Risk Management

To achieve sustainable growth, Sumitomo Chemical makes an effort to detect, at an early stage, various risks that may hinder the achievement of its business objectives, and takes proper measures. We focus on building and expanding a system relating to risk management so that we can promptly and properly address risks when they emerge.

Risk Management Organization

At Sumitomo Chemical, as part of its standard duties, each of the Group’s organizations is taking various measures to properly manage risks associated with its business operations. In order to support initiatives and thorough risk management of each organization, the Internal Control Committee deliberates on Group-wide risk management policy, collection of risk information, and various measures to thoroughly communicate to employees in the Group.
Management meetings deliberate as needed on the management strategy of Sumitomo Chemical and Group companies around the world, critical matters for management, including capital spending/investment and loans, in terms of both opportunities and risks. Summaries of the matters covered in the Internal Control Committee and important matters deliberated in the Management Meetings are reported to the Board of Directors.

Risk Management Promotion Organization

  1. Board of Directors
    • The Board ensures the effectiveness of risk management by deliberating and supervising the activities of the Internal Control Committee and important matters deliberated in the Management Meetings.
  2. Internal 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.
  3. Internal 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.
  4. Risk 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.
  5. Each 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.
  6. Management Meeting
    • Concerning important matters for management, including management strategy and capital spending for each organization of the Group, it deliberates on individual proposals in terms of risks and opportunities.
  7. Corporate Planning Office
    • As the Executive office for the management meeting, it selects the agenda for deliberation and conducts meetings so as to enable proper deliberation of important matters.

Promotion of Group-wide Priority Risk Assessment and Countermeasures

Every year, approximately 120 major organizations, both in Sumitomo Chemical and Group companies around the world, 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 by the Internal Control & Audit Department 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. Then, 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 gives 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

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.