To achieve sustainable growth and maximize our corporate value, PHC Group recognizes the importance of appropriately identifying and assessing the various potential risks inherent in our business activities and preventing or mitigating their effects.

With this in mind, we have created a risk management system based on our Basic Risk Management Regulations, which stipulate PHC Group’s policies and systems on this topic. We have also established processes to systematically identify important Group risks and promote Group-wide risk management and response.

Risk Management System

PHC Group has established a Risk Management Committee with the purpose of comprehensively managing potential business risks and strengthening our risk management system. The Risk Management Committee is chaired by the Risk Management Officer, and its members include corporate officers, business managers from different countries and regions, and heads of corporate departments. The committee meets four times a year, or more often as needed, to formulate and confirm the implementation of measures to avoid business risks and minimize their impact. The committee also evaluates and reviews these measures and reports the results to the independent Board of Directors to support sustainable business operations.

Risk Management Cycle

Business Risk Identification and Management Process

PHC Group operates a series of processes, from risk identification, evaluation, and response to monitoring and improvement, centered on the Risk Management Committee.

First, we conduct interviews of top management and use other means to identify risks recognized by management and, taking into account the perspectives of both business divisions and head office divisions, comprehensively identify and organize risks and then specify target risks. The identified risks are analyzed and assessed from the perspectives of the degree of impact and likelihood of occurrence, and after the Risk Management Committee discusses the validity of the identified risks, potentially significant risks are reported to the Group Executive Committee and Board of Directors.

Risk owners are designated for these potentially significant risks, countermeasures and action plans are formulated, and action is taken based on those plans. Risk control departments monitor the status of implementation and report on progress to the Risk Management Committee. Responses are then reviewed based on discussions within the Risk Management Committee. Issues identified through activities conducted over the course of the year are reflected in the following year’s activity plans to achieve improvement. In the event that a risk materializes, a Group Countermeasures Headquarters is established and responsible for responding promptly to minimize business impact and prevent recurrence.

For further details on business-related and other risks, please refer to the following webpage.

Business riskshttps://www.phchd.com/global/ir/risk