Risk Management

Mission

We recognize various risk factors that hinder the sustainable growth and development of our group and society, clarify the risks and opportunities involved in formulating and executing management strategies, and contribute to the optimal allocation of resources by linking them to management decision-making.

Policies

In addition to the suppression of operational and hazard risks, we promote comprehensive risk management that reflects changes in the external environment such as international situations and climate change. For the sustainable growth of a company, it is necessary not only to focus on avoiding and reducing risks, but also to take appropriate risks that focus on "opportunities" for growth and profit.
Both the recognition and proper evaluation of risk suppression and tolerance are reflected throughout the entire business. 

Promotion system

Risk management system

Resonac has established a risk management system based on ISO 31000, which has been approved by the board of directors as one of the important functions of the internal control system.
A Risk Management Committee, chaired by the CEO, is established to handle significant risk management matters, such as important risks in group management and their countermeasures, conducting cross-organizational deliberations by top management.
Matters deliberated by the Risk Management Committee are reviewed and approved by the Management Meeting, then reported to the Board of Directors, which supervises the status and operations of the risk management system.
In addition, within domestic Business Unit, offices, and major group companies, risk owners, risk officers, and risk managers are appointed to be responsible for the identification, evaluation, and promotion of countermeasures for risks specific to each business or site, thereby clarifying the leadership structure responsible for conducting risk assessments.

Crisis management system

In the event of an accident, disaster, compliance violation or other incident in which risk becomes apparent, the relevant business unit or plant reports to the CRO and the CXO organization responsible for that risk, and they work together in responding to the incident. Should the incident be capable of threatening the Group’s existence or developing into a situation that could seriously impede the Group’s normal business operations, a Crisis Response Headquarters headed by the CEO will be established to assess the situation and its impact, issue instructions on containing the damage/loss, consider how to disseminate information to the public, and promptly take other appropriate initial actions.

If a significant impact on business continuity is anticipated after the initial response, we will activate the BCP (Business Continuity Plan) for products that have been previously defined as subject to maintenance in order to maintain and quickly restore business activities to fulfill our responsibility to continue supplying products to customers, especially those necessary for maintaining social infrastructure.​

For our overseas bases, we also plan to roll out risk/crisis management systems similar to those used in Japan in and after fiscal 2025.

Risk management system diagram

Strategy for Realizing the Long-Term Vision

Roadmap for 2030

Non-financial KPI Results and Targets

Resonac regards sustainability as the basis for its companywide strategies and has set three material issues for sustainability. Accordingly, for risk management, we will work on the non-financial KPIs and measures that were set to “Gain credibility through responsible business management” toward the achievement of our long-term vision.

Risk management processes

Our business environment is constantly evolving and increasing in complexity amid technological innovation, market changes, and changes in policy. We believe that to maximize corporate value under such circumstances it is best to combine two approaches. Through bottom-up activities, we minimize day-to-day risks by tapping into on-site wisdom and experience. Through top-down activities, senior management takes the viewpoint of the entire organization and its goals, ranking business risks in order of priority and optimizing resource allocation.

After companywide risks are identified through these two approaches, they are visualized by being entered into a heat map. After verifying and analyzin risk data using generative AI, the Risk Management Committee reports its findings as companywide key risk themes. These are later discussed intensively in a deep dive at senior executives study sessions.

Identification of bottom-up type report-level risks

The process for departments to identify and evaluate risks is implemented through a centralized data-intensive management using a standardized Enterprise Risk Management (ERM) system. Personnel in positions of manager or above throughout the Company continually share results on the system, enabling day-to-day risks to be reduced at on-site level.

In FY24, templating of risk events and other elements was implemented into the system. As a result, in FY25, when the BU side identifies risks, the accuracy of risk assessment is improved through standardized inventory granularity, and by switching from manual input to a selection-based system, the workload for data entry can be significantly reduced. Additionally, the risk events and evaluation results identified by each department, as well as related data such as current risk responses and future response plans, are reviewed by the control departments (CXO organizations) responsible for each risk area, facilitating communication that includes the need for support. In addition, individual risk events with high importance are positioned as top risks based on the frequency of occurrence and impact levels. These are shared and verified with each department and deliberated by management. The total number of risk registrations for 2024 is 5,836, of which 22 were individually deliberated by the Risk Management Committee.

Identification of top-down type alarm-level risks

The outlook has become highly uncertain in recent years due to changes in the external environment that have rapidly become more diverse and complex. These include elevated country risks, changes in economic security policy in countries around the world, countries’ responses to climate change, and rapid advances in digital technology.

In order to identify the external environmental factors and changes that our group should focus on based on these megatrends in risks, we initiated a collaborative project in 2023 involving the Corporate Planning Department, the Sustainability Department, and the Risk Management Department. By using a scenario-based approach that incorporates external perspectives and environmental changes, we improve risk awareness and reflect it in management strategies. In FY24, we added templating for individual risk scenarios and monitoring by management.

Identification and prioritization (update) of "company-wide material issues (or materialities) risk themes"

We have established a Risk Management Committee chaired by the CEO, which conducts cross-organizational deliberations by top management on risk management systems, the group's material risks, and corresponding response measures. Based on the discussions at the Risk Management Committee, the identification and prioritization of "company-wide material risk themes" were conducted at the management training session led by the executive team in June 2024. At the management training session in March 2025, the status of their response was reviewed, and the heat map visualizing the distribution and impact of risks was also revised.

 

When comparing the FY24 company-wide important risk themes with the results of the company-wide risk inventory conducted through the FY24 risk management system, the field indicated a high risk evaluation (Very High) for "equipment accidents/disasters," whereas the management's risk evaluation (B rank) was somewhat lower, revealing a gap in recognition, which was pointed out. Next, regarding the instability of the supply chain, the heightened sense of crisis on the ground, stemming from the temporary disruption caused by the recent Noto earthquake, is reflected in the results. In particular, the need for deliberation by management executives concerning these risks was pointed out.

Regarding country risk, there are challenges such as the US-China trade friction and instability in the Taiwan Strait that cannot be addressed by a single company, but at this point, for our company, which focuses primarily on the market for high-performance materials for semiconductors, China and Taiwan are still seen as promising markets, and we plan to continue expanding sales there. Therefore, the Risk Management Department will also collaborate with other departments to monitor global trends in risk.
 

Matters for deliberation by management (March 2025 Executive Study Meeting)

The updated "Resonac company-wide important risk map" this time.

Through discussions among management, the company-wide key risks were plotted on the chart with likelihood of occurrence (vertical axis), impact on business (horizontal axis), and impact amount (bubble size), as shown below.

Promotion of BCM