Risk Management

In order to realize our Long-term Vision against the backdrop of a drastically changing business environment, while earning stakeholders’ trust and confidence as we meet expectations, it is imperative that we take on risks in a proactive and decisive manner. To this end, we recognize that our ability to manage risk while enhancing the Group’s resilience are of the utmost importance. With this in mind, SEKISUI CHEMICAL Group has positioned risk management as a key foundation of its management.

In the past, we have focused on identifying and responding to risks in each business and organization (bottom-up approach) in accordance with the characteristics of the Group, which has a diverse range of businesses and business categories. Under the current Medium-term Management Plan, we are following this same approach, while at the same time adopting and reinforcing a top-down structure and system to identify risks that could lead to serious Group-wide incidents (significant Group-wide risks).
Under the next Medium-term Management Plan, we will work to strengthen our global risk detection capabilities while enhancing our risk mitigation capabilities through the combined efforts of each business, organization, and specialized headquarters departments.

In the wake of the outbreak of COVID-19 as of the end of fiscal 2019, Corporate Headquarters took the lead in developing and renewing BCPs for all organizations while putting in place a BCM system under the current Medium-term Management Plan.
Under the next Medium-term Management Plan, we will work to establish autonomous training programs while conducting reviews for each organization and constantly raising performance.

As the business environment in which companies operate becomes increasingly uncertain and complex, SEKISUI CHEMICAL Group believes that increasing risk sensitivity among employees is essential to properly handling such risks. On this basis, the Group continuously runs PDCA cycles in line with the international standard for risk management ISO 31000. By making it mandatory to comprehensively uncover the variety of risks associated with the business objectives of each organization, quantify these risks from the perspectives of their consequences and likelihood of occurring, ensure that dedicated offices in Corporate Headquarters identify serious Group-wide major risks that could lead to a serious Group-wide incident—in the five fields of safety, quality, accounting, legal and ethics, and information management—, and undertake assessments through risk management activities by organization, we established an ERM system that is shared and managed within the Group and are continuously verifying the effectiveness of ERM by reviewing uncertainties on a regular basis.
Starting in fiscal 2023, the overseas regional headquarters will identify risks specific to each overseas region and conduct assessments at divisional companies in each region together with serious Group-wide major risks while promoting risk management activities by specialized area in a similar manner as in Japan.

In an increasingly complex external and internal environment, it is extremely difficult to accurately assess the risks that may emerge moving forward. SEKISUI CHEMICAL Group believes that increasing risk sensitivity among employees is essential to properly handling such risks, and the Group continuously runs PDCA cycles in line with the international standard for risk management ISO 31000.
These activities were launched during fiscal 2011 among 27 organizations, primarily business units. The number of organizations engaged in these actions has increased each year, reaching 170 in total, including Japanese and overseas affiliates accounting for 99% of consolidated sales in fiscal 2022. Activities have also taken root in the R&D divisions of all divisional companies.

To make clear which risks the Group as a whole should prepare itself for, in terms of both organization-specific risk management and Group-wide risk management, we have broadly categorized these as business environment, strategic, and operational risk, and have further subcategorized each category in order to comprehensively identify risk.
Based on the different risk criteria for organization-specific risk management and Group-wide risk management, we quantitatively assess the risk level for each of the identified risks using a risk matrix that combines results and likelihood of occurrence.

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 enhancing that system and its mechanisms ever since. Crisis management activities are conducted in accordance with the SEKISUI CHEMICAL Group Crisis Management Guidelines. A crisis management liaison committee consisting of each Corporate Headquarters’ group and divisional company representatives holds regular meetings to review case studies and conduct training.
Specifically, by means of drills attended by members from initial response headquarters across the Group, we are conducting a review of the Emergency Situation Initial Response Procedures Manual and confirming coordination.
We provide an Emergency Situation Initial Response Procedures Manual to all employees every year, so that they can take the appropriate action in the event of an emergency. Moreover, in fiscal 2019 we installed a safety confirmation system in various forms, including the work mobile telephones of all employees, which enables rapid confirmation of the safety of our employees in emergencies.
With regard to measures designed to counter the spread of infectious diseases, in March 2020 we launched an infectious disease emergency task force, set up a special page dealing with infectious diseases on the Company intranet and have been working to disseminate action guidelines and share strategies on how best to prevent the spread of infectious diseases. The safety of our employees is our top priority, and in the event that an infected person is confirmed within the Group, we have been working to promptly assess the situation and share the information with the relevant parties. As a result, up until the time the infectious diseases emergency task force was disbanded in September 2022, there had been no major impact on business.

BCP is positioned as an essential tool to support business strategies. 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, and is promoting the formulation of business continuity plans and implementation of business continuity management (BCM) based on ISO 22301, the standard for implementing BCM. In light of the recent increase in the number of threats, as well as the growing need to determine how to continue operations in the event of a medium- to long-term loss of key management resources, and to prepare for such an event, in fiscal 2021 the Group revised the wording and formulated its initial response plan (ERP) that places the protection of human life as the highest priority at all organizations as a Group-wide initiative. In addition, major business organizations throughout the Group implemented efforts to put in place resource-based all-hazard BCPs to address every type of crisis event. In fiscal 2022, we declared desktop training mandatory for all relevant organizations, verified the effectiveness of and made revisions to the initial response plan (ERP) document, and completed the PDCA cycle of the BCM cycle. In addition, with the presidents of each division company in attendance, we also carried out a task force joint drill designed to improve the resilience of the division companies. In the years to come, we aim to establish autonomous BCM operations in each activity organization. By making these efforts going forward, even in an emergency situation that could threaten the continuance of operations, we will minimize losses to our organization and customers while continuing to fulfill our social responsibilities as a company by responding quickly and restoring important functions as soon as possible.

Based on the Overseas Safety Management Regulations, SEKISUI CHEMICAL Group divides the world into six crisis management regions. The Overseas Crisis Management Office (Risk Management Group, ESG Management Department) plays a central role in sharing crisis management information with business travelers, expatriates, and local employees, alerting them in a timely manner and instructing them on travel restrictions in addition to other activities in emergency and non-emergency situations. As the number of overseas Group locations increases with each passing year, we established Regional Headquarters in each of the four main regions and appointed the person responsible for the Regional Headquarters as the Regional Head. In the event of a crisis event, the Regional Head and the Overseas Crisis Management Office will work together to collect information and take initial action. We have also established a highly specialized support framework in coordination with our security assistance and medical assistance partners. 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, provides country-specific training focusing in particular on infectious diseases, and educates employees on the basics of crisis management and specific countermeasures.