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Risk Management

Risk Countermeasures

Duskin has formulated Basic Rules on Risk Management that stipulate how risk is to be managed in the Duskin Corporate Group. In accordance with these rules, there is a risk management department and supervisors. At our subsidiaries, we name risk management supervisors for each company in accordance with its size, types of business activities, and other characteristics. We conduct risk management in a consolidated, comprehensive manner.

Duskin has a Risk Management Committee, as an advisory council for the Board of Directors. The committee was held twice in FY2019. It discussed and reported on Duskin's risk management annual plans, the causes of the risks that have occurred and the measures to be taken to counter them, the response to natural disasters and the business continuity plan (BCP). In the event of an incident that may have a major impact on Duskin Group, a response office is established.

Companywide Risk Management System

Each department identifies the risks that are specific to its responsibilities and analyzes their significance. Then, response measures for each presumed risk factor are formulated according to Risk Prevention Manual.

Every year, risk management departments and the secretariat office review and evaluate countermeasures and their effectiveness. With the feedback of these reviews and evaluations, all departments examine and enhance their countermeasures. Each department identifies new possible risks based on the information on revisions of laws and regulations and any crisis that occurred at Duskin. Each department formulates and implements its own risk management programs.

Risks and Measures

Category
(Risk Items)
Details of Typical Risks Risk Countermeasures
Business Model
(franchise system)
  • ●Difficulty in obtaining consent and cooperation from franchisees, which leads to suspension or delay of business plans
  • ●Development and introduction of new products and services
  • ●Sufficient communication to obtain consent for cooperation and sharing expenses from franchisees when opening new shops and renovating existing shops
  • ●Termination or cancellation by franchisees, lawsuits with franchisees, violations of laws and ordinances by franchisees and scandals
  • ●Comprehensive programs to provide guidance and training while further building relationships with franchisees
Changes in Business Environment
  • ●Dust control business: shrinking size of the market
  • ●Develop products, expand sales channels, and respond to diversified payment methods
  • ●New franchise recruitment for Care Service Businesses as part of business expansion measures in this growing market
  • ●Mister Donut business risks: market trends, competition, change of consumers' preferences and higher cost of ingredients
  • ●New openings in urban and suburban areas
  • ●Shop renovations and relocations to meet customers' needs and locational factors
  • ●Value-added menu development and measures to expand businesses mainly in Asia
Product Safety
  • ●Quality problems of products provided by Direct Selling Group
  • ●Objectively check safety and reliability of the products starting with the development stage
  • ●After the launch of products, focus on maintaining quality standards by conducting quality checks on the products from time to time
Food Safety
  • ●Food poisoning, violation of laws and ordinances, including Food Sanitation Act at our shops and restaurants
  • ●Develop and operate an internal system to maintain food safety, including production of a sanitary management guide, and perform regular voluntary inspections using third party experts
Service Quality
  • ●Liabilities for accidents occurred during service provision. Health hazards arising from service defects or problems involving equipment and materials
  • ●Actively work to improve skills of service staff by training them how to prevent accidents and respond to emergencies as well as develop and maintain manuals
  • ●Improve service quality and consistency through staff training and licensing programs
Product Manufacturing
(Procurement)
  • ●Difficulties in manufacturing products due to unexpected natural disasters and other emergencies
  • ●Procure products from multiple suppliers except where the products purchased rely on specific singular suppliers because of a unique production technology
Disasters
  • ●Suspension of business operations or damage to facilities caused by large-scale natural disasters such as earthquakes, typhoons and floods
  • ●Further strengthen measures to minimize the damage caused by natural disasters, such as establishing a safety confirmation system, preparing response manuals, and maintaining a business continuity plan
  • ●Conduct disaster response drills
Information Communication Technology (ICT)
  • ●Significant problems such as personal information leaks caused by insufficient measures to counter external threats such as cyber attacks and inadequate IT security
  • ●Formulate regulations such as Personal Information Protection Rules, conduct training for executives and employees, and hold seminars for franchisees
  • ●Develop and operate a system for safeguarding and managing personal information, including measures for IT system security