Risk Management

The founder continuously urged each employee to sharpen his or her sensitivity to change, stating that "there are signs before all things" and that "one must be alert to signs of change and act accordingly." The Group’s risk management is an initiative aimed at maximizing the organization’s fulfillment of its mission as a "public entity of society" by valuing this sensitivity at every level, from the front lines to management, and by seeking to prevent in advance adverse impacts on the achievement of its business objectives while proactively utilizing favorable impacts.

The Group has established a Groupwide risk management system and processes based on the “Panasonic Group Basic Rules for Risk Management” (the “Basic Rules”), which comply with ISO 31000, an international standard for risk management systems, and COSO-ERM (2017), an international framework for risk management.

The Group operates in a broad range of business areas in Japan and overseas, including Connect, Electric Works, HVAC & CC, Energy, Industry, and Smart Life etc. In light of this business structure, and in order to achieve risk management that balances optimization at both the corporate and business levels, the Group has established promotion systems at Panasonic Holdings Corporation (“PHD”), as the holding company, and at each operating company based on the "Basic Rules."

At PHD, the PHD Enterprise Risk Management Committee ("PHD ERM Committee") has been established, with the Group Chief Risk Management Officer ("Group CRO"), who is responsible for promoting the Group’s risk management, serving as chairperson, and the heads of the functional divisions responsible for Group measures serving as members. In addition, the Enterprise Risk Management Office ("PHD ERM Office") and the functional divisions work together to carry out the practical operations for promoting risk management.

At PHD, once a year, risks requiring a response or monitoring by PHD or the Group, as well as their priorities, are identified, analyzed and assessed from top-down, bottom-up and cross-functional perspectives, based on changes in the external and internal environment and management’s recognition of risks in light of the Group’s management policies and plans. The Group endeavors to anticipate an uncertain future and effectively allocate limited management resources by taking into account not only the degree of impact on the Group and its stakeholders, including employees, customers and business partners, but also multiple indicators such as vulnerability to such risks.

In addition, at PHD, the PHD ERM Committee conducts regular risk reviews, including monitoring changes in risks and the status of measures to address high-priority risks. The content related to this series of initiatives for promoting risk management is utilized not only to enhance the quality of management decision-making and business execution at Group Transformation Round Table (GTRT) and to support the Board of Directors in supervising the effectiveness and efficiency of the risk management system, but also in risk-based internal audits focused on high-priority risks.

In recent years, given the growing importance of addressing social demands such as corporate social responsibility (CSR), the SDGs, and ESG, these activities have also incorporated risks factors arising from failure to meet such expectations, including those related to human rights, labor compliance, and environmental issues. They also incorporate evaluation factors related to the impacts of our business activities on stakeholders.

In order to enhance the effectiveness of risk management, the Group is promoting initiatives aimed at fostering a "Risk Culture" so that each employee can continuously improve his or her risk literacy and pursue sound risk-taking in an ever-changing environment. In Japan, through training for employees upon joining the Group and prior to overseas assignments, the Group aims to help them acquire the mindset necessary to avoid being excessively fearful of risks and to turn them into opportunities for organizational and personal growth, as well as a basic understanding of how to respond in the event of a crisis.

As part of our corporate social responsibility, we conduct external lectures titled “Risk Management that Supports Organizational and Individual Growth” at universities to help develop the young people who will lead the future through risk management.

The Group maintains the “Global Hotline EARS” to allow Group sites in Japan and overseas and business partners to report potential risks, including compliance violations, diverse types of harassment, and issues related to procurement activities. For more details, see “Whistleblowing System” in the “Ethics and Compliance” chapter.