Risks and Management
Identification, Assessment and Management of Sustainability-related Risks and Opportunities
As a group which operates business globally, we constantly monitor risks to our business from changes in the social situation and business environment in each country such as measures and legislation relating to the environment and society. The Division Company Management Committees (DMC) are advisory bodies to our company presidents who have overall responsibility for the management and business activities in each of our companies. The DMC review business risks and opportunities including those relating to sustainability in terms of the environment and society every year. They then formulate an annual plan after prioritizing various measures and businesses. Each company presents its annual financial plan to the Headquarters Management Committee (HMC) as the executive body and the Board of Directors as the supervisory body. Finally, the Board of Directors approves these plans upon comprehensively analyzing and deliberating them from a sustainability perspective.
Our group recognizes that risk management is a critical management issue. With reference to the COSO-ERM framework concept, the ITOCHU Group has established a basic policy for risk management. We have set up the necessary risk management structures and methods. We periodically collect information on trends focused on existing and new regulations relating to climate change, supply chains, human rights and other areas of sustainability as well as information on sustainability-related risks and opportunities which impact our businesses around the world. We then identify the importance of that risks and opportunities.
Our group delegates discretionary powers to each of our companies to achieve prompt decision-making. We manage sustainability-related risks and opportunities associated with business operations at the division company level. The DMC of each company deliberates on management policies, and investments, financing, guarantees and business which affects our management. The division company president then decides on those matters. These decisions are incorporated into businesses, products, group companies, supply chains, strategies and portfolio assessment methods depending on the situation at each stage of 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.