Risk Management

Basic Approach to Risk Management

The DIC Group works to expand its operations in line with the growth scenario set forth in the DIC Vision 2030 long-term management plan. At the same time, in this age of unprecedented uncertainties caused by technological innovation, diversifying values, wars and pandemics, effectively managing risks is crucial to increasing corporate value. The Group strives to address changes in its operating environment and the diversification of risks in an appropriate and flexible manner. The Group also promotes initiatives aimed at promptly minimizing the impact of latent risks on its businesses should such risks manifest.

Risk Management Policy

Based on the aforementioned basic approach, the DIC Group has established a risk management policy. This policy has two components.

  • The DIC Group shall identify, assess, prioritize and address any risks that may have a significant impact on its management based on potential impact on management and likelihood of occurrence, and responds in a deliberate, systematic and efficient manner.
  • The DIC Group shall establish a Group risk management system and ensure its effectiveness by repeating the PDCA cycle.

Framework for Risk Management

In addition to appointing a new director in charge of risk management, the DIC Group recently established a new Risk Management Working Group, a subordinate entity of the Sustainability Committee, as part of its effort to strengthen its comprehensive risk management framework.

Risk Management Initiatives

Risk Management Initiatives

Among the broad range of risks recognized as a result of voluntary risk management efforts in divisions and/ or departments, the DIC Group recognizes risks in three principal categories. The first two are externally caused risks and corporate risks, which are managed by the Sustainability Committee and its subordinate entity, the Risk Management Working Group, while the third is business risks, which are monitored appropriately by, among others, the Executive Committee, an entity established to deliberate important matters related to the execution of business activities.

Each fiscal year, the DIC Group identifies risks based on their potential to hinder achievement of the goals of the DIC Vision 2030 long-term management plan as priority risks. Each risk is assigned an owner, that is, the division or department responsible for implementing countermeasures and validate their effectiveness using the PDCA cycle, with the aim of minimizing impact should the risk materialize. These efforts are overseen by the Board of Directors.

Business Risks

The Group sets forth “Materiality” which are matters with the potential to negatively or positively affect its business performance over the medium to long term. These Materiality items are utilized in enhancing its business, with concrete and efficient handling. The Group continues taking decisive and efficient steps in response to these materiality issues pursuant to DIC Vision 2030,1 launched in 2022, working to ensure that these efforts are beneficial to the management of its businesses. The Group also undertakes risk management initiatives with the aim of appropriately and flexibly addressing changes in its operating environment and the diversification of risks, and of swiftly minimizing damage, led by the Sustainability Committee, an advisory body, and its subordinate entity, the Risk Management Subcommittee. From a wide range of risks, the Group uses risk assessments to evaluate likelihood of occurrence and degree of potential impact and identify major risks to its performance. Risk owners are appointed to take measures against particularly the material risks. These efforts are monitored appropriately and reported on to the Sustainability Committee and the Board of Directors.

The key risks described below are recognized based on the material issues2 identified by the Group, and the findings of a survey conducted by the Risk Management Working Group, and the potential impact of each risk, should it materialize, on the Group’s businesses and stakeholders are categorized into high, medium or low.3

Forward-looking statements herein are based on projections as of December 31, 2023, and the following risks do not cover all risks that could affect the Group.

Likelihood (Potential for future manifestation as of December 31, 2023)

High: Highly likely
Medium: As likely as not
Low: Unlikely

Time Horizon (Expected timing of/period before risk is likely to manifest as of December 31, 2023)

Long term: Five years or more
Medium term: Three to four years
Short term: Within two years
Unknown: Cannot anticipate the timing of its emergence

Risk Type (Categorization by origin as of December 31, 2023)

1: Externally caused risks that are beyond the Group’s control
2: Corporate risks that can be managed through Group management–led countermeasures
3: Business-related risks that should be handled by the relevant divisions/departments

Alignment (Relationship with business strategies outlined in the DIC Vision 2030 long-term management plan)

A: Business portfolio transformation to achieve growth
B: Strengthening of management infrastructure underpinning global environmental, social and governance (ESG)
management and safety management
C: Cash flow management
Other: No alignment with business strategies

Risks, the manifestation of which is likely to have an impact

・Risks associated with portfolio transformation ・Risks associated with exchange rate fluctuations
・Risks arising from the failure of acquisitions and capital alliances to proceed as expected ・Risks associated with product quality issues
・Risks associated with political and geopolitical changes ・Risks related to the creation of a sustainable supply chain for raw materials
・Risks associated with disasters and accidents ・Risks associated with information security
・Risks associated with the stagnation of innovation ・Risks associated with inadequate corporate governance
・Risks associated with response to climate change–related operating environment and ESH-related changes ・Risks related to intellectual property
・Risks arising from demands for the reduction of environmental impact ・Risks associated with water resources
・Risks associated with compliance violations ・Tax-related risks
・Risks associated with securing of human resources ・Pandemic-related risks
・Risks associated with interest rate fluctuations