Business and Other Risks
The Aeon Group has designated risk management as a key management priority that all Group companies and organizational units are responsible for addressing. Under the direction of the Aeon Management Committee (Aeon’s highest management body), the Risk Management Committee discusses and decides matters concerning risks that cannot be addressed by individual companies.
Potential risk factors related to the Group's operations are described below. Forward-looking statements contained herein are forecasts based on the Company's judgment, targets, and assumptions as of the filing date of its latest securities report. Actual outcomes may differ from these forecasts. The risks enumerated below do not constitute an exhaustive list of all risks related to the Group’s operations.
Risks related to the Group’s operations.
Given these circumstances, in June 2020, the Group established the “AEON COVID-19 Protocol for Infectious Disease Control”, which specifies the Group’s standards for infectious disease control measures. Through the actions of all employees and with the cooperation of our customers, we are striving to reduce the risk of infection on an ongoing basis on the way to the establishment of a “new normal”. Furthermore, in November, the protocol was revised to include additional control measures including measures relating to the installation of ventilation and air purification equipment to prevent infection via airborne droplets within facilities, a framework for preventing infection from employees at facilities, and measures to prevent secondary infections following an outbreak. The Group will continue to employ a wide range of integrated infectious disease control measures with the aim of reducing infection risks and establishing safe and reassuring store and work environments.
In the event, however, that a worse-than-anticipated resurgence of COVID-19 infections causes the Group’s sales, logistics, or supply-chain activities to become restricted, or causes additional human suffering, the Group’s operations, financial condition, or earnings could be adversely impacted.
Nevertheless, higher-than-expected energy expenses or countermeasure-related costs incurred due to tightening of legal regulations or growing societal demands relating to the environment, or significant changes in agricultural or marine product quality or yields in connection with climate change, could adversely affect the Group’s operations, financial condition, or earnings.
To prepare for such events, the Group has taken measures based on a business continuity plan, including preparation of information infrastructure, setting up of disaster management bases, anti-seismic reinforcement of stores, conclusion of disaster preparedness agreements with local governments, and the securing of methods to obtain financing in the event of unforeseen events. Nevertheless, any disruption of the Group’s sales, logistics, or supply-chain activities or the occurrence of human suffering or physical damage due to events that exceed the Group’s assumptions could adversely affect the Group’s operations, financial condition, or earnings.
In addition, the new values and rapid changes to behavioral patterns brought about by COVID-19 have had a significant impact on customer consumption trends, and progress is being made with social reforms such as the advancement of digital transformation (DX). Although the Group views such changes in the business environment as opportunities for further growth and is moving rapidly to respond to such changes, it remains unclear when COVID-19 will be brought under control, and the pandemic could adversely affect the Group’s operations, financial condition, or earnings.
The assumptions for significant accounting estimates used for recording impairment losses on non-current assets are as described in “3. Analysis of Financial Position, Operating Performance and Cash Flows by Management (5) Significant Accounting Estimates and Related Assumptions (Impairment of Non-Current Assets)". In addition, the nature of the financial instruments held by the Group and their associated risks, are as described in “5. Status of Accounting, 1) Notes on the Consolidated Financial Statements (Financial Instruments)”.
The assumptions for significant accounting estimates used for recording deferred tax assets are as described in “3. Analysis of Financial Position, Operating Performance and Cash Flows by Management (5) Significant Accounting Estimates and Related Assumptions (Recoverability of Deferred Tax Assets)"