Build a Foundation for Sound and Effective Corporate Governance

  1. Top
  2. Sustainability
  3. Materiality
  4. Build a Foundation for Sound and Effective Corporate Governance

We will build a sound and effective corporate governance foundation, recognizing that maximizing corporate value and ensuring sound management are the most important issues facing management.

Build a System for Appropriate Risk Management and Operation

As risks become increasingly diverse and complex, it is crucial that we accurately understand and respond to them in order to maintain and enhance our corporate value. Meanwhile, companies are also expected to fulfill their responsibility to society by working harder to address various environmental changes. Recognizing these trends, the Happinet Group has been building a system for appropriate risk management and operations.

Build a System for Appropriate Risk Management and Operation

  1. Material Risk Selection

    In selecting material risks, we first conducted a survey of internal directors and managers, and interviewed the heads of each business division to comprehensively identify risks that could impact the Group.
    With regard to the risks identified, we evaluate their importance using a risk matrix centered on impact and frequency of occurrence, then select material risks that should be addressed with particular priority.

    Figure Figure
    Selecting material risks using a 5×5 risk matrix
  2. Management System

    For each material risk, we assign a responsible division head and staff member within the responsible division to ensure that everyone understands the importance of risk management. Based on this system, each division considers issues and measures regarding each risk, and then shares the results with the entire company.

  3. Formulation of BCPs

    We keep our initial response BCP (business continuity plan) up to date while regularly interviewing each section and checking cross-sectional collaboration to ensure that the content reflects our current operations.
    We also formulate BCPs for business recovery at a divisional level by prioritizing tasks and business partners to be addressed in an emergency for each operation and organizational structure.

Strengthening Logistics Facility Safety

The Happinet Group is an intermediate distributor. As such, ensuring the continuity of our logistics functions in order to continue to fulfill its societal role, even in the event of a large-scale disaster, is a serious challenge. The Happinet Group’s logistics division is continuously engaged in this challenge, including working to create safe work environments, revising our emergency contact system, implementing disaster drills, and developing manuals.

Strengthening Information Security

The Happinet Group is focusing its efforts on protecting and preventing the leakage of highly confidential business information, business partner-specific information, and the personal information of regular consumers. In addition, in accordance with the unique characteristics of the Group’s businesses in toys, visual and music software, and game software, we are also concentrating on preventing rights infringements on external works obtained over the internet, etc.

In order to thoroughly implement these initiatives, we have established the Information System Security Policy.

We are also taking a variety of other measures, including implementing virus checks when receiving emails and downloading data, spam filters, and the prevention of unauthorized access.

Further, to prevent the loss and destruction of data due to a natural disaster, we reduce the risk by using highly available cloud services. Combined with this, other measures we have taken include data backups and network redundancies.

The warehouse management system (WMS), which we installed in 2018, is designed with large-scale disasters in mind and is comprised of data centers in two locations—the Kanto and Kansai regions—so that we may continue operations even in the event of a large-scale disaster.

Going forward, we will continue to promote relocating data to remote data centers as well as the shift to cloud services, establishing an environment that will enable smooth business continuity even in the event of a large-scale disaster.

Implementation of Assessments to Strengthen Security

The Happinet Group has conducted a comprehensive study and evaluation of the current measures for information security management and system development/operations, covering their technical, operational, and physical aspects. The study was performed by an external partner based on global security standards. We will use the assessment results to promote further efforts to strengthen security.

Implement a Corporate Governance Code and Plan and Propose Relevant Measures

The Happinet Group believes that maximizing corporate value and ensuring sound management are our most important management issues. To achieve these objectives, we are working to establish a system to increase the transparency of our management and to enable us to respond quickly and appropriately to changes in the business environment.

Initiatives for Development of the Business Portfolio Management System

The Happinet Group is strengthening its business management function to optimize its business portfolio, aiming to respond to environmental changes and achieve sustainable growth.

By visualizing not only inventories but also trade receivables/payables, non-current assets, and investment securities as the balance sheet of each business division, we have been able to calculate the ROA for each business. We also determine what we need to improve and how in order to bolster our ROA by setting KPIs and with periodic monitoring.

We have also introduced rules for making investment decisions, evaluating businesses by looking at everything from quantitative and qualitative aspects (such as profitability and efficiency for the former and business synergies and branding for the latter) to financial, legal, and public relations risks. For important projects, by clarifying the process and criteria for making decisions about improvements and withdrawals and conducting regular monitoring, we have established a system that allows us to constantly renew our business portfolio to keep it robust. Regarding the progress of the mid-term management plan, we have established a Mid-term Management Plan Promotion Council to monitor progress on a quarterly basis.

Outline of initiatives
Figure