- IR Information
- Management Policy
Business Risks
1. Our Group's risk management system
Our group's risk management system is as follows. In addition, our Group has established a corporate governance system as described in "Securities Report-1st Section Corporate Information-4th Filing Company-4. Corporate Governance," and has developed and implemented an internal control system that includes risk management.
(1)Sustainability committee
We have established this organization to continuously conduct the sustainability activities of our group.
Based on our Basic Sustainability Policy, we identify and review material issues from a long-term perspective.
(2)Strategy Committee
The Committee has been established to deliberate important issues and important matters concerning management strategy.
With regard to risk management, once a year, the Company selects major risks and approves their materiality (degree of impact and urgency) based on the opinions of outside directors and corporate auditors regarding risks related to materiality and other business and financial risks. Checkpoints up to approval are as follows.
- 1.Review of the Corporate Philosophy for any changes.
- 2.Review of Materiality for any changes.
- 3.Review of the business portfolio for any changes due to M&A, new business development, rapid expansion of existing businesses, etc.
- 4.Review of management strategies, such as the medium-term management plan, for any changes.
- 5.Assessment of any significant changes in the external environment by individual risk management departments.
- 6.Assessment of any significant changes in the trend of incident occurrences by individual risk management departments.
- 7.Review of reports from each business division, internal audit results, etc., by individual risk management departments to identify any significant warning signs.
(3)Individual Risk Supervisory Department
The General Affairs Department is in charge of materiality-related risks (including reputation risks that threaten the continued existence) and business risks, and the Accounting and Finance Department is in charge of financial risks. Each department works with the respective business divisions of our group to formulate and promote countermeasures for our entire group.
(4)Product Operations
Each of our Group's business divisions takes countermeasures to appropriately manage operational risks as part of their core business.
2.[Major Risks] Selection and evaluation of importance
（1）For "Materiality-Related Risks" and "Other Business Risks and Financial Risks," the Group selects [Major Risks] that require management as a group, taking into account the degree of impact (severity, severity, etc.) and urgency (high, medium, low) as risks that could have a major impact on management, including the impact on stakeholders. The concepts and countermeasures for the selection are as follows.
①Degree of impact "severe/large" x urgency "high/moderate" risk
[Major Risks] Selection is made, and countermeasures for the entire group are drafted by the individual risk supervisory department and examined by the Strategy Committee.
[Major Risks] The status of trends and countermeasures shall be monitored through reports to the Board of Directors and other means.
②Impact level of "large" x risk of "low" urgency
Outside the selection, the individual risk supervisory department will take the lead in examining countermeasures for the entire group.
③Risk of "low" urgency
Outside the selection, the individual risk supervisory department will take the lead in examining countermeasures for the entire group.
[Reference: Guideline for selecting the level of impact (catastrophic, large, other)]
- 1.Catastrophic: Monetary impact of 1 billion yen or more, death rate caused by business, loss of social trust of the entire group
- 2.Major: Monetary impact of ¥300 million or more, or the occurrence of inpatient injuries and illnesses resulting from operations, and loss of social trust in each business division
- 3.Others: Other than above
[Reference: Guideline for selecting the level of urgency (high, medium, and low)]
- 1.High: Unless appropriate measures are continued, the likelihood of materialization within the next year is expected to be more than 50%.
- 2.Medium: Unless appropriate measures are continuously taken, the likelihood of materialization within the next three years is expected to be more than 50%.
- 3.Low: Expect less than 50% possibility of materialization within next 3 years due to continuation of current countermeasures
(2)The selected [Major Risks] consist of nine items, and the determination of their importance (degree of impact × degree of urgency) is as follows.
3．[Major Risks] Details and main countermeasures
The following is a description of the nine items of selected [Major Risks] and does not cover all risks. We may be affected by risks that we cannot predict or are not deemed significant at this time in the future. Forward-looking statements in this document are based on our judgment as of March 31, 2024.
(1)Safety and Quality [Materiality-related Risks]
《Impact》
Extreme
《Degree of urgency》
High
《Content》
Despite the Group's efforts to ensure food safety, if quality problems such as food poisoning and contamination with foreign substances or the safety of used foodstuffs are doubtful, there is a possibility that business performance could be affected by suspension of operations or deterioration in rumors, and in some cases we lose public trust. In addition, there is a possibility of accidents that could jeopardize human life due to fires, etc. in the Store Asset & Solution Business.
《Main Countermeasures》
By acquiring FSSC22000 certification for food safety management standards at plants and establishing a quality control division, we will ensure thorough quality control and continuously provide safe and secure products and services through daily guidance at stores. We will also ensure thorough compliance with the Fire Defense Law and other related laws and regulations, and respond in a timely manner to any deficiencies discovered through inspections.
(2)Business portfolio strategy [Materiality-related risks]
《Impact》
Extreme
《Degree of urgency》
High
《Content》
Our Group has established a basic business portfolio policy as a "self-reforming group of companies" that promotes business diversification and combines environmental adaptability and growth potential. However, if the management of such a group becomes a mere mere falsification, its capital profitability may stagnate and its corporate value may be impaired.
《Main Countermeasures》
We have already established a framework for large-scale investment and loan projects in each business unit (operating company under the umbrella) that requires application for approval from our (HURXLEY CORPORATION). We will strengthen the operation of this framework, which is consistent with our basic business portfolio policy with an awareness of capital profitability that exceeds the cost of capital, and deliberates and approves it at our Strategy Committee. In addition, we will work to fulfill our functions and improve the effectiveness of the two-track treasury function of our Accounting and Finance Department, which monitors our business portfolio.
(3)Fluctuations in raw material prices of foods [Other business and financial risks]
《Impact》
Extreme
《Degree of urgency》
High
《Content》
Inaba Peanuts Corp., which relies on imports of raw materials in the food processing business, faces a significant risk of fluctuations in the price of raw materials, including foreign exchange factors. It also poses a risk of interruptions in the importation of rice and vegetable crops or poultry, which are used as raw materials for take-out boxed lunches, and these risks may affect the Group's business results and financial position.
《Main Countermeasures》
We will work closely with our supply chain to ensure the stable procurement of raw materials that meet quality standards, and we will also develop a system for processing and supplying raw materials within the Group. In addition, with regard to takeout box lunch lunches, we will develop menus by switching the raw materials we use from those that have soared to those that are priced, and we will develop them by grasping customer needs from a multifaceted perspective.
(4)Fluctuations in real estate prices for sale [Other business and financial risks]
《Impact》
Major
《Degree of urgency》
High
《Content》
In the development process for increasing the value of commercial real estate, such as stores, there is a risk of delays in delivery due to labor shortages and difficulties in procuring materials, and an increase in the unit price of construction. In the sales process after the increase in value, there is a risk that sluggish sales due to a deterioration in the market conditions for income properties, including deterioration in the financial situation, may lead to a decline in sales prices and inventory valuation losses. These risks may have an impact on the Group's business performance and financial position.
《Main Countermeasures》
Legal compliance construction and store leasing are the strengths of the Tenpo Ryutsu Net,Inc. Group, and the business model aimed at gains from sales after the increase in value is sustainable. The Group will expand its sales channels widely, not limited to real estate funds that are susceptible to the financial situation, and control price fluctuation risk by operating inventory positions within an appropriate range while enhancing capital profitability by improving inventory turnover.
(5)Human Capital Growth Support Strategy [Materiality-Related Risks]
《Impact》
Extreme
《Degree of urgency》
Medium
《Content》
The Group considers human resources to be its most important management resource. In order to secure and support the growth of human resources needed for corporate development, the Group has formulated a human resource development policy and an in-house environmental development policy. Although the Group's strategy is to implement this policy, there is a risk that the Group will not be able to secure the necessary human resources without implementing the strategy as expected, or that engagement and labor productivity will significantly fail to meet its strategic goals. This could have an impact on the Group's performance.
《Main Countermeasures》
The Human Resources Development Policy and the Internal Environmental Development Policy were presented to the Board of Directors in June 2023. Going forward, we will continue to ensure that the entire Group practices them. In August 2023, we began conducting employee engagement surveys based on the belief that human resource activity is the bedrock of our group management, and we plan to gradually expand the scope of these surveys to assess the situation. We will utilize the monitoring results in measures to improve the engagement of the entire Group.
(6)M&A strategy and impairment [other business and financial risks]
《Impact》
Extreme
《Degree of urgency》
Medium
《Content》
We will strive to reduce risks by conducting preliminary surveys for M&A. However, there is a risk that the business performance of companies that have entered the Group will not significantly meet the business plan, and there is also a risk that goodwill may become impaired, which may affect the business performance and financial position.
《Main Countermeasures》
With regard to large-scale investment and financing projects, whether they are consistent with the basic business portfolio policy with an awareness of capital profitability that exceeds the cost of capital, we will strengthen the operation that is deliberated and approved by our Strategic Committee. In the post-investment phase, in addition to business execution by the Business Development Department, the Company will work to enhance the effectiveness of the two-line finance function of the Accounting and Finance Department, which monitors the business portfolio.
(7)Store opening strategy and impairment and vacant rent [Other business and financial risks]
《Impact》
Major
《Degree of urgency》
Medium
《Content》
In the Store Asset & Solution Business, we will purchase properties in favorable locations for use by store operators and aim to have over 1300 restaurants in operation by the end of March 2027. However, depending on the economic environment and other factors, it may be difficult to secure and close new restaurant operators. In such cases, vacancy (a decline in sales) may occur in respect of real estate for rent owned, but rent is borne even if there is no income from users in respect of properties leased for store leases, which may affect business results.
《Main Countermeasures》
We will strengthen proposals to lead (prospective) customers and existing business partners that systematically cultivate and nurture stores, and curb vacancy and vacancy rents, by leveraging our store leasing capabilities, which are strengthened by our multi-faceted solutions for people (staffing services), goods (store properties), money (financial support for store openings, such as interior facilities and security deposits) and information, which accelerate store operator openings.