Risk management

Risk Management Framework and System

The Oji Group undertakes its business activities with the high ethical standard laid out in the Oji Group Corporate Code of Conduct, and implements appropriate risk management practices. In response to the rapid expansion of the areas in which we operate businesses, we will reinforce our risk management structure globally to ensure business continuity and the steady development of our businesses.

Developed by the Oji Group under the supervision of the Board of Directors, the Oji Group has established Group Risk Management Regulations and it works to manage risks in the flow described below.
The Directors and Corporate officers of Oji Holdings are responsible for reporting risks in the businesses and divisions under their control to the Group Management Meeting, and important risks are also reported to the Board of Directors.The Oji Holdings Board of Directors reviews the effectiveness of its risk management process annually.

Flow of Risk Management

The Oji Group's risk management system is structured as shown in the diagram below and operates separately from the Audit & Supervisory Board and the Internal Audit Department.
The Audit & Supervisory Board and the Internal Audit Department also audit the status of risk management.

Risk Management Structure

The Oji Group categorizes major risks that may have a material effect on its financial position, etc. into three groups: risks regarding long-term issues, risks associated with its management strategies and risks arising from the execution of business. At the same time, the Group takes the following measures to address each risk group.
The icons to the right represent material issues

Type of risk Content of risk Main countermeasures against risks
Risks regarding long-term issues

Climate change

Mitigation and adaptation to climate change

  The Task Force on Climate-related Financial Disclosures (TCFD)

Pandemic

Supply of safe and secure products Ensuring workplace safety and health

Risk of the health of employees being harmed or the temporary suspension of operations caused by the global spread of infection similar to the COVID-19 pandemic
  • We have established the Group Risk Management Regulations, and if a serious incident to be addressed by the Group as a whole occurs, we will establish a Group emergency headquarters to confirm the safety of employees and investigate the damage that has been incurred.
  • We work to minimize the impact of pandemics on our business activities by continuously reviewing the business continuity plan (BCP), and working to implement the digital transformation (DX) of our manufacturing, marketing, administrative processing and other activities.
Risks associated with our management strategies

Structural changes in demand arising from innovation Structural changes in demand arising from innovation

Supply of safe and secure products Enhancing human resources

Risk of structural changes in demand arising from the progress in digital transformation (DX), which significantly changes people’s lifestyles and business activities.
  • Facing a shrinking market, we restructure domestic business production systems and pursue rationalization through activities such as collaborations with other companies in our industry. We also strive to secure cash flows through thorough cost reduction activities and efficient capital expenditures. We expand our portfolio by investing the cash obtained via our domestic businesses where demand is expected to grow and our overseas markets where economic development is expected and also allocating this cash to the development of new material products, etc.
  • To enhance our corporate value over the medium and long term and achieve sustainable development, we work to facilitate the reform of working styles and support diversity to ensure the active participation of diverse human resources.

Fluctuations in demand

Supply of safe and secure products

Risk of a decline in demand for products due to the fluctuation of domestic business and the continuing decrease of the population
  • We work to strengthen the foundation of our business so that we are able to tolerate market fluctuations through thorough cost reduction activities, etc.
  • In the field of industrial materials, we work to differentiate ourselves from other companies by providing comprehensive packaging solutions and strengthening product development capabilities leveraging integrated material and processing management, limiting the impact of any fluctuation in demand on sales and ensuring cost competitiveness.
  • In other business fields as well, we work to develop new products such as paper products that support the transition to plastic-free materials and functional paper with new properties to improve profitability.

Fluctuation of global market conditions Fluctuation of global market conditions

Responsible raw materials procurement Circular use of resources

Risks associated with the procurement prices of raw materials and fuels which are influenced mainly by the fluctuation of demand, changes in countries’ trade policies and wars
Risk that the sales price of pulp is influenced by global market prices
  • We have established a department that is in charge of the Group-wide procurement strategy to monitor markets in relation to the procurement of raw materials and fuels and we strive to maintain a variety of suppliers and facilitate advantageous procurement.
  • Having established the Oji Group Sustainability Action Guidelines for Supply Chains, we confirm the safety and legality of raw materials with all of our suppliers. We work to ensure stable procurement through more environmentally and socially friendly procurement practices and enhanced relationships with suppliers.
  • Regarding the procurement of recovered paper, we strive to maintain recovered paper recycling systems. We also strengthen our coordination with relevant companies with the aim of ensuring the stability of our recovered paper procurement.

Overseas business

Respect for human rights

Geopolitical risks, including war, political or social instability, decelerating economic growth, the revision of laws, regulations or tax systems, destabilizing financial conditions, human rights issues, are present in overseas markets where the Group operates
  • We have established regional headquarters that specialize in gathering information about the political, economic and social conditions of neighboring countries to prepare for and respond to all relevant risks before they emerge. We also diversify risks by operating in a wide range of countries.
  • To reduce risks, we enhance our ability to collect information and reduce the amount we invest through joint ventures operated with leading local companies.
  • Regarding human rights issues, we ensure that personnel are familiar with the Oji Group Human Rights Policy that we have established, and we implement initiatives with the goal of ensuring that human rights are respected.
Risks arising from the execution of business

Occurrence of disasters, etc. Occurrence of disasters, etc.

Reduction of environmental burdens Ensuring workplace safety and health

Risk of production bases and supply chain in and outside Japan being affected by natural disaster
Risk of fire, occupational accident, environmental accident or other unexpected circumstance occurring
  • We have formulated a business continuity plan (BCP) in consideration of the risk of an interruption in our business due to a disaster, etc. and we regularly provide emergency education and conduct disaster drills. In addition, we have established the Group Disaster Control Office as a permanent organization, thereby establishing a system for promptly obtaining the most up-to-date information. We also share information about the causes of and measures to address disasters throughout the Group and work to minimize damage.
  • Regarding the environment, we have, for example, set voluntary management values that are stricter than the environmental regulatory standards, thereby striving to prevent environmental accidents.
  • Regarding safety, we have developed safety measures and safety operation procedures for production facilities and ensure that personnel are familiar with them. We have also established safety and health management structures and work to prevent occupational accidents.

Laws, regulations and other rules Laws, regulations and other rules

Respect for human rights Enhancing human resources

Risk of not being able to comply with laws or regulations of various countries, and risks related to the revision or amendment of laws or regulations.
  • In our business activities, compliance is at the top of our list of material management challenges. We translated the Oji Group Corporate Code of Conduct and the Oji Group Behavior Standard into the languages of the countries in which each of our overseas operate to ensure that personnel in and outside Japan are familiar with their content and adhere to them. We also ensure that responsible divisions take the lead in the provision of training on relevant laws, regulations and other rules to prevent any violation of them.
  • We have extablished the Oji Group Tax Policy and are working to enhance our corporate value and become a company that is trusted by society by ensuring that we properly pay taxes in compliance with the tax laws and regulations of each country in which we operate.

Litigations and other actions Litigations and other actions

Sustainable forest management and biodiversity conservation Responsible raw materials procurement

Risk of being a party to litigation, disputes, or other legal proceedings in the course of business
  • Regarding litigation and other actions filed against us, we prevent a dispute from occurring by discussing with business partners and clarifying contract terms. We also have in place a system to deal with any litigation and other actions filed against us in collaboration with law firms.
  • If an event which may have a negative impact on our reputation arises as a result of litigation and other actions, we promptly respond to the event, and publish appropriate information as necessary to maintain our reputation.

Product liability

Supply of safe and secure products

Risk of being liable for damages caused by our products
  • We provide safe and secure products by establishing the Group Quality Control Regulations, building a quality control system, and implementing quality design and manufacturing processes in compliance with relevant laws and regulations and in accordance with voluntary management values.
  • We work to prevent risks associated with product liability from occurring by establishing the Group Product Safety Management Regulations and ensuring that the department in charge of overseeing quality management throughout the Group provides assistance regarding and conduct audits of the quality management divisions of the Group companies’ management of product safety.

Exchange rate fluctuations

Responsible raw materials procurement Supply of safe and secure products

Risk of the fluctuation of exchange rates affecting product sales prices, the prices of raw materials and other transactions using various currencies
  • We monitor currency movements and their impact on our results and hedge risks using derivatives such as exchange forward contracts, currency option trading and currency swap transactions as necessary.
  • In Japan, we hedge a certain portion of exchange rate fluctuation risks by buying and selling foreign currency obtained from operating activities within the Group companies.

Information leakage

Ensuring workplace safety and health

Risk of confidential information being leaked due to willful conduct including external cyberattacks or negligence
  • In the Group Information System Usage and Risk Management Regulations, we clarify our risk management operation system and organization and their roles and comprehensively set out the matters that information system users must comply with, thereby managing risks across the Group.
  • With stricter system usage rules applying when highly confidential information is accessed, we take measures to prevent unauthorized access, data theft, email spoofing and the like.

Information Security Measures

The Oji Group positions information obtained through its business activities as important assets. We have enacted Information Systems Usage and Risk Management Regulations to respond promptly to changes in the IT environment which is always becoming more complex, and we have established a groupwide system to prepare for cyber threats such as unauthorized access to systems and disasters. The Oji Business Center, as a department that oversees our information system risk management, inspects the information system risks throughout the Group and maintains, manages and improves IT security. In addition, it regularly provides educational activities and information on the latest risk trends that it had acquired to employees using company newsletters and conducts targeted email training so that employees can handle phishing e-mails which are becoming more sophisticated every day. In FY2021, we revised regulations to respond to the changes in work styles, such as the increased use of cloud computing and teleworking during the COVID-19 pandemic. We will work to make sure that these measures take hold and further strengthen our efforts to improve IT security from a global perspective.

Information Security Structural Diagram

BCP

At the Oji Group, we have formulated a BCP*1 for each COMPANY to respond to an emergency when a risk associated with the execution of business materializes. Reviewing the BCPs as necessary, we also engage in BCM.*2 In the event of a serious incident that must be addressed by the Group as a whole, we establish a Group Emergency Headquarters to confirm the safety of employees, investigate the damage incurred, and take prompt measures to continue supplying products to our customers.

  • *1 A business continuity plan (BCP) is a plan for continuing business in an emergency such as a disaster or pandemic.
  • *2 Business Continuity Management (BCM) is comprehensive and integrated management for ensuring business continuity, including the formulation and continual improvement of BCPs including, for example, the introduction, implementation and review of BCPs.

Building a Group Disaster Control System

We have established the Group Disaster Control Office as a permanent organization to prepare for disasters such as fires, earthquakes, storms and floods. We have formulated rules on the reporting of disaster and accident information, establishing a system that enables us to promptly obtain the most up-to-date information. We also promptly share information on disasters that have occurred within the Group for the implementation of recurrence prevention measures. By holding regular Disaster Prevention Committee meetings and conducting a large-scale safety confirmation drills using the safety confirmation system and disaster prevention drills at each workplace, we work to increase employees’ awareness of disaster preparedness and strengthen disaster preparedness measures.

Locating production bases to diversify risks and flexibly procure raw materials

Oji Group companies have production bases nationwide, from Hokkaido to Kyushu. While proceeding with the consolidation of production bases to enhance competitiveness, we consider risk diversification in the continuation of our business. In addition, to ensure we are able to continue production, we, in principle, procure raw materials from several companies and ensure we are able to flexibly procure materials from diversified sources. 

Exploration of infrastructure risks and implementation of measures

The production bases of the Oji Group in Japan explore risks related to earthquakes, heavy rains, typhoons and other natural disasters, and implement measures against them using local hazard maps to simulate the occurrence of disasters such as floods or landslides. For example, we have strengthened waterproofing measures for electrical rooms to prevent the long-term stoppage of operations at plants or mills. We also actively roll out useful measures to other companies in the Group.

Local preparedness for natural disasters and support

In recent years, we have strengthened not only the measures within the Group but also our collaboration with local residents to prepare for the increasingly frequent natural disasters. To date, we have concluded a total of 163 disaster prevention agreements with local governments across Japan. When a disaster occurs, we provide corrugated cardboard beds and various other types of corrugated cardboard products, and also jointly conduct drills for setting up evacuation centers. We provide support in a wide variety of ways, including infection prevention measures.

The Oji Group carries out its production activities to maintain people’s everyday lives around the world by supplying the corrugated containers and folding carton products that support logistics services, hygiene materials such as tissue paper, toilet roll and face masks, as well as printing and communication paper that conveys information. 

Corrugated bed
Drills for setting up evacuation centers with local governments