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Risk Management

To cope effectively with the diversifying risk environment, Sumitomo Corporation has built a framework for micromanagement, with the objective of “minimizing losses from individual transactions,” and for macro-management, with the objective of “maximizing corporate value.” The frameworks support the efficient management of our corporate resources and are strongly linked to the management plan.

Definition of Risk

  • Possibility of losses due to the occurrence of anticipated or unanticipated situations
  • Possibility of not achieving the expected return on business activities

Purpose for Our Risk Management

  • Stabilize Performance: Minimize discrepancies between the plan and actual results
  • Strengthen Financial Base: Maintain Risk-adjusted Assets within the buffer (shareholders’ equity)
  • Maintain Corporate Reputation: Fulfill CSR requirements and preserve corporate reputation

Risk Management Framework

Quantifiable Risk = Value Creating Risk   Company Investment Committee

Maintain Risk-adjusted Assets within our buffer / Maximize Risk-adjusted Return
Deliberate on and monitor important projects through Company Investment Committee and Business Unit Investment Committees

Non-Quantifiable Risk = Value Breaking Risk

Risk control by avoiding or minimizing risks
Companywide internal control reinforcement initiatives centered on Internal Control Committee

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