Risk Management

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Basic Concepts on Risk Management

  • The Sumitomo Rubber Group

Management risks involving product quality, law, the environment, credit, accidents, disasters, etc., that may materially and adversely affect our business activities, shall be addressed by the relevant division and/or subsidiary in advance, via the analysis of those risks and the planning of countermeasures in accordance with the Regulations Concerning Risk Control, which define risk management methods for the entire Sumitomo Rubber Group. These risks shall be then referred to the Management Meeting and other bodies for discussion.
If necessary, advice and guidance may be sought from professionals, including legal counsel, in analyzing and planning counter-measures for such risks. Any risk affecting the Group as a whole shall be addressed by individual departments under the administrative divisions overseeing their business operations in coordination with other relevant departments and subsidiaries. The Risk Management Committee shall oversee Groupwide risk management activities and, on an as necessary basis, investigate and confirm whether the risk management system is functioning effectively.
If any material risk affecting the Sumitomo Rubber Group as a whole emerges or is expected to emerge, the President shall establish a risk control headquarters pursuant to the Regulations Concerning Risk Control.

Groupwide Risk Management System

Groupwide Risk Management System
The Sumitomo Rubber Group has established its risk management structure with reference to ISO31000 while developing a risk analysis flow.

Based on this risk analysis flow, the Risk Management Committee identifies and evaluates major risks that may possibly inhibit the execution of the Midterm Plan and the achievement of its objectives. The committee then formulates action plans aimed at countering such risks while providing follow-up monitoring over their implementation status, with the aim of maintaining robust risk management for the entire Company.
The Risk Management Committee is chaired by the President, who appoints executive officers to serve as committee members. The status of activities undertaken by the committee is reported to and confirmed by the Board of Directors on an as-necessary basis.
Moreover, the Audit & Supervisory Board undertakes audits of the risk management structure described above as part of its duties as an auditing body independent from business execution, with internal Audit & Supervisory Board members attending Risk Management Committee meetings as observers.

Major Risks Identified by the Sumitomo Rubber Group

  • The Sumitomo Rubber Group

The Sumitomo Rubber Group undertakes the periodic review of risks in light of changes in risks associated with and the external environment surrounding its business operations.
We evaluate risks based on a five-point scale for the impact and frequency of occurrence. In assessing the impact, we conduct a quantitative evaluation from five perspectives: monetary damages, human loss, environmental impact, damage to social reputation, and impact on research and development, manufacturing, and sales activities.
Major risks identified by the Sumitomo Rubber Group, including those related to ESG issues, are as listed below.

  • Risks associated with the political situation and economic trends, changes in demand, laws and regulations, etc.
  • Risks associated with the recovery of investment
  • Risks associated with product quality management
  • Risks associated with compliance
  • Risks associated with climate change
  • Risks associated with raw material procurement, etc.
  • Risks arising from currency exchange rate fluctuations
  • Risks at times of natural disaster
  • Risks arising from industrial and other accidents
  • Risks arising from information leakage
  • Risks arising from interest rate fluctuations
  • Risks arising from a decline in the market price of held securities
  • isks associated with retirement benefit obligations
  • Risks associated with intellectual properties

Main Initiatives in Fiscal 2023

  • The Sumitomo Rubber Group

Based on the Company’s Regulations Concerning Risk Control, the Risk Management Committee met twice to supervise risk management activities vis-à-vis risks affecting the Sumitomo Rubber Group as a whole. The Committee also confirmed that the risk management system for the entire Group is functioning effectively.
Furthermore, in light of growing geopolitical risks overseas, we created specific scenarios to prepare for a possible emergency. Based on our past response to incidents, we determined what needs to be done to secure the safety of employees and their families, support their livelihoods, and continue logistics, raw material procurement, and other activities. We then implemented risk countermeasures and other measures in collaboration with business divisions and administrative departments with specific functions to protect human life as well as to minimize said risks’ impact on the Group’s overall business management and operating results.
In addition, after COVID-19 was reclassified as a Class 5 infectious disease under the Infectious Disease Control Law and other countries’ response to the disease returned back to normal, the Company gradually relaxed its infectious disease control measures in coordination with business divisions and administrative departments with specific functions.

Business Continuity Plans (BCPs)

  • The Sumitomo Rubber Group

Having directly experienced fallout from the Great Hanshin-Awaji Earthquake and the Great East Japan Earthquake, the Sumitomo Rubber Group has developed BCPs by drawing on takeaways from these two major earthquakes.
Specifically, we completed the formulation of well-thought-out BCPs encompassing our Head Office, overseas and Japan-based factories and domestic subsidiaries to protect human life as well as to facilitate the early resumption of product deliveries to customers at times of emergency. We also conduct periodic drills to enhance the effectiveness of these BCPs.
Also, aware of the growing magnitude of the threats of typhoons, heavy rains and other natural disasters that have been striking the country in recent years, we have upgraded the content of BCPs by incorporating lessons learned in the course of disaster responses. For example, in fiscal 2019 we established standards for exempting employees from attendance at or allowing them to leave early from their workplaces when public transportation is disrupted by an earthquake or when evacuation is instructed by government agencies due to heavy rains or flooding. We have also provided employees with a renewed version of the Basics of What to Do When a Disaster Strikes handbook, which incorporates the above standards to ensure robust employee understanding of these matters.
We also upgraded the BCPs to be executed in the case of war. This upgrade was informed by fresh discussions regarding how to secure the safety of expatriates and local employees at times of emergency and how to continue sales, logistics, raw material procurement and other essential activities, drawing on takeaways from our response to past incidents.
Looking ahead, we will develop a more robust structure capable of keeping our BCPs up-to-date from the perspectives of ensuring the safety of employees and securing business continuity.

the Basics of What to Do When a Disaster Strikes
the Basics of What to Do When a Disaster Strikes