Crucial Issues for Corporate Survival

Risk Management


Risk Management Basic Policy

We are promoting risk management in accordance with the following action guidelines with the aim of contributing to the achievement of our management strategic goals through recognizing the various risks involved in the Nissan Chemical Group, preventing the occurrence of loss risk and minimizing the impact of their occurrence.

  1. We place top priority on the safety of the lives of officers and employees of the Nissan Chemical Group.
  2. We consider risk management as an important management issue, and engage in the activities from a company-wide perspective.
  3. All officers and employees of the Group shall be sufficiently aware of risk management, strive to improve their abilities, and endeavor to prevent the occurrence of loss risk.
  4. We promptly share the information on risk throughout the Group.
  5. We make efforts to respond promptly and accurately to the occurrence of loss risk and to minimize losses.

Goals of Risk Management

  1. Ensuring the Safety of Human Resources
  2. Surviving as a company
  3. Sound preservation of assets
  4. Securing the credibility of stakeholders
  5. Maximizing business opportunities and opportunities to make achievements, and avoiding the loss of these opportunities
  6. Ensuring compliance and pursuing efficiency, accuracy, and effectiveness in the execution of business operations


The Risk Management & Compliance Office under the Corporate Planning Department has been established as a specialized organization to promote continuous improvement in all of our risk management activities.

In addition, the Risk Management & Compliance Committee, which is held twice a year, has been established as an organization to enhance the effectiveness of risk management, and to maintain and promote compliance.

The committee is chaired by the Chief Risk Management Officer (CRO), who is appointed at the Board of Directors meeting, and is composed of the Risk & Compliance Managers of each division / department, plant / laboratory, and domestic consolidated subsidiary appointed by the CRO.

The Risk & Compliance Managers periodically conduct risk identification and assessment, formulate countermeasure plans, conduct self-assessment for status of implementation of the countermeasure plan and subject, formulate improvement plan, and regularly perform education and training at each division / department, plant / laboratory, and domestic consolidated subsidiary. The important matters related to risk management and countermeasure plans, etc. are approved at the Board of Directors meeting after discussion at the committee.

Risk Management System


Identified Group Major Risks

We clarified risks taking into account the business characteristics of each division and the surrounding businesses, including global political, economic and social conditions.

Subsequently, risk assessment was conducted from the viewpoint of probability and impact on the business. By following the assessment, risk map was created and Group Major Risks were identified. The contents of major risks were deliberated at the Risk Management & Compliance Committee and approved at the Board of Directors meeting.

Overall Risk Assessment Process

Overall Risk Assessment Process

Group Major Risks and Countermeasures

Group Major Risks and Countermeasures

Group Major Risk Summary of Risk Countermeasures against Risk
Delay or Discontinuance of Product and Technology Development Risk of the failure of payback of invested capital to R&D due to being unable to launch the product under development Manage go / stop about research targets based on periodic evaluation
Advent of Innovative Technology Risk of the losing competitive power due to advent of innovative technology with low cost Set research targets based on the latest technology information
Failure of the Business Portfolio Strategy Risk of decline in business performance due to the failure of the business portfolio strategy Minimize risk by improving risk assumptions when formulating strategies
Difficulty in Procurement of Specific Raw Material Risk of being unable to supply the product to customer due to the discontinuance of specific raw material Confirm procurement situation, discover issues and implement countermeasure for stable procurement
Revision or Strengthening of Law or Regulation Risk of unwilling discontinuance of sales of product, or unwilling change in business or capital investment plan due to revision / strengthening of law or regulation Enumerate related laws and regulations and establish an infrastructure for obtaining law revision information
Typhoon / Torrential Rain Risk of increasing expenses to plant restoration and decreasing production volume due to direct onslaught on main plant by large-scale typhoon Revise / improve the countermeasures that make early recovery and business continuity possible
Earthquake / Tsunami Risk of suspension of business activities and the death or injury of many employees due to catastrophic earthquake occurring at the location of business site
Fire / Explosion Risk of suspension of business activities and the death or injury of many employees, and being sued by neighborhood resident for the damage by fire / explosion at plant Revise "No Fires, Explosions, or Chemical spills" measure
Quality Defect / Recall Risk of reimbursement for large expenses by customer and discontinuance of transactions   Continue to implement "no recalls and no falsification cases" measure
Infringing or Being Infringed of Intellectual Property Rights Risk of being subjected to a large amount of damages and product injunction claims from other company due to infringement on other company’s patent Create an IP verification process to reduce the risk of infringing of other company's patent
Cyber Attack Risk of shut-down of operations for a long period of time, and losing credibility of customer and society because of leak of customer’s or the Company’s confidential information by cyber attack Examine and implement countermeasures from the perspectives of prevention, damage minimization, and education
Delay in Human Resource Development Risk of personnel shortage which occurs in each division due to delay in the human resource development   Establish an ideal model of manager as well as a training system
Insufficient Governance of Overseas Subsidiary and Office Risk of losing credibility due to detection of fraud at overseas subsidiary and office caused by inadequate control Formulate group policy on company regulations and share group philosophy and policies

Scenario Analysis on Climate Change Related Risk and Opportunity

In June 2017, Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board (FSB), announced recommendations calling for disclosing the business impacts of climate change in financial reports. In these recommendations, we are required to implement scenario analysis in the disclosure of strategies for climate change. Scenario analysis is a method for anticipating the effects of climate change and changes in the business environment caused by long-term policy trends related to climate change, and for examining the impact that such changes may have on the company's business and management.

In order to disclose information in line with these recommendations, referring both 2°C scenarios and 4°C scenarios, we identified climate-related risks and opportunities, examined importance and summarized our impact and strategies.

This analysis covers all of our businesses division and analysis period is up to 2030, which is the same as the final year of our long-term business plan.

Referenced Scenarios
  2°C Scenario *1 4°C Scenario *2
Transition Risk and Opportunity ・IEA-WEO*3 Sustainable Development Scenario (SDSs)
・IEA-ETP*4 2°C Scenario (2DS)
・New IEA-WEO New Policies Scenario (NPS)
Physical Risk and Opportunity ・IPCC*5 RCP2.6
  • *1Scenarios when necessary measures will be implemented to keep global average temperature rise below 2°C compared to pre-Industrial Revolution era.
  • *2Scenarios in which the global average temperature will rise by 4°C at the end of the 21st century compared to pre-Industrial Revolution era.
  • *3International Energy Agency “World Energy Outlook”
  • *4International Energy Agency “Energy Technology Perspectives”
  • *5Intergovernmental Panel on Climate Change
  • *6Ministry of Education, Culture, Sports, Science and Technology
Process of Risks and Opportunities Identification
Step1 Clarify the value chain and stakeholders, and sort out the factors that impact our business
Step2 Identify risks and opportunities based on the above scenarios and other external data
Step3 Identify particularly important risks and opportunities from those of Step2, considering the likelihood of occurrence and the impact on our business (human loss, financial impact, etc.)
Scenario Analysis Results (Climate Change Risks and Opportunities)
Scenario Factors Social Change Relevant Division Impact on Business Degree
・Strengthening regulations on GHG emissions ・Introduction of carbon pricing All Risk ・Increase in operating costs due to introduction of carbon pricing, such as carbon taxes (If the same conditions meet worldwide including China, maintaining competitiveness is possible.)
・Changes in energy policy
・Changes in energy demand and supply
・Price change in fuel and feedstock
・Change in transportation costs
All Risk ・Increase in costs due to higher fuel and feedstock prices
・Increase in transportation costs

・Market changes due to increasing demand for environmental consideration ・Increased need for low-carbon products Planning Opportunity ・Increase in demands for products related to electric energy such as battery materials and photoelectric conversion materials due to changes in energy policies
・Increased demand from investors for addressing climate change ・Expansion of ESG investment All Risk
・Deterioration of ESG evaluation and reputation due to increasing criticism of bulk use of fossil fuels 
・Improvement of ESG evaluation and reputation through advanced initiatives and information disclosure

・Increase in abnormal weather ・Increase in frequency and enhanced intensity of heavy rain / flooding All Risk ・Increase in risk of impacts on plant operations and supply chains due to escalation of natural disasters
・Enhancement of intensity and frequency of typhoons
・Heavy snowfall
・Market changes caused by rising temperature and abnormal weather ・Decline in the available water (freshwater) resources Chem Opportunity ・Increase in sales of disinfectants due to increase in global demand for drinking water
・Reduction of planted area Agri Risk ・Reduction of planted area due to increase in frequency and enhanced intensity of heavy rain / flooding
・Reduction of planted area due to difficulties in securing irrigation water

・Increase in pests, weeds, and pathogens Opportunity ・Increase in opportunity to develop new agrochemicals
・Influence on sales of existing agrochemicals due to resistance expression

・Increase in mass infection and diseases Plannning Opportunity ・Increase in demand for related products and services due to growing medical needs for tropical infections and diseases

All: All divisions Agri: Agricultural Chemica Division Chem: Chemical Division Plannning: Planning and Development Division

For the introduction of carbon pricing, which is identified as an important risk in the 2°C scenario as a result of scenario analysis, we plan to introduce internal carbon pricing to further promote investment that takes into account the reduction of greenhouse gas emissions (low-carbon investment). In addition, in response to market changes due to increasing demand for environmental considerations, we assume that we are able to expand business opportunities in the Environment & Energy field, which is one of the main business domains of our long-term business plan “Progress 2030” launched in 2016. Moreover, our low-carbon investment and product characteristics have made us more carbon-efficient compared to whole chemical industry. We believe this will benefit from increasing demand for initiatives to address climate change from investors and other stakeholders.

Meanwhile, we will respond to the risks of impacts on plant operations and supply chains due to increase in abnormal weather, which was identified in the 4°C scenario, by formulating and revising BCPs (Business Continuity Plan) for our main products and by multiple sourcing of several key raw materials, etc. In regard to market changes caused by rising temperature and abnormal weather, we assume that we will be able to accrue business opportunities for such as agricultural chemicals and disinfectant for drinking water due to water shortages and infectious diseases.

As a “future-creating enterprise that responds to social needs with unique, innovative technologies”, we will further refine the core technologies that we have cultivated over the years and continue to work to provide new value that contributes to people's lives.

Corporate Social Responsibility (CSR)


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