IR InformationInterview with the President of the Risk Management Unit
As a group seeking to primarily create value from businesses and services that transcend the boundaries of conventional leasing, we recognize active risk management that addresses emerging risks is a crucial strategy for raising corporate value and supporting sustainable growth.
Stakeholders and markets not only examine financial profitability but also closely examine the prospects for sustainable growth and a company’s social continuity and development. We therefore believe that risk management and compliance are key elements in supporting sustainable corporate value.
As a company with financial capabilities, Tokyo Century Group has carried out its mission to solve client issues by providing pioneering value-added services. To that end, our company culture constantly takes on new risks. In order to utilize our true capabilities, assessing and appropriately controlling emerging risks are crucial, rather than simply reacting.
In real terms, this means developing our business based on management guidelines for capital usage rates, measuring consolidated VAR (value at risk: maximum potential loss) using statistical methods for each risk category, and monitoring to ensure that the total volume of risk stays within the boundaries defined as our risk buffer derived by deducting a certain level of margin from consolidated economic capital. Equity capital has hither to increased steadily, and we have expanded risk assets through significant future investment while increasing our shareholders’ equity ratio. Moreover, amid a rapid global expansion in businesses that transcend the boundaries of conventional leasing, we are aware that we must become increasingly sophisticated in our risk management operations.
In our Fourth Medium-Term Management Plan, we set out three core policies under the crucial theme of our risk management approach: 1) to strengthen risk management, 2) to build a risk control framework aimed at efficient allocation of management resources, and 3) to respond to society’s demands in areas such as information security, diverse crisis management, and product quality control.
As our business expands, it is vital that risk management be viewed also on a consolidated basis, and this requires appropriate assessment of risks for each individual risk profile, including those we have not yet envisaged. As well as estimating future capital based on sensible expectations for profit accumulation, we intend to measure both the level and direction of our risk-taking activities.
As for risk management, while continuing to ensure sustainability based on a degree of discipline, we intend to create approaches to evolve Tokyo Century Group’s business model and verify compatibility with society’s changing demands.