At CCBJH we have implemented an overarching business resilience program that integrates the ways in which we manage risk and opportunity to enable profitable growth; protect our people and assets; enhance our capabilities to respond in a crisis; and the way we transfer risk through insurance.
Our Board of Directors has overall responsibility for risk management and sets the risk appetite of the business. They are closely involved in oversighting risks and the strategic response to them, and monitoring management actions to achieve its strategic objectives.
In support, risk management is being firmly embedded within our everyday business activities and culture. Our Enterprise Risk Management (hereafter ERM) PDCA framework is based on COSO(*1) and ISO 31000 and provides a framework to drive profitable growth by leveraging opportunities and promoting appropriate risk-based decision-making, as well as strong capabilities in the identification and response to foreseeable risks. Our business resilience programs are led by our Head of the Risk Management Senior Group (HRM), who as a member of the ELT(*2) works in close collaboration with the function heads and risk owners across our business on the response to specific business risks. The HRM is tasked with maintaining a wide-angled view of all business streams for emergent risks and opportunities and through regular reporting ensures that risk visibility is provided to the ELT and our Board.
(*1) An abbreviation for Committee of Sponsoring Organizations of the Treadway Commission. An organization that issues global frameworks for internal control
(*2) An abbreviation for Executive Leadership Team. Management organization in CCBJI Group including CEO and function heads.
The ERM program incorporates a variety of elements that enable us to ensure alignment to our business strategies, objectives, and principles; drive integration in our strategic direction, ethics and values; link into the business planning cycle; continually monitor our internal and external environment for factors that may change our risk profile and create opportunities; and an annual evaluation of the type and amount of insurance we should purchase. In a hardening insurance market, our approach to insurance risk transfer is influenced by the availability of insurance cover and cost, measured against the probability and magnitude of the relevant risks.
Our risks and the associated mitigation and response initiatives are constantly evaluated. The Audit and Supervisory Committee are provided quarterly updates on the full program with the Board of Directors receiving biannual updates. The program is annually audited by our Internal Audit team and external auditors against global best practice.
During 2022, we continued our focus on strengthening the integration of ERM and Smart Risk program into our corporate culture through the creation and delivery of training and awareness courses. We have maintained the visibility of risks and opportunities through monthly ELT dialogue and senior manager participation in facilitated functional risk identification and review sessions.
A robust crisis management program with associated business continuity plans provides us with the capability to effectively respond to a crisis. These programs are subject to annual review with crisis training provided to our leadership teams who are tested through interactive crisis simulations.
The cyclic review of our key risks involves an assessment of the likelihood of their occurrence and their potential consequences to confirm our level of exposure and evaluate the strategies to manage them. The list does not include all risks that can ultimately affect our Company as there are risks that are not yet known to us, and risks currently evaluated to be immaterial that could ultimately have an impact on our business or financial performance. By leveraging our robust risk management program, which is integrated into business routines and evaluates risks against our business and strategic priorities, we remain vigilant to the uncertainty in our operating environment and can react with agility. The program enables us to proactively identify new risks and opportunities which enable us to understand threats to our business viability.
Risk category | Description and potential impacts | Key mitigations |
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Commodity pricing | Risk of procurement costs increasing due to fluctuations in exchange rates, raw material shortages, and commodity prices.
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Macroeconomic | Risk of volatile and challenging macro-economic conditions caused by key global events including conflict, inflation, and foreign currency fluctuations.
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Cyber security and system availability | Risk of business activities being suspended, and confidential information leaking caused by system failures or cyber incidents
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Changing consumer mindset | Risk of changes in consumer preferences caused by COVID-19, growing concerns over sugar consumption and increased health awareness
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People (attraction and retention) | Risk of not being able to secure, retain and develop enough human resources and build constructive relationships with labor unions due to poor business performance and a competitive employment environment.
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Natural disasters | Risk of death and injury of employees and damage to business facilities for production, logistics and sales operations caused by severe natural disasters, such as earthquakes and floods.
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Evolving commercial and competitive landscape | Risk of changes in the retail market environment led by a surge in online ordering and a change in spending behavior driven by the external macro environment.
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Growth strategies | Risk of failing to implement measures to improve our competitive advantage and grow the business (through business integration, capital investments, product development, etc.)
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Financial risks | Risk of deterioration in financial conditions cause by an increase in funding costs and retirement benefit obligations.
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Risk category | Description and potential impacts | Key mitigations |
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Sustainability | Risk of increased stakeholder concerns caused by caused by negative consumer sentiment over the use of plastics and the toughening of government regulations on plastics.
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Quality and food safety | The risk of product-related quality and food safety incidents.
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Regulatory compliance and ethics | Risk of violations of laws, internal regulations, and our code of ethical conduct
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Manufacturing, logistics & infrastructure | Risk of the stable supply of goods being impeded due to issues in production and logistics operations, or changes in weather and consumer behaviors
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Climate change | Risk of raw material shortages including water and agricultural products or operational impacts due to adverse weather associated with climate change.
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Health and safety | The risk of serious work-related health and safety incidents (i.e. serious injury or death) including transportation accidents
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Franchise relationships | Risk related to our high dependency on, or changes to our relationship with The Coca-Cola Company and Coca-Cola Japan as trademark owners in respect to contract / relationship terms and renewals, concentrate pricing, support for product promotions
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Specific climate related risks and our approach to TCFD is located at:
TCFD