We Are Increasing Risk Sensitivity and Improving the Quality of Our Activities Through Further Strengthening of Our Risk-management Structures
Basic PhilosophyA System That Can Be Brought to Bear on Ever-changing Risks and Crises
Here at Sekisui Chemical Group, we are working to build a risk management structure that unifies “risk management,” which aims to prevent risks from occurring in the first place, and “crisis management,” which responds to serious risks that have manifested. Through this unification of concepts, we aim to build a system that can be brought to bear on ever-changing risks and crises.
Management StructureExplicitly State Risk Management Policies in Writing and Share Them with All Company Employees
In Sekisui Chemical Group’s risk management structure, the head of the HR department, who is also a Director and Managing Executive Officer, holds ultimate responsibility, and the Risk Management Group of the HR Department at headquarters handles day-to-day risk-management operations.
We are striving to publicize and thoroughly install among the directors, executive officers, and employees of Sekisui Chemical and its Group companies the “Sekisui Chemical Group Risk Management Guidelines,” which were established based on the revised “Basic Philosophy on Internal Corporate Governance Systems” of April 2015, to identify significant risks and to prevent them from manifesting by centrally and comprehensively collecting and evaluating information about risks. In the event that a significant risk does become manifest, an Emergency Response Headquarters will be established based on the “Sekisui Chemical Group Crisis Management Guidelines,” creating a framework capable of swiftly and appropriately handling the situation.
In preparation for such rare contingencies, a code of conduct regarding this framework, to be referred to by all employees, has also been shared with all group employees via the group intranet and other means.
Bolstering Risk Management (Prevention) StructuresIncreasing Risk-sensitivity Using PDCA Cycles
It is extremely difficult to accurately monitor for risks that could foreseeably occur at some point in the future, as our corporate activities become more complex. We at Sekisui Chemical Group believe that increasing risk sensitivity among employees is essential to handling such risks, and the Group continuously runs PDCA cycles in line with the international standard for risk management ISO 31000.
These activities launched during fiscal 2011 among 27 organizations, primarily business units within the Company. The number of organizations engaged in these actions has increased each year, reaching 173 in total, including Japanese and overseas affiliates, in fiscal 2018. In fiscal 2019, we will bring the number of organization to 177 while aiming to cover around 93% of consolidated revenue. The Group is also working to improve the effectiveness of these actions through inter-organizational cooperation and linkages among specialist divisions.
*1Temporary decline resulting from a large-scale M&A. Recovery is expected once new organizations begin participating in Risk Management Activities.
Notes:The ratio of consolidate revenue for the entire Group accounted for by those organizations involved in Risk Management Activities serves as an indicator that considers the extent of impact on Sekisui Chemical Group.
Identifying RisksListing of Risks for Which the Group Should Be Prepared, Including ESG Risks
To make clear which risks the Group as a whole should prepare itself for, the scope of anticipated risks has been identified comprehensively, going beyond ESG risks alone, and these risks have been compiled into the “Sekisui Chemical Group Risk List.” In 2018, this list of risks was revised based on changes in the surrounding environment, and has been newly implemented after organizing the list into 120 categories.
●Major ESG Risks Faced by Sekisui Chemical Group
- Environmental risks (soil and air pollution / leaks of harmful substances / tightening of environmental regulations, etc.)
- Societal risks (worsening of relations with local communities / rumor-based reputational harm/spread of communicable diseases / breakdowns of functions provided by public bodies, etc.)
- Legal risks (unethical or criminal behavior / volitions of the Monopolies Act or fraudulent transactions / unauthorized overwriting of data / behavior constituting harassment / sudden changes to laws or regimes / infringements on intellectual property rights, etc.)
- Quality-related risks (responsibility for manufactured goods / product recalls / mistakes during construction, etc.)
- Human resources / labor risks (labor practices that violate the law / discrimination / changes to the composition of employees, etc.)
- Safety risks (employee health and safety / workplace accidents / the safety of employees stationed or traveling abroad, etc.)
- Financial risks (various risks relating to finances, accounting, and taxes)
- Information-management risks (information leaks / destruction or loss of electronic data, etc.)）
- Management decision- and business design-based risks (unclear vision and management policies / defects in work processes / product-related incidents, etc.)
- Affiliated company and supplier risks (scandals at affiliated companies / disasters or accidents affecting affiliated companies, etc.)
Bolstering the Crisis-management SystemThe Operating of the Crisis-management System
Based on its experience during the Great East Japan Earthquake, Sekisui Chemical Group carried out a full-scale overhaul of its crisis management system in fiscal 2011 and has been refining that system ever since.
Specifically, the Group, among other initiatives, has been conducting drills (at least twice yearly) based on the Emergency Response Headquarters Procedures Manual, annual education (for all employees) using the Emergency Situation Initial Response Procedures Manual, and organizing disaster-preparedness systems based on disaster-preparedness checklists in all offices (around 800 within Japan).
As of January 2012, the rate of sufficiency regarding disaster-preparedness systems, in reference to the Cabinet Office’s “Table of Self-evaluation Items,” averaged 41% among all offices. Because of instituting concrete measures, however, the Group has, since fiscal 2015, reached a point where it has been able to maintain an average rate of over 90%.
The Operating of the Crisis-management System
In preparation for emergency situations, Sekisui Chemical Group implements Companywide response measures for emergencies as provided for in the Crisis Management Guidelines and the Emergency Response Headquarters Procedures Manual. Through training and providing the Emergency Situation Initial Response Procedures Manual to all employees, including temporary and other staff, who carry this manual at all times, we ensure that all employees can take the appropriate action in the event of an emergency. In 2018 we also prepared an English version of our Emergency Situation Initial Response Procedures Manual, which has been provided to those employees that require English.
Emergency Response Headquarters Procedures Manual (April 2019 revised edition)
Initial Response Procedures in the Event of a Large-scale Earthquake
Emergency Response Headquarters Functions
Contact the Company/headquarters from the site immediately after the emergency occurs
Business Continuity Planning (BCP)Basic Philosophy Toward BCP
BCP is the very essence of business strategy. Therefore, Sekisui Chemical Group, whose adoption of a Company system has made the range of the business in which it engages broad, has decided on a basic posture of having those in charge of each line of business (the heads of business units, the presidents of business companies, etc.) determine the necessity of BCP individually, based on the particulars of the business in which they are engaged. Because of this, the Group has created a support system, such as by establishing “Guidelines for Formulating BCP (BCM)” and drawing up a checklist for performing this formulation. Each person in charge of a line of business is recommended to formulate business-continuity plans and to implement business continuity management (BCM) based on these guidelines and on ISO 22301, a standard for methods of implementing BCM.
Crisis Management Systems OverseasA Support System Centered on Overseas Crisis-management Organizations
Based on its corporate “Overseas Safety Management Regulations,” Sekisui Chemical Group supports employees traveling abroad, those stationed abroad, and locally based employees in a variety of ways. This includes classifying global activities into nine regions, sharing crisis management-related information spearheaded mainly by the Overseas Crisis-management Office, calling for caution and attention to important matters in a timely manner, instructing employees about travel restrictions, and implementing other emergency-response measures.
As the number of Group locations increases with each passing year, crisis-management manuals have been organized at each factory, office, or other business location based on support provided by the Overseas Crisis-management Office and based on the Crisis Management Guidelines. The details of each correspond to the situation in which the individual overseas sites are positioned. In fiscal 2018, revisions were made to manuals at 140 sites (some manuals were newly prepared).
Regarding risks particular to overseas sites, including civil unrest, terrorism, and infectious diseases, the Group has organized a support system based on signing contracts with crisis-management companies, such as those that provide security assistance and medical assistance.
Additionally, the Group conducts training sessions for employees seconded overseas before they are dispatched abroad, provides pre-trip e-learning for employees sent on business trips, and explains its overseas crisis management system to its employees; it also issues warnings about risks overseas.
In recent years, in particular, business trips and secondments to frontier regions have become more common, and thus the Group has stepped up its partnerships with Japanese diplomatic missions abroad and has created and distributed region-specific crisis management handbooks detailing the types of risks and levels of danger for each region, 20 in total.
Global Crisis Management Guidelines
Improving the Effectiveness of Risk Management ActivitiesIntroducing the Digital Dashboard
In fiscal 2018, we introduced the Digital Dashboard, a database covering the risk management implementation status for each Group company. This move has enabled us to make Group-wide assessments of the degree to which risk has been mitigated at each company, as well as the change in risk resulting from developments in the surrounding environment. This Digital Dashboard also helps to enhance risk awareness among employees through various measures including the preparation of risk matrices and heat maps.
We enriched the contents of our intranet-based e-Learning programs for those on overseas business travel. We also prepared quiz-format content that incorporates the circumstances, customs, and other aspects of each country and region. By including detailed explanations for answers, etc., we are working to provide those on overseas business travel with an insight into the types of acceptable behavior at each local site and to increase awareness toward safety.
Conducting Risk Management Training Sessions for Risk Managers
IIn fiscal 2018, risk management training was provided to 19 newly appointed risk managers.
Data on the Number of Organizations Engaged in Risk-management Activities
Number of Organizations Engaged in Risk-management Activities
Data Relating to the Sufficiency Rate for Disaster-preparedness Systems
Disaster-preparedness Sufficiency Rate (Average for Japanese Business Sites) Over Time