Risk Management

Approach

Lion Group’s business activities entail a wide range of risks. To avoid and minimize losses caused by the actualization of risks, general risk management is placed under the purview of the Executive Management Board with overall responsibility for risk management assigned to the director responsible for the Corporate Planning Department (director responsible for risk management). This director shall act as chair of the AL Risk Management Committee, which shall work exhaustively and comprehensively to manage the Group’s risk.

Basic Policy for Risk Management

1. In conformity with the Basic Internal Control System Policy, management and employees strive to understand and identify risks that could harm Group business operations and prevent their actualization as part of their normal duties.

2. In the event that a risk actualizes, we strive to minimize losses and harm to employees, shareholders, customers, local communities and other stakeholders.
3. We report actualized risks to top management immediately and promptly take steps to understand the situation, elucidate the events and factors that led to it, and develop measures for improvement in order to prevent recurrences.

The Lion Group’s Rules and Other Structures Relating to the Management of Risk

Response under Normal Conditions

1. General risk management for the Group is under the purview of the Executive Management Board with overall responsibility for risk management assigned to the director responsible for the Corporate Planning Department (director responsible for risk management). This director shall act as chair of the AL Risk Management Committee, which shall work exhaustively and comprehensively to manage the Group’s risk.
2. The Executive Management Board shall conduct risk management by deliberating the severity of risks encountered in the execution of business strategies, determining response policies pertaining to such matters as regulating these risks, and addressing any remaining risks (areas where the Group engages in risk-taking).
3. Following deliberations within the AL Risk Management Committee, the Executive Management Board evaluates and identifies management risks that have the potential to significantly impact business activities, and the Group as a whole works to mitigate or otherwise address these risks in line with established policies.
4. Among management risks, those that require a Companywide, specialized perspective, for example, for risks related to the environment, quality assurance, accidents and disasters, or compliance, may be principally addressed by a relevant body, in these cases the Sustainability Promotion Council, CS/PL Committee*, Safety, Hygiene and Disaster Prevention Meeting, or the Corporate Ethics Committee, respectively. These bodies may consider preventive risk management countermeasures, which are then deliberated on by the Executive Management Board and the Executive Committee as necessary.
5. Each department and affiliated company identifies and works to mitigate or otherwise address risks in its area of operations. In addition, all Group plants have received ISO 9001 and ISO 14001 certification, adopted OSHMS (conforming with ISO 45001) and are actively working on quality management, environmental conservation and safety and health management.
6. The AL Risk Management Committee, the Executive Committee, and other such groups verify and share signs of newly occurring risks within a fiscal year (emerging risks) related to environmental changes, etc. Should these risks with a high potential to greatly impact management manifest during a fiscal year, the risk owners assigned by the chair of the AL Risk Management Committee shall evaluate response measures, which shall be deliberated on by the Executive Management Board in the course of risk management.
7. The director responsible for risk management reports on the progress of risk management to the Executive Committee (Executive Management Board) and the Board of Directors. The Internal Audit Department audits whether risk management processes are functioning effectively across the Group and reports its findings to the Board of Directors, which is entrusted with supervision.

* CS/PL Committee
CS：A cross-departmental committee focused on customer satisfaction (CS) and product liability (PL) to promote quality assurance activities

Response in the Event of Emergency

In the event of an incident occurring due to a natural disaster or accident, in accordance with the Emergency Response System (the respective manuals for countermeasures against earthquakes or influenza and other infectious diseases), the General Manager of the Corporate Support Department General Affairs Office shall report details of said incident to the president, the chair of the AL Risk Management Committee and Audit & Supervisory Board members. At the same time, the emergency response members of the AL Risk Management Committee shall collect all relevant information, formulate response measures, clarify causes and determine countermeasures, submitting a report on these actions to the Executive Committee and the Board of Directors.

Business Continuity Plan (BCP)

Lion works to build and maintain systems to minimize damage and to ensure the continuation of business operations so that it can provide products to customers even in the event of a major earthquake, storm or flood damage, an outbreak of infectious disease (pandemic) or other such contingency. In the event of an emergency, we will discuss how to set in motion business continuity plans based on the Emergency Response Systems.

Basic Policy

(1) Secure the safety of employees and their families
(2) Continue priority businesses and key operations to minimize business damage
(3) Carry out corporate social responsibilities and contribute to local communities

Key Points of the Plan

(1) Priority business: Consumer Products Business
(2) Priority operations: Operations necessary for continuation of product supply
(3) Target timeframes for restoring operations and organizational chains of command

Implementing Risk Management

The Executive Management Board annually evaluates and identifies risks that have been determined by the AL Risk Management Committee to have the potential to significantly impact the Lion Group’s business activities, designating them “management risks.” Officers responsible for said risks work alongside each department to mitigate or otherwise address them through dedicated committees and systems. Relevant departments and companies identify and evaluate risks specific to their operations, designating them “individual risks” and determining appropriate countermeasures that they then implement. The AL Risk Management Committee monitors progress on these risks while the director responsible for risk management reports on this progress to the Executive Committee (Executive Management Board) and the Board of Directors as necessary. The Internal Audit Department audits whether risk management processes are functioning effectively across the Group and reports its findings to the Board of Directors.

For more information on management risks and Lion’s main initiatives to address them, please refer to here.