Regarding the risks associated with the transition to a low-carbon society, we are working on the Green Transition Plan, which focuses on insurance underwriting and asset management. The Group Chief Sustainability Officer (CSuO) chairs the Group`s Sustainable Management Committee, composed of executives responsible for the CSR activities of each Group company, to monitor and discuss the status of these initiatives and report to the Global Executive Committee and MAC as necessary. Reputational risk is addressed and minimized by responding to rumours in a timely and appropriate manner, in accordance with the Company`s regulations. We quantify the different types of risks we face using value-at-risk (VaR) as a unified measure of risk. Where necessary, we take management measures to ensure that capital is maintained at a level appropriate to the risks. Managing a business involves many types of risks. Some of these potential hazards can destroy a business, while others can cause serious damage that takes a long time to repair. Despite the risks associated with doing business, CEOs and risk officers can anticipate and prepare for any size of their business. The risks associated with the strategy are not entirely undesirable.
Financial institutions such as banks or credit unions assume strategic risks when lending to consumers, while pharmaceutical companies are exposed to strategic risk through the research and development of a new drug. Each of these strategic risks is inherent in a company`s business objectives. With effective structuring, accepting strategic risks can lead to highly profitable operations. Computers can continue to run on powerful battery backups. Power surges can occur (or randomly) during a thunderstorm, so companies need to equip critical business systems with surge protection devices to avoid losing documents and destroying equipment. Set up offline and online backup systems to protect critical documents. For more than twenty years, our unchanged investment philosophy for the global strategies we manage has been to own high-quality companies that have the potential to successfully diversify over the long term. These companies are growing steadily while maintaining their high returns on working capital. As investors, we are constantly seeking to identify significant risks or opportunities related to this capitalization, including environmental, social and governance (ESG) factors. We believe our customers will benefit from this improvement. The MRI is designed to improve the identification of risks and opportunities for the companies in which we invest. This should further enhance our ability to manage downside risk and increase long-term funding potential.
Business risk is influenced by a number of different factors, including: When a risk becomes a reality, a well-prepared business can minimize the impact on bottom line, wasted time and productivity, and negative impact on customers. For start-ups and established businesses, the ability to identify risks is an important part of strategic business planning. Risks are identified in a variety of ways. Strategies for identifying these risks are based on a comprehensive analysis of a company`s specific business activities. Most organizations face preventable, strategic and external threats that can be addressed through adoption, transfer, reduction or elimination. With regard to the deterioration of the economic environment, the Company monitors daily changes, such as the deterioration of the global economy and financial markets due to the rapid increase in inflation, analyzes the impact on the Group and initiates countermeasures. With respect to the risks of geopolitical and regulatory changes, the Company closely monitored them to identify the impact of management by discussing geopolitical scenarios that would have negative effects and gathering information on trends in domestic and foreign laws and regulations. Organizations should create a plan to address the immediate impact of these risks. Government agencies and local fire departments provide information to prevent these accidents.
These organizations can also give advice on how to control them and minimize their damage when they occur. Employees need to know what to do and where to leave the building or offices in case of an emergency. A security inspection plan for premises and equipment should be developed and regularly implemented, including training and education of staff where necessary. A regular and rigorous review of all potential risks should be conducted. All issues should be resolved immediately. Insurance cover should also be reviewed regularly and, if necessary, upgraded or downgraded. SBM Offshore could face the effects of an accelerated energy transition, driven by climate change, among others. The Company may miss out on business opportunities if it fails to (i) develop competitive technologies to enhance its Gas and Renewable Energy product portfolio and (ii) improve the energy efficiency of its existing offerings. While telephone and communication errors are relatively rare, risk managers may consider providing corporate cell phones in an emergency to employees whose phone or Internet use is critical to their business. SBM Offshore will benefit from its Fast4Ward model® and digitization program.
If the expected benefits are not achieved, it could affect the company`s competitiveness, reputation and credibility with stakeholders. The company`s business improvement program follows a parallel path and improves the company`s ability to adopt new ways of working and incorporate lessons learned. The Group classifies strategic risks as risks that are likely to have a significant impact on the Group`s business development because the Group`s business assumptions and strategies become invalid due to external changes in the environment or because no business model corresponding to the company`s business strategy is established, for example due to poor governance or insufficient human resources. The company`s compliance program provides risk-based policies, training, advice, and compliance monitoring and control to ensure ethical decisions. The use of digital tools supports the ongoing development of the company`s compliance program. The Company`s core values, code of conduct and anti-corruption policy provide employees and business partners with guidelines for responsible business conduct in accordance with the Company`s principles, which may be reinforced by contractual obligations. The Group classifies risks triggered by violations of laws and regulations, third-party management failures, system failures, cybersecurity, labor issues due to long working hours, customer information leaks, fraud and malpractice as operational and compliance risks. The Group operates in accordance with applicable laws and regulations, including the Insurance Business Law of Japan, and the laws and regulations of the countries in which it operates. In case of violation of these laws and regulations, the Company may be subject to administrative sanctions imposed by the Japan Financial Services Administration and other authorities. We capture ESG risks and opportunities through our internally developed ESG scoring framework – the Significant Risk Indicator (MRI) – a tool designed to consistently and comparably capture the ESG scores of portfolio managers` ESG companies over time. Potential acute or chronic exposure to hazards during the life cycle of SBM Offshore may impact people, the environment or assets. This may have other implications for other identified risks (e.g.
social exploitation license, human capital, access to finance). Japan: For professional investors, this document is distributed or distributed for informational purposes only. For those who are not professional investors, this document is provided with respect to the activities of Morgan Stanley Investment Management (Japan) Co., Ltd. (“MSIMJ”) with respect to discretionary investment management contracts (“AMIs”) and investment advisory contracts (“IAAs”). This is not used to recommend or solicit transactions or to offer certain financial instruments. Under an MPA, the client prescribes in advance basic management guidelines regarding the management of a client`s assets and instructs MSIMJ to make all investment decisions based on value analysis, etc.