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Risk Management

The risk management of the Group is primarily focused on “building trust with multiple stakeholders and achieving our medium-to-long-term strategies”. We thus consider risks as “uncertainties” that may impact achievement, both potential threats to business as well as potential opportunities. Based on this approach, we have established a risk management structure and have put into place measures for managing such risks proactively and expeditiously.

We have placed the Risk Management Department in the Global HQ which reports to CLO (Chief Legal Officer), and RMO(Risk Management Officer) in each regional headquarters to centrally manage related information. The Global Risk Management & Compliance Committee, composed of Executive Officers/Regional CEOs and chaired by the CEO, meets on a regular basis to discuss risks and countermeasures. In addition to this, we have identified “risk owners” for each risk category to clarify responsibility for countermeasures. Moreover, we have implemented a transparent monitoring and communicative framework within the Global Risk Management & Compliance Committee and the Board of Directors to regularly discuss and assess our progress in addressing these risks.

Risk Management

In fiscal year 2021, risks with potential impact on “WIN 2023 Key Strategies*” execution were identified through Risk Management Department analysis based on risk perception interviews with the Group CEO, Executive Officers, and Regional CEOs. Regional risk assessments and input from related functional divisions were also taken into consideration, as well as insight from external experts.

We then set three evaluation axes for the risks: “the impact on business in case of risk manifestation”, “likelihood and timing of risk manifestation”, and “preparedness to the risk”. Through the above-mentioned Committees and related meetings, the risks were prioritized, and status of countermeasures were considered.

Reflecting our corporate policies, risk assessment plans have been designed to attach due weight to issues related to personal health (and safety), company assets, business continuity, and reputation.

Risks identified through our risk assessment have been organized into three categories: “Consumer and Social-related Risks” stemming from external factors, “Operation & Fundamental Risks” stemming from internal activities, and “Other Risks”.

As a noteworthy point of the risk assessment results mentioned above, individual risks identified are more interlinked than in the past and interdependency of countermeasures is increasing. In addition, “Changes in Consumer Values” and “Corporate Culture and Acquisition /Securing Outstanding Human Resources” have a large impact on the other identified risks.

For details on Business and Other Risks, please refer to the Annual Securities Report on the URL link below.

Business and Other Risks[ PDF : 505KB ]

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

From a long-term perspective, we identified " Decline in purchasing demands for cosmetics " and "Tighter regulations on R&D, manufacturing, and sales of cosmetics’’ as "Emerging Risks" with increasing importance and impact on our business.

We are taking or have taken appropriate response measures to mitigate these risks as described below, along with other risks, including changes in our business model.

Emerging Risk Description Impact on Business Mitigating Actions
Decline in purchasing demands for cosmetics As the values, behaviors, and preferences of consumers rapidly change and diversify with the development of a highly technological and borderless society, there is a risk of declining demand for cosmetics, such as skincare and makeup. If we are unable to appropriately formulate our corporate strategy to respond to changes in consumer's sense of value regarding beauty and health to develop cosmetics and services that match demand, it may have a significant impact on our business.
  • ・Shiseido is concentrating its resources on ''Skin Beauty Brands'', our area of strength where strong market growth is expected and aim to promote our brands, expand our portfolio, and develop new businesses in this area.
  • ・Strengthen brand portfolio to respond to diversifying consumer values (e.g. Drunk Elephant, development of new brands and M&A)
  • ・Built Consumer and Market Intelligence Department to gather consumer information in an accurate and timely manner
  • ・Accelerate value creation and business development through open innovation with other companies
Tighter regulations on R&D, manufacturing and sales of cosmetics With growing global environmental awareness, regulations such as formulation development/UV care/containers & packaging are tightened. There is a risk of expanded restrictions on our technologies and cosmetics in various countries and regions, resulting in R&D stagnation or a ban on production and sales. Many countries and regions have developed proposals for a sustainable society, such as the European Green Deal and Chemicals Strategy for Sustainability. The number of cosmetics and services offered by the Company may decrease and negatively affect the business plan if unable to formulate unique strategy and effectively develop sustainable products in response to the tightening regulations. In addition, inadequate efforts in this field could result in a loss of trust from society and consumers.
  • ・Regular meetings held by Sustainability Committee, medium-to-long-term strategy development and setting of KPIs, and monitoring of strategy implementation progress involving related departments of HQ and RHQs
  • ・Sustainability/SDG-related activities for each brand (SHISEIDO, Clé de Peau Beauté, etc.)
  • ・Adopt eco-friendly packaging (co-develop Kaneka biodegradable polymer Green Planet® and join “Loop” rollout in Japan)
  • ・Promote switch to certified palm oil and paper
  • ・Set and disclose medium-term targets for major environmental load reduction items (CO₂, palm oil, paper, water, waste) and work toward their achievement
  • ・Support Task Force on Climate-related Financial Disclosures (TCFD); prepare scenario analyzing climate change risk impact on business and disclose information based on TCFD recommendations

At the same time, compliance programs are being or have been prepared for four priority areas: personal data protection, anti-bribery, anti-cartel, and supplier risk reduction.

Incident Response

Shiseido has established the Shiseido Group Crisis Management Policy, a guide for incident response to enable swift and appropriate actions, effective damage control, and early recovery. In Japan, departments in which an incident occurs take initial actions to understand the situation and prevent damage from spreading while promptly reporting to the Risk Management Department. After determining the incident level from the perspectives of severity of damage, possibility of spread, social impact, and other factors, the Risk Management Department assigns members from necessary HQ functions to organize a task force. The task force examines a range of actions to prevent damage from spreading, respond to those affected, and disclose information, while continuously monitoring investigation into cause, progress, and response results and implements reoccurrence prevention measures. Outside of Japan, regional CEOs and RMOs are responsible for leading incident response activities. Significant incidents, such as those which pose a high risk of affecting operations in other regions, are immediately reported to the Risk Management Department at headquarters to enable quick action.

Shiseido Group Crisis Management Policy

1.Ensure the safety of employees and their families

2.Preserve company assets

3.Continue operations

4.Earn the trust of stakeholders

Business Continuity Management (BCM)

We have formulated a Business Continuity Plan (BCP) to prepare for major natural disasters and other emergency situations. To enable prompt and appropriate actions by employees according to the BCP in the event of an emergency, we provide regular training and education programs and use the findings from these programs to periodically revise the BCP.

Business Continuity Plan (BCP)

Our BCP is formulated based on the Shiseido Group Crisis Management Policy and the Shiseido Group BCP Concept as described below.

Shiseido Group basic approach to formation of BCP

  • 1. Protecting peoples' lives is the most important thing. Place the highest priority on ensuring the safety of employees and their families and confirm whether they are safe.
    After this, when conducting business operations, consider the safety of employees, and prevent secondary disasters.
  • 2. Protect finances, IT systems, buildings, equipment, and other company assets.
  • 3. Perform operations essential to recovery and operations that should be continued in the event of an emergency by the target time, without fail.
  • 4. Through the above, minimize the impact on customers, business partners (clients and suppliers, etc.), shareholders, employees, society, and other stakeholders; prevent damage to corporate value, and earn the trust of society by providing various forms of support to the local community, etc.

Our BCP consists of a “basic plan” serving as a general guide and “action plans” to specifically describe recovery activities to be carried out by each department.

The BCP is designed primarily for natural disasters and other emergency situations, such as large earthquakes, that can seriously affect business continuity. In order to minimize damage and facilitate early recovery, the plan describes “restoration tasks” (necessary actions to restore basic operations) and “business continuity tasks during an emergency” (actions that must be taken to maintain business operations during disaster situations) and sets “recovery time objectives” to complete said tasks. The plan also specifies in phases the information to be collected, items to be decided, and reporting lines. This plan is executed under the leadership of the HQ Emergency Task Force, with the Executive Officer in charge of Risk Management as director and members appointed from necessary divisions to address issues related to employees, facilities, communication systems, information disclosure, funding, and consumer relations. The task force undertakes overall management in cooperation with two other special functions: the Product Supply Continuity Task Force (to recover and sustain supply networks) and the SJ Emergency Task Force (to be responsible for Japan Region operations). In addition to the BCP, for sudden and unexpected incidents such as earthquakes, we have separately developed a business continuity plan for emergencies with gradual/long-term impact, such as infectious disease outbreaks, which sets out matters to be considered and implemented by each phase (infectious disease BCP).

HQ Emergency Task Force Drill

The HQ Emergency Task Force Drill is held on a regular basis as training for effective command and appropriate execution of the BCP. Findings from the drill are used to review and revise existing action plans and BCP-related documents. Relevant parties are notified of changes, ensuring the BCP is updated and all are prepared for immediate action.

Emergency education for employees

To promote individual employee awareness and knowledge of emergency preparedness, we run various training and education programs. BCP briefings are given to heads of departments/offices to increase their understanding and ensure swift action by all staff under their leadership in the event of major emergency, under HQ Emergency Task Force instructions. Additionally, safety confirmation drills are conducted for all employees twice a year, and new hire orientation programs include lectures to raise knowledge and awareness of emergency preparedness.