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Compliance and Risk Management

Organization

The Global Risk Management & Compliance Committee and the HQ/SJ Compliance Committee have been established as committees that handle compliance and risk management and report directly to the President and CEO. These committees collaborate with compliance organizations at regional headquarters located in major regions around the world and provide overall direction for activities that improve corporate quality, including the promotion of legal compliance, fair business practices, and risk countermeasures across the Group. The President and Representative Director makes proposals and reports on important issues and progress of compliance activities to the Board of Directors as appropriate.

Group companies and offices are responsible for promoting legal and fair business practices and risk countermeasures across the Group and regularly plan and promote training and awareness-raising activities related to corporate ethics, as well as respond to incidents and manage risks. The divisions in charge of risk management and the committees in charge of compliance and risk management periodically share information with the personnel in charge at each Group company and business unit.

Risk Monitoring by the Board of Directors

Monitoring risks on a Group-wide basis is one of the key responsibilities of the Board of Directors. The Board reviews reports on risks factors identified by the Compliance Committee and provides feedback on the measures the Committee has developed to prevent incidents/mitigate risks. Also, for individual reports and strategies proposed, the Board makes inquiries on the prerequisites, risk tolerance, and risk limit of each to confirm risks are being considered in an appropriate manner. Through these means, the Board urges the Management to identify risks, implement measures to prevent incidents/mitigate risks, and take risks appropriately.
In addition to receiving individual reports/proposals and Compliance Committee reports, the Board compiles risk-related information through sharing of information with the Audit & Supervisory Board, also contributing to the realization of highly effective risk monitoring.

Review of Risks

In 2019, the Risk Management Department held interviews and surveys with the Company’s CEO, HQ corporate officers, and regional CEOs on Group risks. We also conducted Risk Management Officer (RMO) targeted surveys in each region. Based on the findings, we conducted risk assessment to identify key risks facing the Company. Our risk assessment utilized the following three evaluation criteria: “impact on business performance in the event a risk materializes”, “timing and likelihood of potential risk materialization”, and “adequacy of measures toward a given risk”. On the basis of these evaluation criteria, the Global Risk Management & Compliance Committee has identified and prioritized risks that could potentially impact the Company to achieve the 2018-20 Five Key Strategies and evaluated measures. For evaluation of each risk, we took into consideration potential impact on people’s lives, Shiseido’s assets, and overall business continuity in accordance with the Group’s Risk Management Policy. Impact on reputation was also considered.
Risks identified through our risk assessment have been organized into the following categories according to the overall nature of each risk: “Business Strategy Risks", “Core Business Risks”, “Operational Risks”, and “Other Risks”. We have also identified “risk owners” for each risk category in an effort to clarify responsibility for countermeasures. Moreover, we have implemented a monitoring framework within the Global Risk Management & Compliance Committee and the Board of Directors to regularly assess our progress in addressing these risks.
From the risk assessment results mentioned above, the five most impactful risks (threats and opportunities) for 2020 in relation to the realization of our 2018-20 Five Key Strategies are: “Geopolitical Risks”, “Innovation”, “Changes in Consumer Values”, “ESC (Environment, Society, and Culture) Unique to Shiseido”, and “Information Security”.

  • *2018-20 Five Key Strategies

1. Further selection and concentration of brands and businesses

2. Acceleration of digitalization and New business development

3. New value creation through innovation

4. Talent and organization development to be a global winner: “PEOPLE FIRST”

5. New global management structure

Business and other Risks

Business Strategy Risks Core Business Risks Operational Risks Other Risks
  • ・Geopolitical Risks*
  • ・Innovation*
  • ・Changes in Consumer Values*
  • ・ESC (Environment, Society and Culture)
    Unique to Shiseido*
  • ・Changes in Competitive Environment
  • ・Information Security*
  • ・Organizational Management and Governance
  • ・Global Information Network
  • ・Supply Network
  • ・Acquisition and Securing of Outstanding Human Resources and Corporate Culture
  • ・Quality Assurance and Control
  • ・Brand Image
  • ・Natural and Human-Made Disasters
  • ・Compliance
  • ・Exchange Rate Fluctuations
  • ・Material Litigation
  • *Important Risks 2020(As of March 25, 2020)

Notice of Convocation:

Whistle-Blowing System

To discover acts which violate laws, the Articles of Incorporation, or other regulations within Shiseido and to promptly correct such issues, the Company has established a means of reporting compliance-related issues. For overseas, the Company has set up local/regional hotlines, in addition to which it has established a Shiseido Group Global Hotline at the Head Office for direct reports from overseas employees. In the Japan region, the Company has established the Compliance Committee Hotline specialized in whistle-blowing, an in-house Shiseido Helpline staffed with in-house counselors, and an external Shiseido Hotline as a means of reporting. The Company has also created a reporting route to audit & supervisory board members for reports related to corporate officers. Shiseido is working to make known these hotlines to employees.
To secure the effectiveness of this whistle-blowing system, the Company has developed internal regulations to ensure directors, audit & supervisory board members, corporate officers, and employees are not dismissed, discharged from service, or receive other disadvantageous treatment due to reporting. These regulations are made known to employees.