Concept of Risk Management
The SUNDRUG Group positions risk management as an important management issue, and works to identify risks hidden in business activities, such as large-scale disasters and customer information leaks, and strengthen our system to manage them. The Group has established a system, in which, at normal times, each department identifies risks it has and works to mitigate them, and at an emergency, a task force is formed as stipulated in the Risk Management Regulations and the Group as a whole responds to the emergency. As for Corporate Lawyers, the Group has concluded advisory contracts with four law firms, and whenever we have a legal issue related to management or operations, we consult with and get advice from them. The Group thus strives to avoid and mitigate unforeseeable risks as much as possible.
Major matters that are deemed to be business risks of the SUNDRUG Group are as follows (For details, please refer to the Annual Securities Report.).
(1) Risks related to businesses of managing pharmacies and selling pharmaceuticals, cosmetics, daily sundries, etc.
(2) Risks related to the financial position and operating results
(3) Risks related to legal regulations
(4) Risks related to litigation, etc.
(5) Risks related to the business structure
1. Establishment and operation of the Compliance and Risk Management Committee
In order to identify issues related to compliance and risks and respond to them appropriately, the Group has established the Compliance and Risk Management Committee, which is chaired by the President and consists of Directors and Department Managers. The Committee is responsible for reporting compliance cases related to business operations, formulating and instructing response policies, and establishing the foundation of the compliance system (promotion and education systems, promotion and audit plan formulation, etc.). External Full-time Corporate Auditors and the General Manager of the Business Audit Office also participate in the Committee to share information promptly and work in cooperation. Of the contents of deliberations of the Compliance Committee, important matters are reported at Board of Directors’ meetings.
2. Compliance education
The Group creates a Compliance Guidebook so that employees can always refer to it for the latest laws and regulations that are essential for those engaged in a pharmacy and drugstore business or a retail business, such as the Act on Pharmaceuticals and Medical Devices, the Food Recycling Act, and the Antimonopoly Act. In addition to laws and regulations, the guidebook presents issues, including the prohibition of harassment, insider trading, and discrimination. The Group thus works to raise awareness of compliance widely among employees (including part-time employees). Furthermore, the Group gives a compliance exam once every six months to confirm and establish knowledge in line with constant revisions to laws and regulations.
3. Establishment and operation of compliance hotlines (a whistle-blowing system)
The SUNDRUG Group has established a whistle-blowing system that allows all officers, employees, and all people working in the Group to directly report and ask for resolution of compliance issues. The hotlines are located not only inside the Company but also outside the Company (lawyers). Regarding the whistle-blowing system, internal regulations of the Group strictly stipulate that confidentiality of whistleblowers be protected and disadvantageous treatment of whistleblowers be prohibited. In addition, the Group has strengthened activities to make the above hotlines broadly known in order to raise awareness and understanding of them.