Olympus 2007 Annual Report Download - page 22

Download and view the complete annual report

Please find page 22 of the 2007 Olympus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 62

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62

Internal Controls
> Based upon the principles of its “Social IN” management
philosophy, Olympus endeavors to achieve operational effi-
ciency, financial reliability, compliance with laws related
to its business activities, safeguard of its assets and various
other corporate objectives. In addition, Olympus is work-
ing to build upon and consistently improve its sound inter-
nal control environment and system to be able to manage
risk factors that can potentially impact corporate value.
Olympus has established an Internal Audit Department
independent from business divisions in order to carry out
internal auditing functions.
Strengthening Internal Control Systems
> Olympus has already set in place a basic policy regard-
ing the internal control system that fulfills the mandates of
Japan’s new Corporate Law enacted in May 2006, which
requires that companies establish systems to assure the pro-
priety of their business operations. To ensure that assess-
ments and reports on internal controls related to financial
reporting are reliable, Olympus has established a special
Groupwide department and is proceeding with prepara-
tions, in line with requirements of the Financial Instruments
and Exchange Law scheduled to come into force in the
fiscal year ending in March 2009.
Compliance
> To ensure compliance with laws and its Articles of
Incorporation, Olympus formulated the Olympus Group
Corporate Conduct Charter and the Olympus Group Code
of Conduct, as well as a variety of basic policies and inter-
nal regulations. Olympus set up a Compliance Department
that, in addition to controlling compliance activities, rais-
es awareness and conducts training about compliance
for directors and employees. We have also established a
Help Line to which issues and consultations about compli-
ance may be addressed. Olympus has constructed a system
whereby the details of compliance issues that arise may
be reported to the Board of Directors and the Board of
Auditors through a director in charge of compliance.
Risk Management
> To avert losses in relation to its businesses and assets,
Olympus has put in place a risk management system
under which the Board of Directors and the Executive
Management Committee conduct thorough deliberations
and implement appropriate decision-making procedures.
Olympus has formulated risk management regulations and
works to ensure that all business divisions have a firm
awareness of the risks that they face and to implement
measures for avoiding the occurrence of risk factors. The
President chairs the Risk Management Committee, which
meets regularly, and Olympus is taking a variety of other
measures to shore up and maintain its risk management
structure. Olympus has also constructed a system for rapid
response to emergencies. In the event that a significant
incident occurs, business divisions make emergency reports
to the Risk Management Committee and related parties
through the Risk Management Bureau set up as a contact
point at Group headquarters. Countermeasures are then
determined by the President.
Business Risks
> As of March 31, 2007, the main risk factors having the
potential to impact the performance of the Olympus Group
were as follows.
RISKS RELATED TO SALES ACTIVITIES
1) Price competition in the market for digital cameras is
increasingly severe, and a sharper than expected decline
in digital camera prices that cannot be offset through
the Group’s cost reduction measures may impact Group
earnings.
2) In the Medical Systems Business, future reforms to
healthcare legislation may lead to increased costs in order
to respond to such changes. In addition, Group earnings
may be impacted in the event that the price for medical
equipment declines as a result of policies placing caps on
medical expenses.
3) In the Life Science Business, a high percentage of earn-
ings are generated by supplying systems for research fund-
ed by the budgets of various nations. Accordingly, Group
earnings may be impacted in the event of smaller nation-
al budgets that result from macroeconomic changes.
20 OLYMPUS 2007
01-24.indd 2001-24.indd 20 07.8.3 0:16:40 PM07.8.3 0:16:40 PM