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Compliance and Risk Management

Compliance and Risk Management Structure

Compliance and risk management in the Shiseido Group is led by the Risk Management Department established at the Company’s global headquarters. Furthermore, to ensure compliant and fair business activities and implementation of risk countermeasures across the Group, a Risk Management Officer (RMO) is assigned in each regional headquarters. Incidents in Japan and overseas regions are reported, in accordance with certain criteria, to the Risk Management Department through RMOs or the division responsible for the incident. The division, RMO, and the Risk Management Department set up a taskforce as needed and work together toward a speedy resolution. In addition, the Risk Management Department and RMOs conduct regular training and educational activities to raise employees' awareness and knowledge of compliance and risk management.

To oversee compliance and risk management of the Shiseido Group, a Global Risk Management & Compliance Committee chaired by the Group CEO has been established at the global headquarters. In addition, HQ/SJ Compliance Committee oversees compliance in the Japan region.

Significant matters and progress related to compliance and risk management, including major incidents, are reported/proposed to the Board of Directors through the Group CEO or the management team.

Risk Management Oversight by the Board of Directors

Risk management oversight on a Group-wide basis is one of the key responsibilities of the Board of Directors. The Board provides feedback on reports from the management on significant matters and progress related to compliance and risk management, as well as confirms background, risk tolerance, and risk limit for matters included in individual reports and proposals. This allows the management to appropriately identify risks and decide whether the risk should be taken, mitigated, or avoided. In addition to receiving individual reports/proposals from the management, the Board compiles risk-related information through collaboration with auditors and the Audit & Supervisory Board for effective risk management oversight.

Group-wide Risk Management

In fiscal year 2020, the Risk Management Department interviewed the Group CEO, executive officers, regional CEOs, and external directors for their perception of Group risks. Regional risk assessments and input from relevant functions, as well as insight from external experts, were also taken into consideration. As a result, the Risk Management Department identified material risks that may impact the realization of our WIN 2023 Key Strategies.*

The identified risks were evaluated with three axes: “the impact on business in case of risk manifestation,” “likelihood and timing of risk manifestation,” and “preparedness to the risk.” Furthermore, the above-mentioned committees and related meetings held discussions to prioritize the risks and consider the status of countermeasures.

In 2020, the environment in which the Group operates changed significantly due to the COVID-19 pandemic. Accordingly, we have classified the risks brought about by these changes into four categories of “Consumer-related Risks,” “Social-related Risks,” “Operation & Fundamental Risks,” and “Other Risks,” with the first two relating to the external environment and the third, to a robust business foundation essential for the realization of WIN 2023 Key Strategies. Furthermore, we have identified “risk owners” for each risk category to clarify responsibility for countermeasures. Also, a monitoring framework has been established within the Global Risk Management & Compliance Committee and the Board of Directors to regularly assess our progress in addressing these risks.

Based on our 2020 risk assessment findings, the most impactful risks (Threats and Opportunities) for fiscal year 2021 in relation to our WIN 2023 Key Strategies are: "Innovation Risks," "Changes in Consumer Values," "Business Structure Transformation," "Speed of Digital Shift," "Natural and Human-Made Disasters," and "ESC (Environment, Society and Culture) Unique to Shiseido.”

  • *WIN 2023 Key Strategies
Improve Profitability
  1. 1. Rebuild profit structure through fundamental reforms
  2. 2. Increase cost competitiveness and improve factory productivity
  3. 3. Accelerate growth in Asia, especially China
Focus on Skin Beauty
  1. 4. Build a powerful portfolio centered on skin beauty brands
  2. 5. Accelerate innovation through external collaborations
  3. 6. Develop the inner beauty category
Rebuild Business Foundation
  1. 7. Become a truly sustainability-focused company
  2. 8. Strengthen brands through innovate marketing and robust organization
  3. 9. Build a digitally driven business model and organization
  4. 10. Enhance talent and organization through diversity and upskilling

Business and Other Risks

Consumer-related Risks Social-related Risks Operation & Fundamental Risks Other Risks
  • ・Innovation Risks*
  • ・Changes in Consumer Values*
  • ・Speed of Digital Shift*
  • ・Natural and Human-Made Disasters*
  • ・Brand Image
  • ・Geopolitical Risks
  • ・Business Structure Transformation*
  • ・Information Security
  • ・Corporate Culture and Acquisition / Securing Outstanding Human Resources
  • ・Global Information Network
  • ・Supply Network
  • ・Compliance
  • ・Quality Assurance and Control
  • ・Organizational Management and Governance
  • ・Exchange Rate Fluctuations
  • ・Material Litigation
  • ・ESC (Environment, Society, and Culture) Unique to Shiseido*
  • *Most impactful 2021 risks (as of March 25, 2021)

Consolidated Financial Statements [505KB]

Whistleblowing System

The Company has established a whistleblowing system to discover acts which violate laws, the Articles of Incorporation, or other regulations within the Shiseido Group and to promptly correct such issues. In the Japan region, the Company has established an internal hotline managed by in-house counselors, an external hotline operated by a third party, and the Compliance Committee Hotline through which employees are able to make direct reports to the Committee Chair. The Company has also created a whistleblowing hotline for reports related to corporate officers and promotes the use of these hotlines. For other regions, the Company has set up local/regional hotlines, in addition to a Shiseido Group Global Hotline at the global headquarters for direct reports from employees worldwide. These hotlines contribute to strong compliance/governance structure of the entire Group.

To secure effectiveness of the whistleblowing system, the Company has developed and promotes internal regulations to protect whistleblowers’ personal information and confidentiality. These regulations also protect whistleblowers from retaliation such as dismissal from their position or workplace.