Governance
Risk Management
Sodick has established basic rules for risk management, and works to determine, analyze, evaluate, and take appropriate measures to avoid the risks that exist at each division. At the same time, Risk Management Committee has been established to formulate necessary preemptive response policies to prepare for the occurrence or potential occurrence of unforeseen situations that would have a major impact on management, and to respond appropriately and as needed in the event a situation were to occur.
Risk Management Structure(as of end-March 2026)
Risk Evaluation and Analysis
Four times a year at the Risk Management Committee, we conduct risk investigation (which evaluates degree of impact and likelihood of occurrence) at each division of the Company and its subsidiaries. We evaluate and analyze risks judged particularly significant, then discuss measures against these risks, report to and discuss those measures at the Board meetings, and finally reflect them in our business strategies.
In 2025, topics discussed include the impact of the U.S. tariff policy, the establishment of chemical substance management systems, and rare earth export restrictions.
Cybersecurity
We strive to strictly manage confidential business and technological information through appropriate IT technology measures, the establishment of internal systems, and employee training. In 2025, we cautioned personnel regarding the use of generative AI software and took countermeasures against ransomware infection.
Major Risks
Sodick recognizes the following as the primary risks with the potential to have a major impact on the Company’s business performance and/or financial position.
- Risks related to economic fluctuations
- Legal and regulatory risks
- Impairment risks related to non-current assets
- Risks related to new businesses
- Risks related to corporate social responsibility
- Construction cost estimation risks
- Risks related to securing and developing human resources
- Risks related to the competitive environment
- Information security risks
- Risks from major fluctuations in foreign exchange rates
- Risks related to procurement of raw materials and parts
- Risks related to natural and other disasters
- Risks at overseas businesses
- Risks related to interest-bearing debt
Risks Related to Economic Fluctuations
Likelihood of occurrence : High Degree of impact : Major
The Group is working to diversify its business portfolio by expanding the food machinery segment, which is relatively less affected by economic fluctuations, and by acquiring new customers through elemental technology.
Furthermore, by expanding the sales of regular maintenance services and consumables, and providing solutions for automation and labor savings, we are working to build a foundation for revenue that is resilient against fluctuations in product sales volume.
Moreover, in light of recent demand trends and the environment for receiving orders, we are carrying out cost reduction activities and reviewing suppliers on an ongoing basis. And by bringing automation and labor savings to production processes, we are building a production structure that can respond flexibly and efficiently to changes in the market environment.
Risks Related to Procurement of Raw Materials and Parts
Likelihood of occurrence : High Degree of impact : Major
The Group has established a basic procurement policy, and achieved mutual understanding and relationships of trust with suppliers. And based on appropriate standards for quality, price, and stability, we procure optimal parts globally. We have also secured multiple procurement channels and suppliers in Japan and overseas to diversify our procurement sources, and we address risks including shortages of parts and materials and soaring costs for materials and logistics. To address the risk of export restrictions being imposed on items such as rare earths, we analyze our degree of dependence on specific countries, consider alternative materials, diversify suppliers, and review safe inventory levels for important parts. Through such efforts, we are mitigating the risk of cut-offs in supplies.
Given the ongoing rise in energy prices and transportation costs, as well as continued and steep increases in raw material prices, we are working to establish an efficient procurement framework for the Group as a whole.
Risks from Major Fluctuations in Foreign Exchange Rates
Likelihood of occurrence : High Degree of impact : Major
To suppress to some degree the impact of exchange rate fluctuations on business performance, the Group examines the details of foreign currency-denominated transactions, and takes such steps as entering into forward exchange contracts, thereby mitigating exchange rate risk.
In addition, by establishing production and sales structures overseas in order to match, as much as possible, the currencies in which revenues and expenses are denominated, we are working to create a structure that ensures the impact of exchange rate fluctuations on profit is relatively limited.
Nevertheless, with respect to the impact on net assets of foreign currency translation adjustment, short-term hedging is difficult. We therefore strive for appropriate financial management while comprehensively taking into account our financial health and capital structure.
Risks Related to New Businesses
Likelihood of occurrence : High Degree of impact : Major
The Group pursues the development of technologies and new products with the aims of achieving the world’s highest levels of processing precision and speed and expanding functionality to meet customer demands. Specifically, we conduct R&D through a trilateral structure spanning Japan, China, and North America, and complement this with research into cutting-edge technologies, monitoring of market trends, and collaboration with universities, research institutions, and academic experts.
We are also working to reduce the technological and market risks associated with new businesses by leveraging the elemental technologies and customer base cultivated through our existing businesses, while also utilizing M&A and ties with external partners.
Furthermore, by responding flexibly and agilely to changes in the business environment and market trends, including through the review of business plans and investments, we aim to achieve the stable launch of new businesses and realize medium- to long-term growth.
Risks at Overseas Businesses
Likelihood of occurrence : High Degree of impact : Major
To mitigate risks at overseas businesses, the Group continuously obtains information on market trends, business conditions, and security matters in each region, ensuring that our business operations are capable of responding promptly and flexibly to changes in the business environment.
In China, we adhere to the principle of local production for local use. For example, we have a structure in place for sales in the Chinese market to be covered by production in China. And by decentralizing sales and production sites, we alleviate the impact on the Group as a whole of changes in the business environment in specific countries or regions.
We also work to ensure the stable operation of overseas businesses by sharing information with overseas bases and strengthening governance. For instance, we identify operational challenges and risks at an early stage and review business continuity plans (BCPs) as necessary.
Information Security Risks
Likelihood of occurrence : Medium Degree of impact : Major
The Group strives to strictly manage confidential business and technological information through appropriate IT technology measures, establishment of internal systems, and employee training.
In addition to thorough use of thin clients as internal standard terminals, we have introduced comprehensive security management tools for IT asset management and to serve as countermeasures against internal information leakage, cyberattacks, etc. To further strengthen our security system, we also periodically carry out a vulnerability diagnosis, etc., using a third-party organization.
Risks Related to Corporate Social Responsibility
Likelihood of occurrence : Medium Degree of impact : Medium
The Group has established a Sustainability Committee chaired by the Representative Director and is pursuing initiatives for compliance, social contribution, human resource development, quality management, and the environment. We are also promoting work style reform and working on initiatives such as setting the designation days to take paid leave and encouraging the reduction of overtime work. We also enforce the Sodick Group Corporate Ethics Charter, establish a human rights and compliance reporting desk and an external reporting hotline, and provide harassment-prevention training to employees.
Regarding environmental initiatives, by providing environmentally friendly products and services, we do business in a way that contributes to the realization of a sustainable society. In the area of business management as well, we have established a specialized department to promote initiatives including carbon neutrality and CO2 emission reductions.
Risks Related to Securing and Developing Human Resources
Likelihood of occurrence : Medium Degree of impact : Major
The Group views the securing and development of human resources to support sustainable growth into the future as an important management issue, and works strategically to recruit and develop such talent. Our approach to human resource development centers on OJT, but by also providing position-specific training and education/training for different areas of specialization, we endeavor to enhance technical skills and managerial capabilities, as well as systemically develop young talent and next-generation leaders.
Furthermore, to support our global business operations, we actively develop and promote talent recruited locally at overseas bases, and strive to create a working environment that enables diverse human resources to give full play to their respective abilities.
*Please refer to the securities report for more detailed information regarding major risks (available in Japanese only).