MENU TOP
Risk Management Structure
AIFUL established the Risk Management Committee under the direct control of the Board of Directors in April 2007. The Company has established systems to prevent the rise of risks in advance and during emergencies to control and handle risks arising in each department and risks threatening corporate activities across the organization. Specifically, we estimate and assess risks based on risk information collected continuously from departments and discuss measures to avoid and mitigate risks based on the Risk Management Rules. The Corporate Risk Management Dept. manages all the risk information reported by departments.
The Risk Management Committee regularly identifies risks, examines and instructs measures to avoid and mitigate risks, and takes the lead and gives instructions in the case of a crisis. The committee formulates a policy or method when it deems necessary in collecting risk information or taking measures or actions for a crisis, and obtains approval at the Board of Directors. It also shares risk information related to the Compliance Committee with the Compliance Committee as necessary. However, despite these actions, the Group's financial position and business performance may be affected by the change of management environment including the strengthening or relaxing of legal regulations, the situation of our competitors, and economic fluctuations, which may forcibly lead to the review of the Group's strategy.
Structure diagram
Top Risks
The Company has selected risks that the management recognized may have a significant impact on the business as top risks for FY2025/3 and beyond, based on the probability of a risk scenario and its impact on the business. The top risks will be discussed and determined every fiscal year at the Risk Management Committee. For the top risks, we will assess the heightening of risks and their signs and take necessary measures to control them.
Risk scenario
Risk of undermining the trust of stakeholders when an employee(s) does not take appropriate actions in accordance with laws and regulations, social norms, business/market practices, and a customer perspective (this is so-called “misconduct” ).
Our Group's Measures
- Set up the Group Compliance Committee with the goals of sharing the unified corporate ethics of the entire Group and establishing a compliance system for the whole Group
- Enhance organizations and systems as an internal control function and address operational risks with these systems
- Carry out Inspections and ongoing improvements by implementing three lines (Each business execution department, Risk Management Department, Internal Audit Department) of defense
Opportunities
- Reform the compliance system and long-term organizational strengthening corporate culture
- Improve brand value by restoring trust
Risk scenario
Risk of reduced competitiveness in the market which occurs when the Company cannot appropriately respond to changing customers' expectations.
Our Group's Measures
- Conduct activities to proactively gather market trends andcustomers' voices
- Enhance convenience utilizing digital technology by strengthening measures for improving UI/UX
- Diversify its business portfolio through business diversification and business expansion to overseas
Opportunities
- Develop products and services that capture new needs
- Create new services and markets through technological innovation
Risk scenario
Risk of an increase in customers who have difficulty paying loans due to financial difficulties caused by worsening economic conditions.
Our Group's Measures
- Build a system to instantly identify any signs, including periodic surveys of regular investigation of customers ʻ creditability to maintain the soundness of receivables
Opportunities
- Reduce bad debt risk
- Improve profit structure through better quality of loan portfolio
Risk scenario
Risk of the rise of funding rate due to the fluctuating market environment, affecting the Company's business performance.
Our Group's Measures
- Mitigate the risk of fluctuating interest rates by fixing the funding rate and diversifying procurement means based on the interest rate outlook and costs
- Manage the risk of interest rates with ALM (Asset Liability Management)
Opportunities
- Shift to a funding model that utilizes retained earnings and equity capital
- Shift to management that emphasizes capital efficiency indicators (ROIC, etc.)
Risk scenario
Risk of having difficulty procuring funds due to the market environment, a decrease in the Company's creditability.
Our Group's Measures
- Manage funding liquidity with ALM
- Manage and report the financial covenants or early redemption clauses
- Diversify procurement, devise new procurement methods, and undertake measures to boost its rating
Opportunities
- Improve cash flow and reform financial structure
- Diversify procurement methods
Risk scenario
Risk of having an impact of human error, natural disasters, and cyber-attacks and others similar events from outside the Group on the business.
Our Group's Measures
- Strengthen its infrastructure such as duplicating core systems and establishing back-up systems
- Establish a system for information linkage inside and outside the industry based on in-house CSIRT, eliminate computer viruses, monitor the possibility of cyber-threats from outside the Group, implement measures to diagnose vulnerabilities from multiple aspects
- Reduce damage by implementing concrete measures such as the adoption of two-step authentication, holding regular in-house training etc.
Opportunities
- Evolution of Resilient IT Infrastructure
- Promote employee awareness of system risks
Risk scenario
Risk of failure to secure personnel and human resources, making it impossible to execute the business plan and project.
Our Group's Measures
- Recruit employees and provide ongoing training for employees to secure and develop a diverse workforce to ensure continued recruitment and retention of talented personnel
- Implement measures to optimize recruitment, placement, and evaluation through active use of a talent management system
- Carry out effective human resource development through clarification of requirements for organizations and positions
- Make continuous improvement of internal loyalty to enhance employee satisfaction.
Opportunities
- Acquire diverse and highly skilled human resources from outside
- Promote organizational renewal
Details regarding matters other than the top risks are provided in the Annual Securities Report.
