The Daiichi Sankyo Group identifies risks as those factors that may prevent the Group from attaining its organizational goals and targets and that can be predicted in advance. The Group is promoting risk management through such means as taking steps to address risks inherent in corporate activities through retaining, reducing, avoiding, or transferring these risks. In addition, we seek to minimize the adverse impacts of risks on people, society and the Group should risks actualize.
Risk Management
Risk Management System
Head of Global Compliance & Risk oversees Groupwide risk management as the risk management officer (RMO) and operates the risk management system in conjunction with an annual cycle for formulating and implementing business plans. In addition, the heads of each division autonomously manage risks to aid in the accomplishment of their divisions’ goals and targets. To this end, they analyze and evaluate individual risks, formulate and implement yearly risk management plans, and provide employees with information on underlying risks in the organization, education and insight concerning risk management.
Annual Cycle for Management of Material Risks
Based on assessment of impact and the likelihood of occurrence, risks with the potential to significantly impact the management of the Company are identified by the Management Executive Meeting and the Board of Directors Meeting (see the conceptual diagram below on the Group’s risk level classification). Individuals who have been assigned responsibility for each risk formulate risk response measures (Plan), which are then enacted through coordination with relevant organizations (Do). The progress of risk response measures is monitored twice a year (Check). The risk response measures are corrected or improved upon as necessary (Action). Should precursors of the potential appearance of a material risk be detected, related information will quickly be assembled for provision to the RMO, and appropriate measures will be taken.
As part of the risk management scheme, the Group has a business continuity plan (BCP) that stipulates preparations for and measures to be instituted in the event of a disaster as well as for provisions for crisis management.
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Crisis Management
The Daiichi Sankyo Group defines "Crisis" as a collective term for events among the potential risks in our corporate activities that have arisen and that require urgent action and also events with a high likelihood of occurring. The Group has formulated a Global Crisis Management Policy that defines basic matters related to Crisis Management with the aim of minimizing losses caused by such events.
As stated in our basic policy, we are committed to "Upon the occurrence of a crisis, the Daiichi Sankyo Group shall respond immediately and precisely based on the following principles: ensuring the safety of the lives and communities of Daiichi Sankyo Group employees and related personnel; and fulfilling the responsibilities as members of a life science company. The Group shall endeavor to minimize human, social, or corporate losses and strive for business continuity and quick recovery."
In addition to promoting autonomous Crisis Management in each region and function as well as at group companies, we have established a system that enables us to respond flexibly and globally according to the type of Crisis (Disasters, Accidents, Incidents ＜including Terrorism＞, Scandals, Violations of laws, Information management issues, Product issues) and the degree of impact of the Crisis.
Reporting criteria and reporting routes shall be specified, a Crisis Management Officer shall be established (who is designated by the CEO or COO), as shall an Initial Crisis Management Officer (the VP of Compliance & Risk Management Department). In the case of a Crisis with a major global impact and the need for company-wide responses, the Group will share such information with the Risk Management Officer and endeavor to prevent the escalation of the situation and quickly resolve it through immediately and appropriate initial responses.
After a Crisis convergence, we will analyze the situation ex post facto to prevent recurrences and improve our response.
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Business Continuity Plan (BCP)
The Daiichi Sankyo Group has formulated a business continuity plan (BCP) for all all-hazards to deal with various threats that may affect business continuity.
To meet the demands of society in the event of an emergency, we have established a system that ensures the stable supply and quality of pharmaceuticals and other products, and a system that ensures the continuity of research and development. In response to the diversification of threats and the globalization of our business, we are continually making improvements to ensure that we can respond more appropriately to threats as they emerge.
Business Continuity Plan Measures in Supply Chain
Based on its experiences following the Great East Japan Earthquake, the Group revised its BCP in 2012. Since then, we have continued to improve upon the BCP through such means as incorporating revisions to national disaster response plans and reviewing the list of drugs for which supply should be prioritized and the disaster plans at our production bases based on social needs. In this manner, we strive to ensure effective response measures are taken in the event that a risk occurs.
For the stable supply of pharmaceuticals, we have prepared a BCP for each production site in Japan in consideration of its functional and regional characteristics by estimating the recovery time based on the damage from the largest earthquake expected. As shown in the table below, BCP measures are taken for necessary management resources such as facilities, logistics/inventory, personnel, and information from four viewpoints: implementing preventive measures, ensuring diversity, ensuring support measures, and ensuring alternative measures. For example, our measures for facilities include reinforcing buildings and facilities, operating multiple sites, and securing emergency power. Measures for logistics/inventory include ensuring backup inventory of priority supply drugs, decentralizing their storage, and other actions that combine measures to mitigate risks in advance.
In addition, we have developed and regularly revise the list of priority supply drugs that are used by a large number of patients, that are needed in emergencies, or that cannot be substituted by other drugs. In this way, we have established a system to supply necessary drugs continuously and appropriately when risks occur.
Pandemic Influenza Action Plan
To prepare for a global outbreak of pandemic influenza, the Group formulated the Pandemic Influenza Action Plan in 2009 for the purpose of ensuring the safety of employees and their families and continuing the supply of pharmaceuticals. In addition, Daiichi Sankyo is a designated public corporation under the Act on Special Measures for Pandemic Influenza and New Infectious Diseases Preparedness and Response and has the responsibility to cooperate with measures taken by national and local administrative organs. We work to fulfill our corporate social responsibilities by contributing to maintaining the healthcare system through the continued supply of pharmaceuticals.
The Pandemic Influenza Action Plan prescribes operations that need to be continued in the event of an outbreak or spread of the disease, and defines an action plan for each operation according to the stage of the outbreak. In response to the recent outbreak of COVID-19, we have taken flexible measures in accordance with the Action Plan, and, based on the knowledge gained through this experience, we will review the Action Plan to make it more practical.
Major Risks and Their Management
The table below summarizes Major Risks extracted from the Group's material risks and management risks at each division. In extracting the risks, the possibility of impact on investment decisions and other similar matters were considered.