| strategic risk |
Risk of decline in demand for our products |
- Influx of cheap products from overseas due to tariff reductions
- Decrease in product demand due to market contraction due to continued declining birthrate and aging population
- Decreasing demand due to rising prices of oils and fats, fats and meal products
- Sluggish demand due to product features and value not being properly communicated to customers
- Decline in competitiveness due to delays in product and technology development that adapt to changes in customer preferences and social conditions, etc.
- Occurrence of defective inventory due to insufficient supply and demand management
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- Add value and strengthen proposals in terms of product functionality and health in response to changes in consumer values.
- Strengthen our ability to respond to the growing demand for substitutes for animal protein and fat by proposing a combination of starch, margarine, and PBF (plant-based food)
- Implementation of optimal communication according to customer segment, and DX of brand/product communication
- Strengthen company-wide system support and establish an optimized flow for total SCM (supply chain management) management
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| Potential risks of expanding overseas |
- Unexpected revisions to laws, regulations, and tax systems that may occur when expanding overseas
- Political and social risks such as unexpected conflicts and terrorism
- Occurrence of accounting fraud and illegal acts due to poor governance at overseas subsidiaries
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- Obtaining information on each country's laws and overseas risks from external consultants and Group companies expanding overseas, and implementing prompt responses.
- Enhancing internal controls and conducting regular audits
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| Financial risk |
Risks related to raw material procurement, exchange rates, etc. |
- Increased procurement costs due to changes in the quality of main raw materials and market fluctuations
- Increase in procurement costs due to fluctuations in exchange rates, sea freight, etc.
- Inability to procure and increase in procurement costs due to changes in the international situation (situation in Ukraine, ban on palm oil exports by Indonesia, etc.)
- Increase in procurement costs due to increased demand for biofuels
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- Transactions in a position that is considered to have a competitive advantage within the scope of raw material purchasing regulations and foreign exchange forward contract management regulations.
- Hedging transactions using futures market pricing and foreign exchange contracts, etc.
- Research and recruitment of new raw material production areas and suppliers
- Implementation of appropriate price revisions according to raw material procurement costs, etc.
- Promoting sustainable procurement activities throughout the supply chain
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| Risks related to financing |
- Increase in interest burden due to rise in market interest rates
- Difficulty in raising funds due to financial market turmoil
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- Selecting a comprehensive funding method based on the nature of funding demand, financial market environment, long-term balance, funding cost, diversification of procurement sources, etc.
- Reduce interest rate fluctuation risk by combining financing with fixed interest rates through corporate bonds and long-term loans
- Understand the scale of capital impairment risk through continuous monitoring of assets with potential for impairment and deferred tax assets
- Improving capital efficiency through thorough asset reduction, including working capital management and reduction of cross-shareholdings
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| Risks related to impairment losses on goodwill and fixed assets |
- Poor performance of acquired subsidiaries, capital participation, etc., and significant failure to achieve business plans
- Decline in fair value of tangible fixed assets and intangible fixed assets
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- Deliberations regarding the appropriateness of the acquisition price at Investment and Financing Committee and Executive Committee and follow-up to realize post-acquisition synergies
- Regular monitoring of the macroeconomic environment
- Estimation of future cash flows based on business plan
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| Hazard risk |
Risk of natural disasters and spread of infectious diseases |
- Human damage to employees and damage to facilities and equipment due to large-scale earthquakes, typhoons, torrential rains, etc.
- Suspension of operations and stagnation of product supply due to the spread of infectious diseases including the new coronavirus
- Difficulty in continuing business activities due to supply chain disruptions and social infrastructure outages
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- Strengthen responsiveness through regular review of crisis management system and business continuity plan (BCP)
- Efficient business operations such as remote work
- In order to ensure stable supply, we are establishing multiple production systems by securing subcontractors and cooperating partners, ensuring appropriate inventory, and speeding up communication and information sharing with customers.
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| Operational risk |
Climate change/environmental risks |
- Difficulty in stably securing raw materials due to reduced yields and quality changes due to rising temperatures and abnormal weather conditions
- Increase in production costs due to stricter CO2 emission regulations
- Decline in corporate value due to lack of environmental measures and violation of environmental laws and regulations
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- Promoting ESG Management that is integrated with business
- Resource and energy conservation, reduction of CO2 emissions, elimination of plastics, effective use of water resources
- Maximizing resource usage efficiency through the use of AI in the value chain
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| Human rights risks |
- Decline in corporate value due to inadequate human rights measures in the supply chain
- Human rights violations such as harassment
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- Understand supply chain sustainability issues and implement improvements by effectively utilizing external programs
- Ensuring traceability in raw material procurement
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| Logistics risks |
- Logistics failure due to lack of appropriate logistics cost management, such as stagnation of product supply or significant delivery delays due to lack of drivers and cargo handling workers or inability to secure delivery vehicles.
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- improving the working environment by improving incidental work outside of delivery operations, reducing long waiting times, systematically securing vehicles by extending lead times, and setting appropriate rates.
- Appropriate response to changes in laws and regulations, etc.
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| Risks related to information leakage and cyber security |
- Leakage, falsification, or disappearance of information due to unauthorized access or computer virus infection, or suspension of ICT infrastructure, production lines, etc.
- Inadequate response when an incident occurs
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- Implementation of robust security measures
- Implementation of regular monitoring of the management status of internal confidential documents
- Regular implementation of information management education for employees through e-learning
- Promoting stronger monitoring of external cyber attacks
- Preparation and thoroughness of response procedures in the event of an incident
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| Food safety risks |
- Occurrence of voluntary recalls due to health hazards to customers or violations of laws and regulations such as labeling.
- Occurrence of intentional adulteration, food fraud, and data falsification
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- Operation of a quality management system based on ISO9001 (reducing quality risks by implementing quality assessments and strengthening systems at the product development stage)
- Appropriate operation and confirmation through ISO22000 certification and quality audits
- Implementation of continuous employee education
- Product development and research and development that reflect customer feedback
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| Risks related to human resources and labor |
- Lack of highly specialized human resources and the next generation of human resources
- Decline in corporate competitiveness due to lack of progress in DE&I (diversity equity and inclusion)
- Loss of corporate value, claims for compensation, etc. due to industrial accidents, accidents during work, labor-related laws and labor troubles, etc.
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- Maintaining and improving a comfortable working environment, building and appropriately operating a fair personnel and treatment system
- Developing highly specialized human resources and human resources who will be responsible for the next generation of management
- Promoting diversity through active Participation of Women and post-retirement employment extension system, etc.
- Implementing safety and health education, establishing a safety and health management system, improving the working environment, and responding quickly when an accident occurs.
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| Compliance risks |
- Occurrence of acts that violate laws and regulations or social norms, fraud, harassment, etc.
- Business constraints due to changes or additions to laws and regulations
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- Formulation of the "J-OIL MILLS Code of Conduct" aimed at compliance with laws, regulations and social norms, and thorough dissemination through in-house training
- Early detection and correction of fraud, harassment, etc. by establishing internal and external whistleblowing desks
- Pay close attention to information on legal revisions in order to respond to changes in laws and regulations
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| Risks related to intellectual property |
- Loss of competitive advantage due to insufficient acquisition of intellectual property rights in response to similar technological developments by competitors
- Suspension of sales or claims for damages due to infringement of third party intellectual property rights, etc.
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- Early discovery of inventions and quick and appropriate acquisition of intellectual property rights by strengthening mutual cooperation with related departments
- Building a system to prevent infringement of third party intellectual property rights
- Ongoing training for employees regarding intellectual property rights
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