Risk Management

Sumitomo Chemical seeks to improve and enhance its risk management system to detect, at an early stage, risks that have the possibility of hindering the achievement of business objectives and to prevent them from occurring as well as to minimize damage when they do occur.

Risk Management Organization

As part of its standard duties, each of the Group’s organizations is taking various measures to appropriately manage the risks associated with its business operations. In addition, the Internal Control Committee deliberates on Group-wide priority risk management policy as a basis for supporting and ensuring thorough implementation of these measures by each organization. Moreover, the committee oversees the implementation of measures undertaken by each organization based on this policy.

Risk Management Promotion Organization

①Board of Directors

  • The Board ensures the effectiveness of risk management by deliberating and supervising the activities of the Internal Control Committee.

②Internal Control Committee (Chaired by the President)

  • The committee deliberates on policies related to risk management for the entire Sumitomo Chemical Group, and supervises the efforts of each organization based on these policies.

③Internal Control & Audit Department

  • As the executive office of the Internal Control Committee, this department monitors the risk management activities of each department and Group company of the Sumitomo Chemical Group.

④Risk Response Coordination Departments

  • Each organization plans and promotes Group-wide countermeasures for the risks assigned to it, in cooperation with each department and Group company.

⑤Each Department and Group Company

  • These organizations are the main drivers of risk management.
  • The organizations develop and implement countermeasures for the risks affecting their own organization or company.

Promotion of Group-wide Priority Risk Assessment and Countermeasures

Every year, approximately 120 major organizations, both in Sumitomo Chemical and Group companies in Japan and overseas, conduct risk evaluations, assessing the probability of occurrence and the potential impact of various risks that could hinder the achievement of business objectives. These results are then aggregated to create a Group-wide priority risk map. Based on this risk map, the Internal Control Committee identifies priority risks that require Group-wide countermeasures. In addition, our risk response coordination departments, which have been established for each priority risk, formulate a response plan for the entire Group, and each organization of the Group implements countermeasures in accordance with this plan. Moreover, the committee regularly receives reports on the progress of countermeasures and provides necessary instructions.

Risks subject to risk management

●To ensure the Group can comprehensively manage various risks that could hinder it from achieving its business objectives, the Risk Response Coordination Departments have cooperated to create a list of risk items.

●Each risk item is grouped in one of the seven areas shown in the pie chart. Each of these areas encompasses a wide range, from risks associated with business activities (price fluctuations, technological innovation, etc.) to ESG-related risks (response to the CO2 problem, human rights issues, etc.).
●In addition, revisions are made as necessary every fiscal year in response to changes in the Group’s business activities or in social conditions.
●Each of the Group’s organizations uses this list of risk items to conduct a yearly assessment of its own risks and to implement countermeasures for priority risks associated with its business operations.

Evaluating Risks and Promoting Countermeasures

To Review and Strengthen the Effectiveness of Risk Management

In this way, we conduct a PDCA cycle for risk management every fiscal year, centered on the Internal Control Committee. In doing so, we are constantly inspecting and strengthening risk management in response to changes in our business and the surrounding environment so that risk management functions effectively. Summaries of the matters covered in the committee are reported to the Board of Corporate Auditors after each meeting. These summaries are then reported to the Board of Directors for deliberation.

PDCA Cycle for Risk Management Activities

Cross-Organizational Risks and Crisis Response

We established the Risk Crisis Management Committee to deliberate risks and crisis response policies that affect multiple business sites, departments, and Group companies, such as large-scale disasters (earthquakes, storms, floods, etc.), pandemics, deterioration of security in Japan or overseas (terrorism, riots, wars, etc.), and other issues.