Assessment of risk management system at a major manufacturing company

The client was a subsidiary of a global enterprise, producing and marketing metal snaps for jeans, casual wears, baby & kids clothes, working wears, sports wears and underwear, buttons for jeans and plastic snaps. As the leading company in Japanese market, the client had been operating mainly in Japanese and Asian markets.

The client had been recognizing the following challenges regarding its risk management system.

・Mandates and communications on compliance had been issued by multiple organizations within the headquarters and received by different staffs. As a result, it was difficult to understand the overall picture of compliance activities.

・Due to the gap in prioritization between the client and its parent company and the shortage of hand, promotion of compliance activities was running late.

In order to address the above issues, the client engaged PFA and launched the project.

First of all, PFA gathered and sorted out relevant information, gained an understanding of the current status and analyzed the outstanding issues.
PFA then carried out a risk analysis on the identified issues and prioritized those issues.
In addition, PFA identified the available measures and points of consideration on taking such measures. Based on these considerations, the direction of the measures to be taken was determined. ① Understanding the current status of compliance activities ・Gathered compliance related materials from the staffs in charge of compliance within the client company and prepared a table of the current status based on the gathered materials and interviews to relevant staffs.

・Picked up the issues to be addressed from the table of the current status and prepared a table of issues, identified potential compliance risks by issue and clarified how such issues lead to the breach of compliance.
② Prioritization based on the risk analysis ・Ranked the issues listed in the table of issues using 3 indicators: “Risk value (i.e. the level of impact if the risk becomes actual)”, “Maturity of risk management system” and “Inhibitory effect on risk after resolving the issue”.

・Identified the criteria for comparing the issues from the ranking of each indicator and prioritized the issues based on the criteria.
③ Determination of the measures for resolving the issues ・Set up measures to be taken for each issue.

・Identified the points of consideration on taking the suggested actions. (e.g. possibility of implementation within the client company, request from the parent company, time and labor required for the action)

・Based on the above considerations, determined the measures, possibility of achievement, timeline for completion and persons in charge.

Based on the measures suggested by PFA, the client decided on the following strategies.

・The management will consult with the parent company on issues that require coordination with the parent company. (e.g. establishment of new policies, systems and rules)

・For measures that require the development of a new system and can be implemented independently by the client company (e.g. monitoring), promote further discussion within the company and develop an original system.

・For measures that are immediately available (e.g. documentation of the existing processes, minor changes or additions in the existing processes, trainings), assign persons in charge and take swift actions.

・For issues involving overseas offices, gain an understanding on the local situations and consider appropriate suggestions and measures.

・For the existing chain of command, keep everyone well-informed on the organizational structure.

・For the issues which certain actions has already been taken for (e.g. education, training and compliance survey), gather detailed information and identify further actions to be taken within the company.