Risk Management

The Otsuka group recognizes that pursuing management efficiency and controlling the risks inherent in business activities are important for improving corporate value. For this reason, it is vital to establish a group-wide system that enables all executives and employees to swiftly uncover, identify, and deal with risks related to their work. The Otsuka group manages risk via the initiatives outlined below, under the supervision of top management.

Risk Management System

The Otsuka group introduced Enterprise Risk Management (ERM) in 2020 to further enhance companywide risk management at Otsuka Holdings (the Company) and its main operating companies, including the recognition and evaluation of risks comprehensively from a company-wide perspective and the prioritization of management resources to control important risks. In 2022, the Otsuka Group Global ERM Policy was established by referencing global standards such as ISO31000 and COSO.

In the initiatives of ERM, the group defines “risks” as uncertainties that significantly impact the fulfillment of its corporate philosophy and the achievement of its business strategy goals, and it has established a group-wide risk management framework and a system for risk assessment. Under the framework and system, we identify and evaluate significant risks in the group through the risk assessments performed at main operating companies, determine whether to mitigate, transfer, avoid, or accept those risks, formulate management policies, and continuously execute and monitor these activities to effectively and efficiently manage the risks in the group.

The Company has established the Global Risk Oversight Committee, chaired by and composed of Directors/Operating Officers in charge of finance, corporate planning, and administration. The Global Risk Oversight Committee participates in deliberations on significant risks and reports on them at meetings of the committee and the Board of Directors, formulates and monitors the implementation of policies for the management of significant risks, and provides instructions and support to the main operating companies when needed. The Board of Directors receives reports on committee activities, issues instructions as necessary, and oversees the effectiveness and efficacy of the group’s ERM structure.

Details of Risk Management Activities

Identification of significant risks begins with the sharing of risk awareness by senior management through interviews at the Company and the main operating companies (top-down approach), as well as assessments of risks and controls by frontline employees (bottom-up approach). This enables us to comprehensively identify the risks that exist in the group. Each group company develops risk management policies and risk management action plans for the risks that are judged to be significant risks and regularly monitors and reviews the status of those risks and the progress of action plans.
The Company aggregates and visualizes the significant risks faced by each group company to grasp a comprehensive understanding of the existing risks and the status of controls in the group. Common risks that apply to the whole group are studied closely and the significant risks are gathered and identified. Based on the results of this process, the Global Risk Oversight Committee assigns priority to significant risks that could a have significant impact on the group’s business, such as financial losses or business continuity.
The Company and the main operating companies develop and implement countermeasures to each significant risk based on the characteristics and risk tolerance. The Company provides the guidance and support to the main operating companies, which submit reports and seek advice from the Company, as appropriate. In these activities, the whole group coordinates closely to promote and practice ERM. Moreover, the Company and the main operating companies regularly monitor risks to prevent their occurrence to the extent possible and ensure that they remain within their respective tolerance levels.

ERM Initiatives (FY2025)

In order to not only build a highly effective risk management system that supports the Otsuka group’s management foundation but also further improve that system, we moved forward with introducing ERM in regions throughout the world, including Japan, North America, Europe, Asia, using a standardized process based on the Otsuka Group Global ERM Policy and Otsuka Group Global ERM Implementation Guidelines.
Furthermore, we conduct monitoring activities and hold risk management-related study sessions while regularly sharing with ERM staff of major operating companies information on risks that are growing more complex and advanced as the global situation continues to change.
Here, we look at workplace opinions that promoted initiatives in various regions.

Business Continuity Planning and Management

The Otsuka group has business continuity plans (BCPs) in place to minimize the impact on our business activities and ensure that the group continues to operate as effectively as possible in order to maintain the stable supply of products, even when largescale earthquakes and disasters strike.
In terms of business continuity management (BCM), Otsuka Holdings and all major group companies (Otsuka Pharmaceutical, Otsuka Pharmaceutical Factory, Taiho Pharmaceutical, Otsuka Warehouse, Otsuka Chemical, etc.) have partnered to create a system to tackle business continuity on a group-wide scale. Since acquiring ISO 22301 certification for the production and stable supply of pharmaceutical products, beverages, and foods in 2012, we have gradually expanded the scope of certification to include the stable supply of intravenous solutions (in 2015) and the stable supply of anticancer agents (in 2016). The acquisition of ISO 22301 certification demonstrates that our organization complies with international standards and is fully covered, from a BCP standpoint. In addition, the Otsuka group as a whole is working to strengthen measures and systems to minimize the impact on business activities in the event of an emergency. Every year, we conduct joint simulation drills for different scenarios, such as natural disasters and the spread of infectious diseases. These drills provide the opportunity to test our framework for cooperation under close-to-realistic conditions, with a focus on ensuring stable product supply.

Risk Management Training

Risk management training is held annually for directors, Audit & Supervisory Board members, executive officers, and department heads of major group companies. Training includes simulation drills and lectures by outside experts, and involves discussions and reviews on domestic and overseas risks, referencing serious incidents and other matters. Topics include the initial response and coordination of information among the group when a crisis occurs, measures to ensure business continuity, and corporate social responsibility.

Information Security

Across the Otsuka group, we have established the Otsuka Group Global Information Security Policy, which defines our fundamental approach to information security and promotes a shared understanding of the importance of information security management across all group companies. In line with this policy, we provide ongoing education and training for directors and employees to ensure broad awareness of information security throughout the organization.
To address a broad range of threats, including cyberattacks, we strengthen security infrastructure and security-related processes across the group and conduct cross-group assessments based on recognized cybersecurity frameworks. These efforts enhance visibility into security management, including governance, across domestic and overseas group companies and support continuous improvement of our security posture.
CSIRTs (Computer Security Incident Response Teams) are in place at the Company and group-company levels, providing a structure for timely and appropriate responses to information security incidents. Incident reporting procedures for employees are continuously reviewed and improved within each group company. In conjunction with these efforts, escalation drills are conducted annually to ensure that incidents arising at group companies are appropriately shared through the major operating companies.
The group has also established the Group Information Security Committee to review specific security measures and facilitate the sharing of the latest information. In parallel, cybersecurity training programs are conducted to develop and enhance the capabilities of security personnel across group companies, supporting steady improvements in the overall security maturity of the group.
These information security initiatives are reported to the Board of Directors as appropriate, and continuous improvements are carried out under the Board’s oversight.