Risk management

Panasonic’s founder, Konosuke Matsushita, coined numerous aphorisms
which are still used at the company: “Hardship now, pleasure later,” “There
are signs before all things,” and “Small things can create big problems;
one must be alert to signs of change and act accordingly,” among many

Policyothers. Inheriting these ideas as the cornerstone of our thinking, we,Risk Management System

Moreover, based on the principle of “Thinking from a Global perspective,

Responsible Executive andFramework

assistance to overseas countries, and construction of overseas factories
in 1961. At the same time, while confronting the risks that sometimes

Basic Framework

including overseas safety policies and emergency response plans.

Education and Enlightenment
for Our Employees

PolicyReporting/whistleblowing
mechanism (external andinternal)
Policies on BCM and BCP

as Panasonic Group, conduct Groupwide risk management activities.
work for the whole world,” we began our export business, technicalarose, we have promoted risk and crisis management initiatives early,

The Group considers it a vital management issue to accurately identify
risks and take appropriate countermeasures to ensure the achievementof its business objectives and sustainable and stable development.
Thus we have formulated the Panasonic Group Operational Rules for
Risk Management (the “Basic Rules”), and we promote Group risk
management based on these. The Basic Rules list the three objectivesof risk management: “ensure the safety and security of our stakeholders
and compliance in our business activities,”“strengthen our businesscompetitiveness through risk management that treats appropriately
both opportunities and threats to the achievement of our businessobjectives,” and “continuously offer products and services by maintaining
operating resources and ensuring work effectiveness while fulfilling oursocial responsibility.” In addition to providing guidelines for directors
and employees to achieve these objectives, the Basic Rules also clearly
define a framework for risk management, as well as the roles andresponsibilities of the holdings company, Panasonic Holdings Corporation(PHD), and the Operating Companies.

Risk Management System
The Group considers risk management and formulating and executing
strategies as the wheels of business management. As these inseparable
wheels function to ensure business objective achievement and corporate
value enhancement, risk management plays an important role in ourgroup management.

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Risk Management

In order to establish an effective risk management system, the Group promotes a processof linking the construction of appropriate frameworks with the PDCA cycle of management
and business strategies under the Basic Rules, which reflect the standards of ISO 31000, aninternational standard for risk management systems, and COSO-ERM (2017), an international

Policyrisk management framework. Through regular reports to the Board of Directors, we provide
risk information to contribute to business and strategy discussions and receive supervision on

Responsible Executive and Framework
The Group Chief Risk Management Officer (Group CRO), an Executive Vice President,
supervises the promotion of risk management within the Group. Moreover, the PHD Enterprise
Risk Management Office (PHD ERM), a dedicated risk management department, handles theGroup’s risk management promotion (as of August 2023).

establishing and operating our risk management systems. By operating and continually improving

As an internal system for promoting risk management, the Group has established the PHD

its risk management systems, the Group will utilize changes in the business environment asEnterprise Risk Management Committee (“PHD ERM Committee”)—normally held three times

Responsible Executive andFramework

opportunities to contribute to the improvement of people’s lives and the development of society

a year and chaired by the Group CRO and comprising individuals representing PHD Legal, HR,

Basic Framework

Risk Management Systemthrough our business. We will also appropriately disclose risk information to society and enhance

Accounting, and other functions—with the PHD ERM Office handling the committee’s executive

the transparency of our business management to reassure our customers, business partners,

office functions. The PHD ERM Committee’s role is to both manage risks related to theneighbors, shareholders, employees, and other stakeholders.

advancement of Groupwide functions and to confirm that risks that have the potential to impact
the Group as a whole are being addressed. In keeping with the Group’s principle of autonomous

Education and Enlightenment
for Our Employees

responsible management at each Operating Company, we have also established Operating

Risk Management in the Value Creation Process

Company ERM Committees at each Operating Company, through which each Company works
with PHD to manage risks that affect the entire Group while simultaneously managing risks

Reporting/whistleblowing
mechanism (external andinternal)

Customersthat arise due to the business or work of that Company. Information from risk assessments
conducted under these frameworks are also used for internal audits. Based on the results of risk

Buisiness
Partners

Policies on BCM and BCP

assessments, the Internal Audit Department determines themes to be examined and conducts

Our Mission(Business Purpose)

audits of functional departments using a risk-based approach.
Media

The PHD ERM Committee regularly reports to the PHD Strategy Committee and the Board of

Enhance
Competitiveness
Investors

A long-term perspective
Building structuralcompetitive advantage

Improvement of reliability

Business
Strategy

Directors on important risks to the group’s management and countermeasure progress using
the PDCA cycle of risk management. Based on these reports, the Board of Directors andResponding to changes
Operational in business environment
Excellence

Formulation and implementationof group-wide management strategy

Local
Communities

Audit & Supervisory Board Members supervise and verify the status of risk monitoring andthe effectiveness of the risk management process. All Operating Companies also have ERM
committees that regularly report to their management teams and the Board of Directors.

Improvement of reliability

Strategic
Reinforcement ofAppropriate information
Appropriate information
investments Business Infrastructure
disclosure
disclosure
Strategic Perspectives on Business Domains Operational

Risks

Risks

shareholders

Perspectives on Group’s Business Management andSocial Responsibility

Employees

Risk Management

Corporate Governance
Practice of the Basic Business
Philosophy

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Risk Management

ReportPolicyThe Group promotes risk management based on an identical process at PHD and the Operating<Note>

Stakeholders’ Meeting

Companies.
Supervise

PHD Board of Directors

Group CEO / PHD *1 Strategy Meeting

PHD

Group's Major Risks
Holding Company
Specific Risk

Supervision and Report

The Group defines “operational risks” as operational “losses” or “threats” that potentiallyaffect the Group’s business activities. The Group updates its “risk inventory” annually bycomprehensively identifying possible operational risks based on external and internal changes.

Internal Audit
Committee

PHD ERM*2 Committee

PHD Function

Monitoring of
PDCA cycle

risks in the inventory. The PHD ERM Committee considers the Group’s management, businessstrategy, and social responsibility when deliberating on these assessments to determine

ReportDelegation
andControlReportInternal Audit
Department

PHD
ERM
Officesignificant risks to the Group’s management (the “Group’s Major Risks”).
Each Operating Company conducts risk assessments and determines the significant risks to
its management (the “Operating Company Major Risks”) using the Group’s common evaluation
criteria and a risk inventory that includes risks specific to the Operating Company with theGroup’s common risks. PHD ERM reports each Operating Company’s risk assessment results

…

Legal

ACCT

HR

Reporting/whistleblowing
mechanism (external andinternal)
Policies on BCM and BCP

Align

It conducts risk assessments according to financial and non-financial evaluation criteria for all

Responsible Executive andFramework

Education and Enlightenment
for Our Employees

Audit

PHD Audit &Supervisory Board

Risk Management System

Basic Framework

Basic Framework

Panasonic Group Risk Management Structure

and the Operating Company Major Risks to the PHD ERM Committee to determine the Group’s
Major Risks.

CEO /Management Meeting
Direction and Supervision ofGroup's Major Risks
Countermeasures execution

Operating Company work toward continuous improvement to formulate and implement
countermeasures and monitor their progress. Especially for the Group’s Major Risks, theReportOperating Company
ERM Committee

Operating Company
Group's Major Risks
Business Specific Risk

Once the Group determines its and its Operating Company Major Risks, PHD and each

Align

Monitoring of
PDCA cycle

Functionfunctional divisions in charge of each risk at Operating Companies formulate and implement
their own countermeasures according to their business profiles and the Group’s common

ReportERM
FunctionInternal Audit
Department

countermeasures, in cooperation with PHD’s functional divisions. The PHD functional divisions
monitor the progress of the Group’s common and each Operating Company’s individual

…

Legal

ACCT

HR

countermeasures to ensure a thorough response by the entire Group.
In our risk assessments, we have traditionally evaluated materiality based on financial impact

Direction and Supervision

Division Company・Each Division
Domestic / Overseas Subsidiaries*1 PHD: Panasonic Holdings *2 ERM: Enterprise Risk Management

and frequency of occurrence. However, we have added human life as an impact factor in ourrisk assessment with recent outbreaks of infectious diseases, increasingly intense natural
disasters, and heightened geopolitical tensions. Considering the importance of corporate social
responsibility (CSR), the SDGs, ESG, and other social imperatives, we also incorporate items
related to the risk of not meeting these expectations (including human rights, labor compliance,and environmental issues) and evaluation factors related to the Group’s social impact (including
our reputation) into our risk assessment framework. Our risk management efforts will strengthen
our efforts to comply with laws and regulations, a prerequisite for business activities. At thesame time, we will continue to aim for a high level of integrated risk management for the entire
Group, treating it as an opportunity to contribute to society and our customers.

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Risk Management▪Group Major Risks in Fiscal 2024

Basic Framework of Risk Management: ERM Process of PHD

Related to “operational risks” that may be operational “losses” and “threats” and potentially: ERM Process of Operating Company

affect the Group’s business activities, we have identified the following major risks to the Group’s
Fiscal Year n

PolicyRisk Identification

Fiscal Year n+1

Risk Assessment

Selection ofMajor Risks

Formulation ofCountermeasures

Conduct Risk
Assessment

DecideGroup’s
Major Risks

Formulatecountermeasuresof Group’s
Major Risks

Risk Management System
Responsible Executive andFramework

P
H
D

SupportBasic Framework

Reporting/whistleblowing
mechanism (external andinternal)
Policies on BCM and BCP

Support
Deploying

OperatingCompany

Education and Enlightenment
for Our Employees

Update anddeploy the
Risk Inventory

Confirm andupdate the Risk
Inventory

Support
Sharing ofInformation

Conduct Risk
Assessment

SupportCooperation

DecideOperatingCompany
Major Risks

Execution
Monitoring

Carry out
and check the
progress ofcountermeasures
SupportCooperation

Formulatecountermeasuresof Group’s andOperatingCompany
Major Risks

management in fiscal 2024:

Terrorism, war, riots, and political unrest
In preparation for the emergence of political unrest or military tension in countries or regions withGroup sites, or in the event of terrorism or riots, the Group is promoting the development of BCP
that takes geopolitical risk response into consideration and the safety measures at normal timeby each function in order to strengthen the response to emergency situations giving the utmost
priority on human lives.

ReportOccupational accidents
Carry out
and check the
progress ofcountermeasures

In accordance with laws and regulations and the Panasonic Group’s Basic Business
Philosophy, we promote health and safety initiatives with the establishment of the Occupational
Safety and Health Policy and the Occupational Health and Safety Management Regulations,which have set forth standards for ensuring employees’ safety and health, achieving a
comfortable workplace, and preventing workplace accidents. Moreover, we have established

FY2024 Group Major Risks/ PHD Major Strategic Risk
■Group Major Risks (Operational Risk)• Earthquakes, tsunamis*1• Floods and landslide disasters*1• Infectious disease outbreaks/pandemics*2• Terrorism, war, riots, and political unrest• Occupational accidents

the Central Health and Safety Committee under the Group Health and Safety Management
department. This committee discusses, sets, implements, and monitors material health andsafety policies and strategies for the health and safety organizations established at Operating
Companies and workplaces it supervises.
In addition, we hold the Health and Safety Forum, which those responsible for health• Trade regulations/Economic sanctions

and safety at each Operating Company attend to promote autonomous health and safety• Antimonopoly Act violations/Any bribery involving government officials

management throughout their organizations, as well as training sessions for management to• Cyberattacks

share knowledge and foster awareness. For more details, see the “Work in safe, secure and• Any wrongdoing and/or scandals involving suppliers (Information leakage, producthealthy state” section (on page 83).

security, environmental protections, human right compliance)■PHD Major Strategic Risks (Strategic Risk)

Trade regulation/Economic sanctions
Laws and regulations in various countries are changing continuously; the Group closely monitors• Climate change response・Environmental regulations/Development of a circular economy

these trends and collects information on a daily basis through global cooperation to quickly• Geopolitical risks and economic security issues

identify new trade restrictions and sanctions that may affect our business, and responds by• Attracting, acquiring, and retaining human resources

updating our global policies and guidance as necessary. We also thoroughly assess how new*1 Refer to the BCM/BCP policies*2 Refer to our Response to the COVID-19 Pandemic

regulations may apply to cargo and technologies. Moreover, we work to further strengthen
compliance by raising awareness among employees in Japan and overseas and disseminatinginternal information and countermeasures to avoid transaction risks. Once we have thisunderstanding, we respond by updating our global policies and guidance as needed and assess

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Risk Management

whether our goods or technologies are in fields subject to new restrictions. We are also raisingawareness among employees in Japan and overseas to further improve compliance, with efforts
including sharing information internally and disseminating countermeasures to avoid transaction
risks. For more details, see the “Trade Compliance” section (on page 142).

PolicyRisk Management System
Responsible Executive andFramework
Basic Framework
Education and Enlightenment
for Our Employees
Reporting/whistleblowing
mechanism (external andinternal)
Policies on BCM and BCP

Antimonopoly Act violations/Any bribery involving government officials
The Panasonic Group Code of Ethics & Compliance stipulates our commitment to fair businesspractices as a “company as a public entity of society,” clearly stating our compliance with laws,
regulations, and corporate ethics, and shares the Group’s basic stance with all directors andemployees. Furthermore, we are working to prevent and detect bribery and corruption earlythrough training programs meant to ensure thorough compliance based on global regulations
and compliance audits based on a risk-based approach. In addition, we are working tostrengthen awareness of ethics and legal compliance by implementing compliance measures for
employees throughout the year in response to various risks.
Additionally, as a centralized whistleblower contact point, we have established a global hotline
to receive reports from domestic and overseas bases and business partners. We are working todetect and correct problems early through appropriate internal investigations. For more details,
see the “Business Ethics” chapter (on page 137).

policy for promoting responsible procurement activities.
We have also issued the Panasonic Supply Chain CSR Promotion Guidelines stipulating the
CSR requirements (including human rights and labor, health and safety, global environmental
conservation, information security, and corporate ethics) that we expect our suppliers to comply
with. Moreover, we are working to ensure CSR throughout the supply chain by promoting
initiatives such as CSR Self-Assessments and audits. For more details, see the “Responsible
Supply Chain” chapter (on page 102).

▪PHD Major Strategic Risks in Fiscal 2024
Along with operational risk management, we are promoting appropriate risk-taking activities
using degree-based metrics by considering uncertain events that may become “opportunities”
or “threats” to the achievement of business objectives over the medium to long term as “strategicrisks” in formulating management and business strategies and making decisions.
We manage strategic risks to enhance the quality of business strategy formulation anddecision-making and better ensure that we achieve our business objectives. When faced withchanges in the external environment, we consider the direction of risk-taking and implementing
countermeasures against these “opportunities” or “threats” in reviewing our business strategy
and promoting the initiatives we have taken.

Cyberattacks

Among the various strategic risks, we select major risks to the Group management (“PHD

We are working to ensure the soundness of the IT environment and improve its cyber resilience

Major Strategic Risks”) from the viewpoint of necessity for cross-PHD/Operating Companies

to achieve a higher level of information security. Specifically, we are implementing measuresefforts to realize our vision and mission, and we work to subdivide these risks into units of

to further expand anomaly monitoring on networks, servers, and PCs, including infrastructure

events that may be “opportunities” or “threats”. We then share these details with the relevant

at Japanese and overseas subsidiaries; integrate security monitoring with internal factory

functional divisions, which monitor them in their respective areas of expertise and promotemonitoring; and strengthen global and centralized security monitoring systems.

initiatives designed based on this monitoring.

In April 2023, we established the Cyber Security Supervisory Office as a new organization to

Similarly, each Operating Company defines and manages its “Operating Company Major

promote a centralized, integrated response to complex cyber security risks involving data,

Strategic Risks” from among the strategic risks related to their respective business strategies.

products, factory security, and the overall supply chain. We also appointed cyber security generalmanagers at all Operating Companies to oversee their responses to complex cyber security risks.
For more details, see the “Cyber Security and Data Protection” chapter (on page 143).

Any wrongdoing and/or scandals involving suppliers

Climate change & Environmental regulations/Development of a circular
economyWith regard to climate change response, we are working to focus on the introduction andexpansion of environmental regulations and policies, making the most of the opportunities in

The Group makes purchases from roughly 13,000 suppliers globally. In recent years, the calls for

related business markets born of changing demand for certain products and services as global

social responsibility on the part of corporations with regard to their supply chains have grownwarming progresses and the growing awareness of environmental issues while simultaneously

stronger with each passing day, and this trend can also be seen in legal regulations with new

reducing losses by strengthening our responses to these issues as threats.

regulations being drafted and going into effect.
We have established the Rules on Supply Chain Compliance stipulating the system and basic

With the development of circular economies due to shortages and restrictions on resources, weare seeking to expand our opportunities for improving corporate value through our proactive

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Risk Management

PolicyRisk Management System
Responsible Executive andFramework
Basic Framework
Education and Enlightenment
for Our Employees
Reporting/whistleblowing
mechanism (external andinternal)
Policies on BCM and BCP

use of renewable energy, while at the same time anticipating greater demand for low-carbon

for process improvement to be promoted during the fiscal year. We hold several briefings

products that use circulative resources. Meanwhile, there is also the possibility that higher

each year for personnel in charge of risk management at each Operating Company to shareproduction costs and production delays will become frequent or constant due to the increased

their perspectives and information, aiming to improve their skills and promote effective risk

costs and short supply of circulative resources (recycled materials and raw materials to be

management processes.

recycled). The Group is aiming to expand our business by responding appropriately to both theopportunities and threats presented by the situation.

Geopolitical risks & economic security issues
Through our monitoring of international affairs and trends in national and regional policies,
laws, and regulations, we are trying to understand their impact on the Group’s business andrespond to them promptly. The Group is also working to inspect and restructure its production

Moreover, in Japan, we provide training for new employees, newly assigned CEOs at
subsidiaries outside Japan, and employees who will be dispatched to locations abroad on basic
knowledge of risk management and how to respond to crisis-related risks to improve their ability
to respond to risks when working outside of Japan.

Reporting/whistleblowing mechanism (external and internal)

system from a medium- to long-term perspective, with an eye to diversifying supply chains and

The Group also maintains a global hotline for domestic and international offices and businessconsidering local production for local consumption. We will also continue to closely monitor

partners to report issues related to compliance violations, any type of harassment, procurement,

the rapid changes in the business environment caused by market decoupling, strengthening ofand the like as a means for employees to report hidden risks.

National economic and security policies, and polarizing public opinion, including the threats toour business and opportunities to leverage tax measures based on economic security policies.

Policies on BCM and BCP

Attracting, acquiring, and retaining human resources

Since 2005, we have been promoting and improving our business continuity management

As a common Group human resource strategy, we are committed to realizing “Employee WellBeing” so that each and every employee is healthy in mind and body and feels happy andfulfilled in their work through challenging opportunities. Thus, we create safe, secure, and healthy(BCM) efforts to ensure that our production and sales will not be interrupted in the event of an
emergency and to resume necessary functions as soon as possible in the event that we areforced to suspend our business activities.

workplaces; support employees’ independent motivation to take on challenges and develop their

In particular, if a disaster, accident, or other unforeseen event occurs in the Group’s supply

careers; and promote diversity, equity, and inclusion (DEI). Meanwhile, competition to securechain, including at parts suppliers and product delivery destinations, it will affect not only supply

competent human resources is intensifying, and we will continue to closely monitor trends inshortages and interruptions of parts from suppliers but also the BtoB field. Therefore, we

policies and legislation related to human resources, diversity, and promoting women in thestrengthen our BCM initiatives, as we consider it a crucial issue under normal circumstances forworkforce in all countries and our competitors. For more details, see the “Employee Well-Being”

the entire supply chain.

chapter (on page 80).

▪Major Efforts

Education and Enlightenment for Our Employees
The Group has also established the Panasonic Group Operational Rules for Risk Management(“Operational Rules”), which are subordinate to the Basic Rules and define the standard
procedures for the Group with regard to promoting risk management. The Group aims toachieve centralized risk management and its advancement by defining specific proceduresfor identifying and assessing risks, selecting Major Risks, and formulating and implementing
countermeasures. Additionally, we annually update and deploy a risk management guidebased on Operational Rules to managers and other personnel in charge of risk management
at each Operating Company. This guide aims to share the priority issues, initiatives, and points

The Group has established Corporate Emergency Management Rules wherein we define policies
for emergency response, the organizations that should respond, initial response, reporting
routes, and the like. We have established the Guidelines on Business Continuity Management (theGuidelines) and have formulated BCPs for each business site; we also formulate BCPs specificto the supply chain, logistics networks, and IT security for each function, including procurement,
logistics, and information security. We review the BCP based on the Guidelines as appropriate
to improve our Groupwide BCPs and resilience. In fiscal 2023, we revised the Guidelines toincorporate the Japanese Cabinet Office’s latest damage projections for a Nankai Troughearthquake and an earthquake with an epicenter in the Tokyo metropolitan area. We included
disaster prevention and mitigation measures in response to these projections and clarified theSustainability Data Book 2023 135

Risk Management

connections between the BCPs for each function to improve their effectiveness.
In particular, we have conducted a hazard survey about various risks posed by natural
disasters such as earthquakes, floods, and tsunamis. We have also shared these findings witheach of the Operating Companies and have put priority measures in place, both within our

Policyown Group and in our supply chain. The Group is also analyzing the impact of a Nankai TroughRisk Management System

as stress events expected to significantly impact the Group’s business. Based on the results of

Responsible Executive andFramework
Basic Framework

earthquake and an earthquake with an epicenter in the Tokyo metropolitan area, treating themthese analyses, we enhance the required countermeasures, raise appropriate risk awarenesswithin the Group, and improve risk communication. We have also created a Groupwide Firebehavioral restrictions while maintaining basic infection control measures. Meanwhile, we willcontinue to monitor infections in Japan and overseas and administrative trends in each country,
responding appropriately to any infection increases or mutant strain outbreaks within cities that
may occur due to these measures or loosened behavioral restrictions. Furthermore, as part ofour infectious disease preparations during normal times, we are working to maintain employee
health and safety and business continuity systems by formulating a BCP for infectious diseases
at all business sites and ensuring that we keep appropriate stocks of masks, rubbing alcohol,
thermometers, and other similar products.

and Disaster Prevention Committee to help both strengthen our readiness before contingencies
arise and transition rapidly to emergency response systems when an incident does occur. We
have created fire and disaster prevention task forces under the Fire and Disaster Prevention

Education and Enlightenment
for Our Employees

Committee, and these task forces work to conduct disaster prevention studies and strengthen

Reporting/whistleblowing
mechanism (external andinternal)

power supply equipment into BCPs to ensure business continuity. The Group also runs annual

Policies on BCM and BCP

and Medical Care for Patients with Infectious Diseases, the Group has also gradually eased

our response capabilities, including stockpiling systems. In particular, given the strain that has
been placed on the power supply by disasters in the past, we have incorporated emergency
disaster prevention drills based on disaster scenarios. In January 2023, we conducted aGroupwide disaster drill that the Group Emergency Headquarters created based on a Nankai
Trough earthquake scenario. Based on the expected difficulties for members of the Corporate
Emergency Headquarters to assemble due to the devastating nature of the disaster, we
conducted the drill under the assumption that employees who could come together without
using public transportation would set up the Corporate Emergency Headquarters. Coordinatingwith local municipalities, Operating Companies and business divisions conduct annual disaster
preparedness and emergency evacuation training drills at each business site as needed.
We also actively work to both prevent incidents and prepare for emergencies when it comes tofires as well, based on the Global Fire Prevention Rules, which govern fire risk assessments, fire
prevention and fire extinguishing equipment, fire brigades and firefighting, recurrence prevention,
autonomous inspections, fire prevention drills, awareness raising, auditing, and more.

▪COVID-19 Response
When the World Health Organization (WHO) declared COVID-19 a public health emergency on
January 31, 2020, the Group created a Groupwide Emergency Response Headquarters.
Management, procurement, public relations, and other functions responded to issues under the
Corporate Emergency Headquarters in cooperation with the emergency headquarters at each
Operating Company, ensuring the safety of employees’ lives and health as the top priority. As
Japan and other nations have eased their COVID-19 restrictions, and Japan has downgraded
it to a Class 5 infectious disease under the Act on the Prevention of Infectious Diseases

Sustainability Data Book 2023 136