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Top 3 risk management strategies in Japan

A vital part of any business plan is risk management. It requires a company to look at the world and foresee what will happen in the future before it happens, and then take steps or actions toward solving problems that may arise.

With Japan being one of the most competitive markets in Asia, companies often face stiff competition from their rivals when attempting to find success in the country. Risk management strategies are therefore crucial for these businesses.

We will be looking at three key risk management strategies in Japan: reducing operational costs by outsourcing, creating an effective crisis communication plan and improving staff morale through rewards systems.


Let’s begin with how a company can reduce its operational costs.

Outsourcing refers to contracting out some functions which could otherwise have been executed within the company’s premises.

In Japan, this often means turning to local staffing companies to keep operational costs low.

By outsourcing simple processes such as data entry, customer service and even accounting functions, businesses can use those resources instead to focus on more critical areas that will boost productivity and improve overall business strategy.

Effective crisis communication

Another method is to create a crisis communication plan that will allow a company to minimise the damage that could have been done by a crisis, whether from an external or internal source.

Poorly handled concerns could lead customers to lose confidence in a company and drive them away from doing business with you.

These incidents are published online through social media channels such as Facebook and Twitter. For example, what would happen if a company had a factory caught fire? The first thing they need to do is set up an emergency response team.

This would involve going into damage control mode, which could include temporarily suspending all operations on their website.

When a company successfully manages to deal with the crisis quickly, it will build trust among its customers and give consumers more faith in buying from them again.

Improving staff morale

In addition, companies should try to improve staff morale as much as possible. In Japan especially, businesses often fall behind other countries when offering incentives such as cash prizes or bonuses for excellent work performance within their organisation.

But these small rewards can make a big difference, primarily if the employee works very hard but does not have any external motivation from family or friends to keep going.

Three more strategies

  • A traditional approach is that of ‘delayering’. For example, a company can have several divisions, each with its head. An excellent way to manage risks within each division is to significantly reduce the heads’ power and decision-making capability to prevent issues from escalating quickly. The more leaders, the higher the possibility of mismanagement leading to disaster or bankruptcy. A similar idea applies to hiring people: having too many personnel means an increased risk of spreading information. This might be something that happened in the case of NHK (Japan Broadcasting Corporation), where one employee was punished severely for sharing the results of an internal research paper on the Fukushima nuclear disaster on Twitter.
  • Decentralise management – high-ranking managers need to communicate what they expect from their employees while refraining from micromanaging these. As it is often stated, autocracy leads to poor decision making; this also applies to risk management. For example, having several independent divisions with their own goals can receive conflicting reports about affected areas post-earthquake or tsunami. Hence centralising risk management efforts would help avoid such problems.
  • A shift in mindset: it is better to be an episode too early than one too late in the risk management world. For example, spending money on safety measures before a disaster occurs might be seen as uneconomical to some; however, putting these off until after the unfortunate event might result in just that – misfortune.

In conclusion

Risk management is a complicated process that needs to consider different factors that could potentially negatively impact the company’s bottom line.

However, by designing and implementing top-notch strategies such as those listed above, companies can significantly reduce their business costs and grow their customer base at the same time!

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Leighton Jon
the authorLeighton Jon