Risks and Management
Identification, Assessment and Management
Identification of Sustainability-related Risks and Opportunities
As a corporate group with global operations, ITOCHU Group constantly monitors the risks to its business arising from changes in society and the business environment, including environmental and societal measures and legislation in respective countries. The Division Company Management Committee (DMC), which serves as an advisory body to the Division Company President of each operating segment, who hold responsibility for overseeing the management and business activities of their respective companies, annually reviews business risks and opportunities, including those related to environmental, social and other sustainability-related issues, and formulates the plan that sets out a range of measures and business priorities. The plan for each operating segment is submitted to the HMC and to the Board of Directors, which serves as the Group’s supervisory body, and is approved by the Board of Directors following a final comprehensive analysis and deliberation from a sustainability perspective.
Evaluation of Sustainability-related Risks and Opportunities
Our group recognizes that risk management is an important management priority. Accordingly, we have established a basic policy for risk management at the Group with reference to the COSO-ERM framework, and developed the required risk management systems and methodologies. We recognize factors that may have a major future impact on our financial situation and performance as significant risks. We identify risks by gathering information on a regular basis regarding regulatory and other trends related to sustainability, including climate change, supply chain issues, and human rights, as well as sustainability-related risks and opportunities impacting our business operations throughout the world.
Management of Sustainability-related Risks and Opportunities
Our group delegates authority to its operating segments in order to enable swift decision-making and to manage sustainability-related risks and opportunities associated with their business operations. At each operating segment’s DMC, management policies as well as investments, loans, guarantees, and businesses and other matters affecting Company’s management are deliberated, with final decisions made by the Division Company President. These decisions are managed, as appropriate to the circumstances at each stage of the business.
Integration into the Enterprise Risk Management System
Our group has established a variety of in-house committees and responsible departments to deal with various risks and opportunities including sustainability-related risks and opportunities. At the same time, we have set up the necessary risks management structures and management methods. For example, we have set up various management rules, investment criteria, risk limits and transaction limits, and reporting and monitoring structures. We then manage risks and opportunities all-inclusively and individually.
Each of our companies reports the risks and opportunities it manages to our in-house committees. The HMC and/or the Board of Directors then approves those risks and opportunities after they have been deliberated on by the committees according to their level of importance. The Internal Control Committee reviews the effectiveness of the management structure every year and makes a report to the Board of Directors.
Please refer to the “Governance＞Risk Management” for details.