Corporate activities are affected by various uncertainties (risks) that exist internally and externally. Proper management of risks is therefore essential in maintaining and increasing corporate value. At Chugai, risk management is a key issue underpinning sustainability, and we strive to evolve it every day.
1. Advanced Risk Management through ERM
Enterprise risk management (ERM) is an approach to managing risk aimed at maximizing corporate value by visualizing all risk relating to business activities and managing it in an integrated framework. The Chugai Group has an established practice of ERM that identifies and evaluates risk by division and monitors the status of implementation of countermeasures. However, to realize more advanced risk management, we have introduced and started a new ERM framework from 2021 that integrates strategy-related risk management. Specifically, we have formulated the Risk Appetite Statement to clarify policy on risk preferences with the aim of creating a healthy risk culture. We divide risks to be addressed on a company-wide basis into strategic risk (risk inherent in strategic decision-making and risk that hinders strategy execution) and operational risk (risk that hinders smooth business operations). On this basis, we will identify, classify, and visualize these risks in a centralized fashion for company-wide sharing and discussion. This will not only promote effective and efficient risk management but also strengthen accountability to external stakeholders.
2. Chugai Pharmaceutical Risk Appetite Statement
Chugai’s Mission Statement is the basis of the business activities we pursue to create shared value with society and increase corporate value. In these business activities, the Chugai Group regards risk as any phenomenon that hinders the achievement of management goals and the execution of strategy.
To support appropriate strategic decision-making and smooth business operations, we have formulated the Risk Appetite Statement that sets out our policy in response to risk. It is intended not only to promote a healthy risk culture but also to serve as a comprehensive basis for the judgments and actions of individual employees.
3. Strategic risk management
When identifying and evaluating “strategic risks,” we draw up important risks that are expected to have a major impact on its management strategy and their specific impact, and regularly analyze trends in the business environment to identify changes in risks, assess the impact on its strategies based on the progress of management activities, and take appropriate measures in a timely manner.
Specifically, in the midst of dramatic changes in the company environment, such as the remarkable development of science and technology and the transformation of the social system accompanying the expansion of the novel Corona Virus infections, the risks associated with “Technology and Innovation,“ “Healthcare System and Regulation,“ “Markets and Customers,“ and “Business Foundation“ are identified as critical risks in the execution of the key material issues (materiality) and the growth strategy “TOP I 2030.“
4. Operational risk management
The Chugai Group strives on a daily basis to appropriately manage operational risks, which hinder the smooth operation of business activities.
Risk Management Frameworks and Initiatives
Chugai has established the Risk Management Policy and Risk Management Regulations, and set up a Risk Management Committee chaired by a representative director as a corporate management committee, as well as Division Risk Management Committees in each division and at subsidiaries in Japan and overseas.
The Risk Management Committee monitors risk management in each division with a Company-wide perspective, evaluates reports from the Division Risk Management Committees, and submits reports to the Executive Committee as necessary. It also identifies Group-wide risk issues that may have a material impact on management, taking into consideration the status of response by the relevant divisions and trends in the industry and external environment, and submits progress reports on Company-wide measures to the Executive Committee.
Division Risk Management Committees create and quantitatively evaluate risk maps that identify the risks in the business activities of their respective divisions. To address priority risks, which are division risk issues, the Division Risk Management Committees draw up annual response plans and submit quarterly reports on the progress of the plans to the Risk Management Committee.
Chugai Risk Management System
Using IT Systems to Boost Risk Management Efficiency
To promote more efficient identification, analysis, and feedback of company-wide risk information, Chugai developed an original risk management system and implemented it globally. Using the database for centralized management, divisions can record their risk maps, annual risk response plans, and incident reports. This enables us to analyze risks for the Group as a whole, and monitor countermeasures at each division.
Emergency Response System
If a problem arises in a division or at a subsidiary, the division or subsidiary involved will respond immediately and report to the Risk Management Committee.
In the event of a large-scale disaster or serious problem, an Emergency Headquarters led by the CEO and a cross-divisional Risk Response Subcommittee will be set up to carry out Company-wide emergency response measures.
In addition, a Business Continuity Plan is in place for responding to business continuity risks (e.g., a major earthquake, pandemic outbreak or cyber attack), and drills are conducted periodically.