Risk Management Structure
The Company maintains a Joint Compliance Committee to manage rise from a company-wide perspective consisting of the committee chair (senior managing director in charge of the Internal Control Division), a vice-chair (managing executive officer in charge of the Human Resources & General Affairs Division), one outside director, one outside auditor, and one outside attorney as a meeting body to manage risks from a company-wide perspective. At the beginning of each fiscal year, the Company identifies potential risks based on internal and external information, the audit results of the Internal Auditing Department, and other sources. The risks are analyzed and evaluated for importance, likelihood of occurrence, and potential effect on financial reporting, and risk countermeasures are formulated and set in place. In addition, a company-wide risk map is being created and updated to enable a comprehensive overview for viewing, comparing, and understanding the magnitude of risks.
The Joint Compliance Committee oversees IT Committee, Product Safety Measures Committee, and Fire Prevention and Disaster Prevention Committee. In principle, each committee holds regular meetings four times a year to monitor, respond to, and manage internal risks. In addition, the Compliance Office serves as the secretariat of the Joint Compliance Committee and is responsible for day-to-day risk response.
When a compliance officer assigned to a department by the Compliance Office identifies a risk in the department’s business, the officer and the department director examine the risk and implement a response including reporting to the Joint Compliance Committee. For risks that require a Group-wide response, the Joint Compliance Committee works with the relevant departments to gather information and, if necessary, refers to the Management Council and Board of Directors for a final decision on countermeasures.
The compliance officers are the primary executors of risk management and work with each other to identify risks across departments and to enhance risk-response countermeasures when necessary. The PDCA cycle is applied to risk management activities and the risk map is constantly updated with the latest information.
A framework is being developed to extend the risk management system in place at the head office to the entire Group in Japan and overseas.
Sanrio recognizes that transition risk and physical risk caused by climate change have potential environmental as well as economic and business impacts. The Sustainability Committee also monitors these and other risks related to sustainability, and if a risk is identified as requiring a response, the committee works with the Joint Compliance Committee to examine and implement countermeasures.
All Group companies in Japan and overseas hold risk management meetings twice a year to share information from the head office on the latest risks and to examine risks and responses specific to each company. The minutes of the companies’ risk management meetings are shared with the Joint Compliance Committee.
The Internal Control Committee, in accordance with the Financial Instruments and Exchange Act, annually evaluates risks and controls related to the Group’s overall financial reporting and reports to the Board of Directors.
The Internal Auditing Department conducts independent and objective assessments of inherent risks and controls by conducting audits of Group companies in Japan and overseas and departments at the head office, or by conducting thematic audits and any recommendations for improvements to the audited departments. Audit results are also reported via the Joint Compliance Committee to the Board of Directors.
The growth strategies of in the current medium-term management plan include initiative for the education, game, and digital fields as well as in new business areas. This strategy increases the need to identify and understand risks in new business areas with which the Company does not have experience. While accumulating expertise and increasing our personnel, we will continue to apply thorough risk management, including making effective use of external resources as needed.
Primary Risks
Primary risks to sustainability are presented in the Business Risks section.