Risk Management

We Are Increasing Risk Sensitivity and Improving the Quality of Our Activities Through Further
Strengthening of Our Risk-Management Structures

Management Approach

Basic PhilosophyA System That Can Be Brought to Bear on Ever-changing Risks and Crises

Here at the 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 create 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 the 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 “Internal Control System Basic Policies” 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 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 the 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 year 2011 among 27 organizations, primarily business units within the Company. The number of organizations engaged in these actions has increased each year, reaching 165 in total, including those in Japanese and overseas affiliates, in fiscal year 2017. These organizations collectively account for around 93% of consolidated revenue, and the group is working to improve the effectiveness of these actions through inter-organizational cooperation and linkages among specialist divisions.

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”

●Major ESG Risks Faced by the 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, the Sekisui Chemical Group carried out a full-scale overhaul of its crisis management system in fiscal year 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 year 2015, reached a point where it has been able to maintain an average rate of over 90%.

The disaster-preparedness checklist, which consists of 33 items

Business Continuity Planning (BCP)Basic Philosophy Toward BCP

BCP is the very essence of business strategy. Therefore, the 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 regulations “Overseas Safety Management Regulations,” the Sekisui Chemical Group has formed a pyramid-shaped overseas crisis management organization with an officer in charge of overseas crisis management at the peak. (The officer in charge of overseas crisis management is answered to by [the head of the] Overseas Crisis-Management Office, to which the regional heads answer, and to who in turn the heads of locations answer.) It is primarily through this organization that the group supports employees traveling abroad, those stationed abroad, and locally based employees, using such means as sharing crisis management-related information, issuing advisories 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 these manuals are revised periodically and whenever deemed necessary.
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.

Major Initiatives

Improving the Effectiveness of Risk Management ActivitiesConducting Risk Management Training Sessions for Risk Managers

With the aim of improving the effectiveness of risk management activities, the group conducted risk management training sessions for the risk managers of the risk-management activities organization in fiscal year 2017. There were a total of 14 of these risk management training sessions conducted throughout the year, and there was a 93% participation rate among the risk managers targeted.

Performance Data

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