INTEGRATED REPORT 2023
BACK NUMBERS
Major Risks and Management Frameworks
RISK MANAGEMENTDuring the period of the previous medium-term management plan, the need to reinforce risk management was highlighted through developments such as the deterioration of macroeconomic conditions that stemmed from the impacts of the COVID-19 pandemic and the massive losses centered on the aviation business that were a result of Russia’s invasion of Ukraine. Going forward, Tokyo Century will continue to develop its risk management framework while enhancing its investment management framework to facilitate the efficient allocation of management resources based on a comprehensive enterprise risk management (ERM) approach. These frameworks will be used to support the ongoing growth of the Company.
- *Country risk, which was previously included under credit risk, was changed to an independent risk category in April 2023 to reflect recent geopolitical risks. Based on this new categorization, the Company is taking steps to accelerate the collection and internal sharing of country risk information, enhance monitoring of country risk exposure, designate countries not eligible for financing or investment, and implement more rigorous risk assessments of overseas business entities from the perspective of information security and anti-corruption measures.
Relationship between Major Group Companies and Main Risk Categories
High-weight risk category
Scrollable horizontally
| Risk Category | Tokyo Century | Nippon Car Solutions | FLCS | NipponRent-A-Car Service | Orico Auto Leasing* | TC Kobelco Real Estate | Shunan Power | Orico Business Leasing* | IHI Finance Support | Aviation Capital Group | CSI Leasing | Tokyo Century (USA) | TC Skyward Aviation |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Credit risk | |||||||||||||
| Country risk | |||||||||||||
| Market risk | |||||||||||||
| Interest rate risk | |||||||||||||
| Foreign exchange risk | |||||||||||||
| Liquidity risk | |||||||||||||
| Investment risk | |||||||||||||
| Equity investment risk | |||||||||||||
| Business investment risk | |||||||||||||
| Asset risk |
Automobile |
General residual value |
Automobile |
Automobile |
Real estate |
Biomass co-firing power generation |
General residual value |
Aircraft |
General residual value |
General residual value |
Aircraft |
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| Operational risk |
- Note:The scope of management extends to all consolidated subsidiaries. The table above only lists Tokyo Century’s significant subsidiaries subject to internal control under Japan’s Financial Instruments and Exchange Act.
- *Effective October 1, 2023, Orico Auto Leasing and Orico Business Leasing were excluded from the scope of management following a transference of equity in these companies to a non-Group entity resulting in their conversion into equity-method affiliates.