Gun Ei Chemical Industry Co.,Ltd.

There are concerns about information infrastructure failures and information leaks caused by cyberattacks, as well as the external leakage of confidential information and personal information due to intentional acts or negligence by employees. Both the probability of occurrence and the degree of impact are rated as high, and serious effects on business continuity and corporate credibility are anticipated. As countermeasures, the company is promoting the formulation and periodic review of its basic information security policy, implementation of zero-trust security measures, and enhanced education and training.

Fluctuations in raw material procurement prices and product market conditions due to geopolitical risks, supply delays or suspensions by raw material manufacturers, and procurement/delivery delays caused by reduced domestic transportation capacity resulting from work-style reform-related laws may affect business performance. Both the probability of occurrence and the degree of impact are rated as high, making the securing of stable procurement an important issue. As countermeasures, the company is implementing timely pass-through of raw material and freight price increases to selling prices, diversification of purchasing sources, appropriate inventory management, and dissemination of its sustainable procurement policy.

Potential risks include health hazards caused by product quality defects, increased costs from non-conforming products and waste generation, litigation and compensation claims arising from quality complaints, and a decline in the credibility and corporate value of the group as a whole. The degree of impact is rated as high, and strengthening the management system is particularly required in product fields that demand advanced quality control. As countermeasures, the company is strengthening equipment maintenance, reinforcing its quality control and quality assurance systems, maintaining appropriate product liability insurance coverage, and providing quality improvement support to suppliers.

Potential scenarios include employee casualties and operational shutdowns due to natural disasters such as heavy rain, chemical leaks or explosion accidents caused by disruption of utility supply, and inability to ship products due to delayed delivery of raw materials. The degree of impact is rated as high, and given the nature of the chemical manufacturing industry, the scale of damage in the event of an accident could be significant. As countermeasures, the company is implementing preventive measures and conducting drills simulating potential incidents, formulating and periodically reviewing BCP/BCM plans, and installing in-house power generation equipment and other facilities.

There is a risk that changes in sugar industry policy or policy direction by the Ministry of Agriculture, Forestry and Fisheries could directly affect the company's saccharification business, which operates under legal and regulatory constraints. The probability of occurrence is rated as high, and policy trends are positioned as a regulatory risk that touches on the fundamentals of the business. As a countermeasure, the company continues regular negotiations and information exchange with government authorities through industry associations (the All Japan Sugar Refining Industry Association).

Concerns include increased operating costs associated with the transition to a decarbonized society, reduced competitiveness and sales of existing products, and a decline in corporate value and credibility due to delayed response to climate change. The probability of occurrence is rated as high, and this is regarded as an important factor in the medium- to long-term change in the business environment. As countermeasures, the company is implementing waste reduction, reducing GHG emissions through capital investment and adoption of renewable energy, and promoting product development premised on carbon neutrality.

A decline in corporate value and credibility is anticipated due to legal violations, deviations from social norms and ethics, and conduct raising concerns about human rights violations such as discrimination, harassment, or forced labor. Both the probability of occurrence and the degree of impact are rated as medium, and strengthening governance across the group as a whole is required. As countermeasures, the company is conducting regular compliance education, strengthening and monitoring the group governance system, and enhancing CSR procurement initiatives.

There is a risk that operational shutdowns and production declines due to employee illness, as well as delays in raw material delivery and product shipment, could affect business continuity. Both the probability of occurrence and the degree of impact are rated as medium, and ensuring business continuity as a manufacturer is a key challenge. As countermeasures, the company is formulating and periodically reviewing BCP/BCM plans, maintaining appropriate inventory management, promoting work-style reform through IT utilization, and advancing operational efficiency improvements, labor savings, and automation.

There is a risk that difficulty in recruitment and labor shortages due to the declining birthrate and aging population, rising costs of acquiring highly specialized talent such as IT personnel, and the outflow of personnel to other companies could affect business operations. Both the probability of occurrence and the degree of impact are rated as medium, and this is an important issue from the perspective of technology and know-how succession and maintaining competitiveness. As countermeasures, the company is strengthening in-house talent development through enhanced training programs, building an attractive work environment and promoting diversity, and enhancing its personnel evaluation system and wage structure.

There is a risk of impact on raw material procurement costs and product sales denominated in foreign currencies, as well as on the consolidated financial results including overseas subsidiaries. The probability of occurrence is rated as medium and the degree of impact as low, positioning this as a relatively manageable risk. As countermeasures, the company monitors and periodically reports on the impact of exchange rates on raw materials, and avoids risk by promoting yen-denominated transactions.