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DUSKIN 60th Anniversary

Risk Management

Basic policy

The Duskin corporate group has a proactive approach to risk management by assessing all possible risks that the group may encounter in order to avoid these problems or minimize losses and damage if a problem occurs.

Risk management structure

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 a supervisor of the department.

At our subsidiaries, we name a risk management supervisor at each company in accordance with its size, types of business activities, and other characteristics. We conduct risk management in a consolidated, comprehensive manner.

To preside over the operation and administration of risk management, a secretariat office is established under the Risk Management section of the Quality Assurance & Risk Management department. When a problem occurs, risk management departments work in concert with this secretariat office to implement countermeasures.

Risk management structure chart
Risk Management Committee (advisory council for the Board of Directors)
  • Chair: Operating Officer representing the Quality Assurance & Risk Management department
  • Secretary General: Manager of Quality Assurance & Risk Management department
  • Secretariat office: Risk Management section in the Quality Assurance & Risk Management department
  • Committee members: Risk management members in each division. *Non-members can also participate at the request of the Committee.

Risk Management Committee

Duskin has a Risk Management Committee, as an advisory council for the Board of Directors. Its purpose is to establish risk management policies by assessing any possible risks that Duskin Group may encounter in order to avoid these problems or minimize losses and damage if a problem occurs. The committee meetings are held twice a year to discuss its risk management annual plan, causes and measures for risk factors, measures for natural disaster preparedness, and corporate group risk management programs, and the committee submitted reports. The Risk Management Committee also reviewed actions to take if the head office is affected by a disaster.

Risk assessment

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.

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 enhances their countermeasures. Each department identifies new possible risks based on the information on revisions of laws and regulations, case studies at other companies, and any crisis that occurred at Duskin. Each department formulates and implements its own risk management programs.

Business Continuity Management (BCP: Business Continuity Plan)

We formulate a BCP (Business Continuity Plan) for each business in order to continue upholding the responsibility of providing products and services to our customers and franchisees as well as to minimize damage and loss to business even when emergency situations occur, such as large-scale natural disasters and infectious diseases. We also promote BCM (Business Continuity Management), with efforts including periodic review of BCPs, the construction of safety confirmation systems, and disaster outbreak training.

Basic BCP Policy

  • - We prioritize the safety of human life and strive for quick restoration from disasters.
  • - We continue supplying products, etc. to franchisees as a franchise headquarters.
  • - We safeguard daily living routines for our employees.

Crisis situation framework

When damage results from a crisis or natural disaster or an earthquake with an intensity of at least 5-plus occurs, the risk management supervisors for each function at Duskin Group gather information and submit a report to the secretariat office.
Information about damage caused by other natural disasters is gathered immediately after the occurrence.
If there is a significant natural disaster, the President decides whether or not to establish a response office, and, if an office is established, names a general manager. For risk factors that will significantly impact the Duskin corporate group, the chairperson of the Risk Management Committee decides whether or not to establish a response office, and, if an office is established, names a general manager.

Phenomenon covered under BCP

In order to continue our business activity in non-impacted areas even if our headquarters functionality was suspended because of damage to our company (Suita City, Osaka Prefecture), we set our sight on the highly probably "Nankai Trough Earthquake" and formulated a Business Continuity Plan for imagined damage following a "Major Nankai Trough Earthquake", the most massive earthquake scenario that could occur at the Nankai Trough.

Advance measures for product supply in case of emergency

If a Duskin product manufacturer suffers damage from a natural disaster or other causes and product supply temporarily stops, this will cause inconvenience to the customer as well. Therein, we have developed a contingency plan for the mainstay products in our dust control business and food businesses, which would incur a particularly large impact.

Continuity planning policy
  • 1. Purchase goods from several suppliers with the exception of procuring products that depend on a specific company from the viewpoint of manufacturing technology specificity.
  • 2. Check if direct suppliers are implementing their continuity plans
  • 3. Identify similar products and alternatives that can serve as substitutes in an emergency

Information security

Duskin engages in measures to prevent information-centered accidents such as illegal access, loss, destruction, tampering and leakage. These measures include classifying the management level of information employees come into contact with in the course of business into multiple stages, and establishing limits on storage methods and access privileges.
With regard to the handling of personal information, we set forth a Personal Information Protection Policy and make efforts to ensure that all of our employees are aware of this policy and enforce it. We have established a management framework with a supervisor at each department responsible for personal information protection. The framework is compliant with the requirements of personal information protection management systems, and we strictly administer rules on the management of this information.

Business risks

The following section provides an overview of the principal risk factors envisaged by the Duskin Group (our company and our subsidiaries) related to its business activities. The Duskin Group works to fully identify these potential risks and takes all steps to prevent these problems and to prepare responses. These risks do not include all the risks that Duskin could encounter in the course of its business operation. All of these risks could affect investors' investment decisions.

Matters pertaining to the future in the text reflect our judgment as of the day on which the securities report was submitted.

Risk factors and measures

Categories Risks Measures
Business model
(franchise system)
Difficulty to obtain consent and cooperation from franchisees, which leads to suspension or delay of business plans Sufficient communication to obtain consent for cooperation and sharing expenses from franchisees for development and introduction of new products and services, new shop openings and renovation of existing shops.
Termination/cancellation by franchisees, lawsuits with franchisees, violations of laws and ordinances by franchisees and scandals Improve programs to provide guidance and training while further building relationships with franchisees.
Change in business
environment
Clean Service businesses: shrinking size of the market Develop products, expand sales channels, and respond to diversified payment methods. New franchise recruitment for Care Service businesses for business expansion in the growing market.
Mister Donut business: 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 expansion 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 product launches, conduct, from time to time, a quality check of the products distributed in the market and maintain quality standards.
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 Improve skills of service staff by training them how to prevent from accidents and to respond to emergencies. Develop and maintain manuals. Improve service quality and consistency through staff training and licensing programs.
Procurement Difficulties in production of products due to unexpected natural disasters and other emergencies Procure products from multiple suppliers except the products purchased from specific singular suppliers because of a unique production technology.
Natural disasters Suspension of business operations or damage to facilities caused by large-scale natural disasters such as earthquakes, typhoons and floods To minimize the damage caused by natural disasters, establish a safety confirmation system, prepare response manuals, maintain a business continuity plan, and conduct disaster response drills.
COVID-19
Infection spreading
Increased impact on business performance if the pandemic is prolonged or if another infection spread progresses Prioritize customer safety and take measures fundamentally in compliance with policies issued by the national government (the administration and relevant ministries and agencies) and prefectural governments.
Information security Significant problems such as personal information leaks caused by unauthorized access Develop and operate a management system for handling personal information, including regulations such as Personal Information Protection Rules, training for executives and employees, seminars for franchisees, and measures for IT system security.