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Risk management

Governance

Addressing Business Risk

The Group operates Production Equipment Business and Consumer Goods Business both in Japan and overseas, and faces a variety of risks. Of these, the main risks that are considered to have a potentially material impact on investment decisions are the following. The Group has put in place required risk management systems, and reviews risks continuously. The issue of whether appropriate policies have been formulated and executed to counter these risks is evaluated by the Board of Directors etc., and in this way it works to avoid the occurrence of risks and to respond appropriately to emerging risks.

Important risks and their countermeasures

*The table below can be scrolled left or right.

Major risk category
Risk subcategory Risk details Measures to address risk
(1) Risks associated with business environment, etc.
a.Changes in business conditions
Significant changes in demand caused by trends in corporate attitudes to capital investment and personal consumption Pursue specialization to address diverse needsOpen up new markets by accelerating overseas expansion
b.Country risk
Soaring procurement and distribution costs, as well as delays in supply of product,arising from the situation in Russia and Ukraine and other political/social conditions Obtain appropriate information on country risk
c.Foreign exchange rate volatility
Major foreign exchange gains or losses caused by significant fluctuations in foreign exchange rates, and declines in sales caused by customers holding back from purchasing products handled by the Company Implement forward exchange contracts and other measures for import/export transactions denominated in foreign currencies
(2) Risks associated with operation of the business
a.Response to new business models
Expected results are not obtained from investment in the business Implement measures based on business investment framework
b.Securing and developing human resources
Difficulty in obtaining competent personnel due to the declining birthrate,aging of the population, and the shrinking of the workforce Draw up and execute strategies based on personnel management policyPromote diversity, beginning with participation of women in the workplace
c.Credit
Lines of credit to business partners both in Japan and overseas as a result of a variety of marketing activitiesDefault, etc. by business partners occurring as a result of unforeseen circumstances Implement credit management based on internal management regulations
d.Product liability, etc.
Significant costs following the occurrence of major recalls or product liabilities, and impairment of corporate brand value Set out quality management regulations and establish Quality Management and Product Liability CommitteeTake out product liability insuranceEstablish Crisis Management Committee as a structure for use in times of emergency
e.Information systems and
information security risks
Leakage, falsification or loss of personal or corporate information as a result of unauthorized access or other incidentsOpportunity losses and loss of social trust caused by systems-related suspension of operations Formulation of information systems management regulations and information security regulationsStrengthen information security, put backup systems in placeImplement regular employee education
(3) Other risks
a.Compliance
Punishment by regulatory authorities, impairment of corporate brand value, and loss of social trust in the event of violations of official regulationsInfringement of official regulations in Japan and overseas caused by the enactment of new official regulations and other developments Establish Internal Control Committee and Compliance CommitteeFormulate and abide by Yamazen Group Corporate Activity Charter
b.Share price fluctuations
Changes in share price based on fluctuations in market price of stocks heldImpairment of Group’s pension asset value caused by stock market slump Review all shareholdings on a regular basis to confirm the reasonableness of maintaining or reducing holdings
c.Impairment losses on non-current assets
Recognition of necessary impairment losses arising from trends in the economic environment and a decline in economic value Implement measures based on capital investment framework
d.Natural disasters, epidemics, etc.
Damage arising from large-scale natural disasters or pandemicsDelays in product delivery caused by supply chain interruptionsSuspension of major trade shows due to the spread of COVID-19 Promote countermeasures such as business continuity planning (BCP)Support the introduction of BCP throughout the supply chain (for small and medium-sized enterprises)Use the Crisis Management Committee, etc. to implement initiatives to address change
e.Climate change risk
Physical risks caused by natural disastersSales opportunity losses caused by strengthening of laws and regulations or supply chain regulationsDecline in social trust caused by insufficient engagement with social issues Promote global diffusion of energy saving equipmentEnter the renewable energy business by establishing the Green Recovery Business (GRB) Dept

Business Continuity Policy

Yamazen Corporation and its group companies (hereinafter, “the Yamazen Group”) constitute a specialized trading company that deals both in “production equipment” that supports the manufacturing that is the pillar of Japanese industry, such as machine tools, industrial equipment, and cutting tools, as well as “consumer goods” that help maintain the comforts of daily life, such as housing equipment and home products, and that is growing its business both in Japan and overseas. In the event that this business is interrupted, there would be a significant impact on the customers that use the Yamazen Group’s products and services, which we would expect to result in a loss of trust in the Group. Accordingly, we have formulated Business Continuity Plans (BCP) based on this policy in response to a variety of threats that could interrupt the Yamazen Group’s business, and we declare that we will continuously make improvements in response to changes in the internal and external environment.

1Preventing and correcting interruptions of business

The Yamazen Group will work to prevent interruptions by clarifying which businesses should be given priority in terms of continuity and recovery, as well as fully recognizing and analyzing risks related to the interruption of business, devising necessary and rational management measures, and determining systems and procedures in advance for use when an emergency occurs, thus facilitating the recovery of the business within the targeted time period. In addition, when new threats that would have an impact on the continuity of the business are perceived, corrective action shall be taken without delay.

Furthermore, at this point in time (the date of the most recent revision to this policy), the scope of the application of BCP within the Yamazen Group is as follows.

Scope of BCP application

a) Organization
Yamazen Corporation and its group companies
b)Facilities
Japanese offices and sites
c)Business

Provision of various products and services related to production goods, housing equipment & materials, and household products, in the fields of production equipment and consumer goods

d) Assets
All employees, facilities and equipment involved in the above-mentioned business

2Raising awareness of business continuity and improving the responsiveness of the organization

The Yamazen Group regularly conducts BCP-related education and practices, with the goal of raising awareness of business continuity and improving the responsiveness of the organization in this regard.

3Compliance with laws, guidelines set out by the state, and other norms

When formulating its BCPs, the Yamazen Group complies with laws, guidelines both in Japan and overseas, and other norms related to business continuity.

4Response to inquiries

The Yamazen Group maintains the following points of contact to respond to BCP-related inquiries.

Point of contact for BCP-related inquiries

a)Department in charge
:YAMAZEN CORPORATION Corporate Planning Department
b)Address
:2-3-16, Itachibori, Nishi-ku, Osaka, 550-8660, JAPAN
c)Tel
:06-6534-3060
d)e-mail
bcp@yamazen.co.jp

5Continuous improvements to BCP

The BCP that is formulated using this policy as its basic concept takes into full consideration changes in the nature of the business, social circumstances, and the content of inquiries made from both inside and outside the company, and is subject to continuous improvement.

Yamazen’s BCP

As a measure to deal with various threats to the continuity of the business (natural disasters, man-made disasters, etc.), the Yamazen Group introduced Business Continuity Management (BCM) and formulated Business Continuity Plans (BCP) for its major bases from October 2015 onwards, and is working continuously to make improvements in response to changes in the internal and external environment.

◆BCM initiatives

  • Review of BCP-related documents
    (bringing up to date)
  • Implement investigations of the supply chain’s business continuity capabilities
  • Implement education and training
  • Maintain and manage inventory items and equipment and materials
Some inventory items
Some inventory items
Training in progress
Training in progress

◆BCP initiatives

  • Establishing organizations and roles for when BCP is activated
  • Setting criteria for activating BCP
  • Selection of substitute bases
  • Setting criteria for attending office/returning home
  • Implementing an extraordinary convocation
  • Implementing safety checks and evacuations
  • Implementing checks on personal safety
  • Implementing emergency treatment and relief/rescue activities
  • Formulating BCP measures for each location based on hazard maps.

BCP initiatives

◆Distribution of crisis response handbook

In order to protect the lives, safety and daily living of employees, copies of the “BCP Activation Response Handbook” or the “Emergency Response Handbook” have been distributed to every Group employee, so that everybody fully understands methods of communication and personal safety checks in the event of a disaster.

Distribution of crisis response handbook
Compact handbook, resistant to tearing and water damage, that can be inserted into a notebook, etc.

◆Supply Chain Initiatives

Yamazen supports the introduction of BCP not only within its own group, but throughout the supply chain as a whole, and is thus rolling out its “BCP.ERS” one-stop support service for small and medium-sized enterprises.

Supply Chain Initiatives

◆External evaluation

Acquired “Resilience Certification”(※1)

The strengthening of business continuity systems and other initiatives for recovery actions after a disaster were given high marks, leading to the acquisition and updating of our “Resilience Certification” for business continuity and social contributions.

*1 What is “Resilience Certification”?
A system whereby, based on the “Guidelines for the Certification of Organizations Contributing to National Resilience” established by the Cabinet Secretariat’s National Resilience Promotion Office, the Association for Resilience Japan certifies companies, etc. that are taking an active approach to initiatives related to business continuity.

“Resilience Certification”

Won “Japan Resilience Award”(※2)
for six consecutive years

In recognition of our active approach to strengthening our resilient systems, such as deploying BCP and conducting recovery activities, we have won the “Japan Resilience Award” for six consecutive years.

*2 What is the “Japan Resilience Award”?
A system in which awards are granted by the Association for Resilience Japan in recognition of initiatives to build a more resilient society in preparation for the next generation.

Japan Resilience Award 2017

  • Introducing BCP at major bases
  • Providing “BCP.ERS”(※3)
  • Providing support for recovery activities after the 2016 Kumamoto Earthquake

Japan Resilience Award 2018

  • Introducing BCP at major bases and distribution centers, and strengthening systems by implementing reviews/training, etc. after introduction
  • Acquiring “Resilience Certification”, and rolling out “BCP.ERS” nationwide, etc.

Japan Resilience Award 2019

  • Rolling out “ZePlus”(※4)housing concept nationwide, which provides enhanced resilience for houses, etc.

Japan Resilience Award 2020

  • Conducting a business continuity enhancement project for the Tokyo 2020 Olympic and Paralympic Games

Japan Resilience Award 2021

  • Conducting a COVID-19 response business continuity enhancement project using measures for the Olympic and Paralympic Games

Japan Resilience Award 2022

  • Conducting a project contributing to Universal Health Coverage (UHC) (※5)during the COVID-19 pandemic

*3 What is “BCP.ERS”?
A one-stop support service aimed at small and medium-sized enterprises that covers everything from consulting on the formulation of BCPs to deployment of equipment and inventory items.

*4 What is “ZePlus”?
A housing concept that takes the net zero-energy house (ZEH) a step further. Not only does it have superior resistance to seismic events and improved energy-saving features, but it also proposes an unconstrained approach to homebuilding that matches the customer's lifestyle.

*5 Universal Health Coverage (UHC) means to ensure that all people can receive appropriate services for promoting health, prevention, treatment, and functional recovery at an affordable cost. The achievement of UHC is listed as one of the targets under Goal 3 of the Sustainable Development Goals (SDGs), “Good Health and Well-Being.” It includes protection of all people from financial risk, access to high quality basic healthcare services, and access to safe, effective, high quality, affordable essential drugs and vaccines.

Certified as a “Three-Star Resilience Company”

In recognition of the above initiatives and track record, the company was certified as a “Three-Star Resilience Company” at the “Resilience Grading” certification ceremony jointly held by the Association for Resilience Japan and the Research Organization for Grading Japan in February 2020. Going forward, Yamazen will continue to leverage its unique trading company functions and develop its business in such a way as to contribute to improvements in Japan's resilience.

Three-Star Resilience Company

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