ranging from daily operational measures to contingency plans | |
| 4 | Exchange rate fluctuation | Serious | Urgent | Countermeasure | Implementation of hedging transactions such as exchange contracts | |
| 5 | Technological innovation | Standard | Urgent | Countermeasure | Revise the technology development and commercialization road map in a timely manner, including changing market environments, social demands and technology trends, and systematically develop engineering human resources and their skills | |
| 6 | Rapid evolution and transformation of the industry | Serious | Medium | Countermeasure | Promote development of proprietary products and services and establish a position not affected by industry changes | |
| Business operations | 7 | Information security | Significant | Urgent | Important | Establish the JVCKENWOOD Central Incident Response Team/Coordination Center under the control of the CISO (Chief Information Security Officer) to clarify the Company's security system in light of the government's request to strengthen cyber security measures. Strengthen the security system to protect the Group's information assets and information assets entrusted by customers around the world an stakeholders including business partners, shareholders, and employees of the Group |
| 8 | Quality problem | Serious | Medium | Countermeasure | Implement thorough checks to prevent quality problems by complying with the standards of each process with an emphasis on quality in the processes of planning, development, and production and establishing effective phase gates. Across the whole Company, promote product safety assessments of new models, reinforcement of management of critical safety parts, reconstruction of the product safety management system (e.g., database of PL* information), design assessments for quality improvement and safety assurance, and company-wide sharing of know-how | |
| 9 | Loss and shortage of human resources | Standard | Short | Countermeasure | Secure diverse human resources through expansion of recruitment of new graduates and diversified implementation of mid-career recruitment, facilitate career development by establishing the employee development system, and promote retention, appropriate age structure and rebalancing of employees through synergies with workstyle reform | |
| 10 | Business tie-up with other companies | Serious | Short | Countermeasure | Risk analysis through business tie-ups, and sufficient examination of potential synergies with the Group | |
| Disasters, etc. | 11 | Natural disasters, pandemics, and human disasters | Serious | Short | Countermeasure | Promote business continuity management including business continuity and early recovery from disasters by establishing various manuals assuming crisis response, implementing disaster prevention drills, business continuity plan training, and safety confirmation drills in preparation for emergencies, as well as rapid resumption of production, shipment, and services |
* Product liability
Business Continuity Management (BCM）
Numerous risks confront our business, the risk of earthquake and other natural disasters, the spread of infectious diseases, and global expansion of terrorisms among the most pressing. In the face of these risks, JVCKENWOOD's first priority is to preserve human life, but it also bears a responsibility to its stakeholders to have systems in place that will enable it to continue to provide products and services. The Group has set forth the Business Continuity Management Rules and articulated basic policy for business continuity in its Business Continuity Plan (BCP), which serves as the foundation for its Business Continuity Management (BCM). BCP-related units work actively to refine the plan in a PDCA cycle, conducting BCP exercises in accordance with annual plans to identify issues and revising the BCP accordingly.
Basic policy on Business Continuity Plan (BCP)
Contribute to the security and safety of society through sustained business operations by promptly restoring business activities after an emergency occurs.
At the JVCKENWOOD Group, for example, we have envisioned risks such as the following and formulated BCPs accordingly.
| Natural Disasters | For natural disasters, we have formulated a BCP that envisions the occurrence of a major earthquake, resulting in multiple business offices in Japan being affected at the same time. In accordance with related rules and manuals, we have set forth rules on the establishment of disaster and accident taskforces at our head office, response in the event of disaster, and other matters. Additionally, we conduct hands-on exercises in regions that we expect to be affected, and revise rules and the BCP based on any issues identified from the exercises. In this way, we continuously strengthen our preparations for disasters. |
|---|---|
| Infectious Diseases | For infectious diseases, we have formulated a BCP that envisions that occurrence of pandemics related to all forms of infectious disease, typically influenza, COVID-19, etc., and have summarized the measures employees, visitors, etc., should take at each business site in the event of the spread of an infectious disease. To ensure safety and security, we have also updated our infection control manuals and other existing materials, and taken measures to prevent the spread of various forms of disease based on such materials. We have utilized the lessons learned from the spread of COVID-19 since 2020 to revise various manuals and our BCP. In this way, we have developed a crisis management system to ensure an accurate and prompt response, both in normal circumstances prior to the outbreak of infection, and after infection occurs. |
| Business activities at overseas sites | The JVCKENWOOD Group has multiple business sites overseas, and we have therefore formulated BCPs that envision the occurrence of various incidents and emergencies, such as acts of terrorism, public disturbance, and conflict. Additionally, we have developed manuals, etc., to protect the safety of people overseas, and our head office Human Resources Department and departments responsible for risk management hold regular joint desktop evacuation exercises with local production centers and sales companies. We also revise manuals, etc., in accordance with issues identified from exercises, thereby continuously strengthening our preparations for the occurrence of incidents. In response to the Russia-Ukraine crisis, which actually occurred, we were able to evacuate personnel outside the country at an early stage without any issues. |
Certification as a Business Operator Contributing to the Building of National Resilience Against Disasters (Resilience Certification)
In March 2017, JVCKENWOOD received certification from the Association for Resilience Japan based on the guideline issued by the National Resilience Promotion Office, Cabinet Secretariat, as a business operator contributing to the building of national resilience against disasters (Resilience Certification) in recognition of its endorsement of the objective of promoting the building of national resilience and active engagement in efforts related to business continuity. As a result of ongoing activities of disaster prevention and mitigation and business continuity plans (BCPs), we passed the renewal examination after the review of the documents on its improvements and interview with our executive on March 31, 2025. JVCKENWOOD will continue to work to further enhance the quality of BCM in the future.
Certification as Organization Contributing to National Resilience (Resilience Certification)
Registration Certificate (obtained on March 31, 2017, updated on March 31, 2025)
Climate Change Risk Management
Since FY2023, we have been strengthening our risk management system to address climate change risks in line with the TCFD recommendations.
The JVCKENWOOD Group recognizes climate change as a risk to its business operations and implements company-wide climate change initiatives aimed at mitigating this risk under the leadership of the Sustainability Management Office at its Head Office .
Transition risks*1 and physical risks*2 arising from climate change issues are classified separately from general risks and assessed in terms of material issues, and managed in an integrated manner with other risks."
*1: Risks arising from the transition to a low-carbon society
*2: Risks arising from physical changes due to climate change
See the page linked below for specific initiatives.
Responses to Climate Change
*In addition to foreign exchange fluctuations, international taxation, geopolitical risks, emerging country risks, large-scale disasters, procurement, intellectual property lawsuits, etc., a wide range of risks are also covered such as human rights issues, information security and climate change, which have been increasingly recognized as risks in recent years.