Basic Approach
To prevent or minimize the damage of business risks, we have established the Risk Management Rules, which stipulate measures for preventing risks from occurring in the first place and the optimal ways to respond to risk events once they occur.
Situational risks that emerge
- 1.When we commit a mistake that seriously harms our business partners or customers
- 2.When we are held responsible for committing a legal violation
- 3.When our financial disclosures lose their credibility
- 4.When we sustain severe damage in a natural disaster
- 5.When sensitive information is unduly divulged or leaked to third parties
- 6.When our continued operation is otherwise threatened
Risk Management
Our Risk Management Rules categorize risks according to causal factors and specify measures for preventing the risks from materializing. Such measures include establishing rules, producing manuals, and issuing directives. Prima Meat Packers has established code of conduct detailing specific routine workflows to ensure that the management philosophy is put into practice. The Company has also established a Food Safety Policy to ensure that all our business activities contribute toward the goal of delivering safe and tasty meals to the table.
When risk events materialize, we follow the Risk Event Response Manual, which outlines the steps to follow in accordance with the anticipated severity of the damage. If the damage is expected to be extensive, the business continuity plan (BCP) will be enacted, with a central task force headed by the president coordinating the emergency responses of the affected departments.
The employee handbooks we issue each year include content on the initial steps to take if a risk event materializes during routine work operations (there are separate instructions for serious customer complaints, food poisoning incidents, work accidents, traffic accidents, and natural disasters).
Climate-related Risks
Climate change is a worldwide problem and one that impacts our business operations. Examples of the climate-related risks we face include higher prices for raw materials and animal feed. Recognizing climate change as a major source of business risk, we have endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and we disclosed climate-related information in accordance with the recommendations.
Business Continuity Planning
Part of our risk management strategy involves business continuity planning. We develop plans to keep our businesses operational during a natural disaster or a wave of infections. During such events, we will promptly place ourselves on an emergency footing to manage the dangers, and work to contain the damage. Mindful of our corporate social responsibility, we will work to recover normal operations and assist the recovery efforts of affected communities and government bodies.
Monitoring Risks
We monitor risk information for the Group regarding "Food Safety and Reliability," "Public Regulations," "Occupational Health and Safety," "Compliance," "Information Security," and "Transactional Risks," and report the results to the Board of Directors every half-year as risk concerns.
Events judged to be serious are reported until they are resolved or concluded, and we strive to minimize any potential adverse impact on the Group's business operations.
Of the risk categories mentioned above, food safety and reliability risks are the most critical concern to us as a food manufacturer. Accordingly, we make extra efforts to communicate such risks across the Group. For example, we hold quarterly meetings to discuss customer feedback about our products, inform each business about regulatory developments, and inform production sites about the measures they should take to ensure food safety and reliability. We also hold monthly meetings to discuss price trends in raw materials and make sure that our businesses are procuring their materials for a reasonable price.
Anti-infection Measures
On March 17, 2020, we initiated a business continuity plan to deal with the growing threat of COVID-19. As part of the plan, we established a taskforce headed by the president. The taskforce worked to prevent or contain infections on Company premises primarily to protect employees and other stakeholders but also to fulfill our social responsibility to maintain stable supplies of food products. Through these actions, we created value in the following ways: 1) We raised confidence among employees and other stakeholders, 2) forged new sales channels and distribution means to expand our clientele, 3) created new business opportunities and ways of working, and 4) built solid supply chains.
Risks Affecting Performance
The following table shows the main risks that could potentially affect our business and financial performance.
Business environment
| Risk | Description | Actions |
|---|---|---|
|
Price fluctuations in raw materials Material risk |
Because we produce and sell fresh meat, processed pork (ham and sausages), and other processed foods, our performance may be affected by price rises in the livestock market or oil market, from which we procure raw materials and goods for such products.
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Exchange rate fluctuation |
Because we source raw materials and goods from the U.S., Europe, China, and other overseas areas, exchange rate fluctuations may affect our performance. Additionally, because the financial results of our overseas subsidiaries are denominated in local currency, our consolidated performance may be affected by the exchange rate that applies when we translate the results into Japanese yen. |
|
Business operation
| Risk | Description | Actions |
|---|---|---|
|
Securing safe, reliable food Material risk |
If any of the following issues occur in the production and sale of our products, we may harm customers’ health and our credibility may be affected, which may threaten our continued operation:
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Impairment of goodwill and fixed assets |
Our performance and financial health may be adversely affected if we fail to produce the expected cash flows as a result of tangible or intangible fixed assets diverging from what was stated in the business plan.
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Regulatory compliance Material risk |
A Group business may be severely damaged if it commits a legal violation.
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Environment, emergencies
| Risk | Description | Actions |
|---|---|---|
|
Natural disasters, accidents, incidents Material risk |
If a natural disaster or accident harms the life, health, or property of a Group company or one of our distributors, the affected entity may be forced to suspend supplies and rearrange production, distribution, and sales networks, resulting in severe damage to performance.
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Infectious disease Material risk |
If an infectious disease persists, we may be unable to continue business activities, resulting in severe damage to performance.
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[Measures to prevent infection among employees and their families during epidemics/pandemics]
[Action for business continuity]
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Major system malfunction Material risk |
If a major system malfunction occurs (as a result of a cyberattack or other reason), we may be unable to continue business activities, resulting in severe damage to performance.
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- ※In the Risk column, “Material risk” indicates that the risk in question is particularly dangerous.