Risk Factors and Risk Management

ORIX recognizes that external environment-related risk, credit risk, business risk, market risk, liquidity risk (risk relating to funding), compliance risk, legal risk, information/cybersecurity risk and IT risk and operational risk are the principal risks we face, and we manage each of these risks according to its characteristics.

Risk Factors Risk Management Departments Handling Risks Executive Bodies Related to Risk Management
External environment-related risk Corporate planning, Credit, Public relations, Public affairs, Investor relations, Sustainability, Treasury, ERM Executive Committee, Sustainability Committee
Credit risk
  • When appraising individual projects, comprehensively evaluate the credit recipient’s financial condition, cash flow, underlying security interests, profitability, etc.
  • Strengthen credit risk management methods for individual projects and portfolios (obtaining sufficient collateral and guarantees, diversifying industries and credit recipients, controlling exposure to potentially high-risk markets)

    Risk Management System for Investing and Lending

 Credit, Corporate planning, Accounting, ERM Investment and Credit Committee
Business risk
  • Thoroughly analyze risk (scenario analysis and stress testing) before executing a business or investment
  • Improvement of the quality of products and services through regular monitoring as well as evaluation and verification of withdrawal costs, after execution of businesses and investments

    Risk Management System for Investing and Lending

 Credit, Corporate planning, Accounting, ERM Investment and Credit Committee
Market risk
  • Establishment of an integrated management system for assets and liabilities (comprehensive understanding and verification system for market risks, using derivative transactions as a means of hedging)
 Credit, Treasury, Corporate planning, Accounting, ERM Executive Committee
Liquidity risk
(risk related to funding)
  • Promotion of diversification of procurement methods
  • Strengthen management of liquidity on hand (implementing stress tests of liquidity risk and developing countermeasures, understanding liquidity risks for each country as well as subsidiary and developing countermeasures)
 Treasury, ERM Executive Committee
Compliance risk
  • Establishment of an effective compliance structure alongside a corporate culture that values high ethical standards (formulating and implementing a compliance program, establishing internal regulations and promoting compliance awareness through activities to disseminate information, establishing internal and external compliance hotlines)

    Compliance

 Compliance, Public relations, Public affairs Executive Committee, Sustainability Committee
Legal risk
  • Establishment of a legal compliance and legal risk management system (establishing internal regulations for legal compliance, understanding laws and regulations applicable to each business, and implementing appropriate responses to revisions to the law)
 Legal, Accounting, Investor relations, Sustainability Executive Committee, Sustainability Committee
Information/cybersecurity risk and IT risk
  • Establishment of an information/cybersecurity risk, and IT risk management system (establishing internal regulations, implementing technical measures such as vulnerability management measures for information systems and network protection, establishing systems for response in the event of information cybersecurity incidents, and implementing measures to reduce the risk of system failures)

    Information Security

 Information Security Information Technology Management Committee
Operational risk
  • Establishing, disseminating, and training about internal regulations
  • Establishment of systems related to execution of operations
    • Building an internal control system for financial reporting
    • Establishment of a personnel system and a work environment to stably secure diverse human resources

      Human Capital Management to Support Sustainable Growth

    • Continuously strengthen the overall risk management system through monitoring of operational risks by the Audit Department
  • Establishing system for responding to and preventing recurrence of operational risk incidents, and risk control self-assessment

    Incident Management System

 ERM, Human resources, Corporate administration, Accounting, Public relations, Public affairs Executive Committee, Sustainability Committee