In response to the globalization of our business operations, we are fostering activities to identify a range of risks faced by our business sites in Japan and overseas, and to prevent the materialization of serious risks.
In FY2018, based on the risk management rules and the detailed rules on risk management, we conducted a risk assessment of domestic and overseas Group companies. Based on the results of this risk assessment, we will formulate and implement priority measures to address serious Group-wide risks identified by the Risk Management Committee, based on the expertise of each department in charge of risk. We also continue efforts to raise awareness by covering risk management issues in compliance newsletters.
The Risk Management Committee decided to conduct a yearly risk assessment of all companies of the Nabtesco Group both in and outside Japan from FY2018 (risks of domestic group companies and those of overseas group companies used to be assessed alternately every other year).
The Nabtesco Group has a system in place to ensure that profits and losses, capital efficiency, quality issues, extraordinary accidents and other matters concerning the execution of business operations are reported to the Board of Directors appropriately and in a timely manner, thereby detecting risks at their early stages and minimizing losses.
In FY2018, to properly implement risk and crisis management at the Nabtesco Group and to maintain and improve its corporate value, we conducted a risk assessment of Nabtesco and the group companies in Japan and overseas according to the risk management rules and the detailed rules on risk management.
Given that risks faced by corporations have been multiplying and becoming increasingly diversified, we identified serious Group-wide risks based on the results of the risk assessment and discussed the countermeasures to address them at a meeting of the Risk Management Committee, which was established in FY2016 as a forum for Group-wide risk management activities for prompt actions.
In FY2018, we managed the following types of risks and prevented losses.
We also ensure the rationality, appropriateness and legality of decision-making and manage risks through compliance with, and thoroughgoing implementation of, the Group regulations for responsibility and authority. We have also established company regulations that set forth reporting procedures in the event of accidents, disasters, critical quality problems and other incidents that may have a seriously negative impact on the Group’s business results, financial standing or credit. We thus have established a prompt and proper information communication and emergency response system in case of a contingency.
With regard to monitoring, expert members at the Headquarters, such as the Business Auditing Department, conduct cross-organizational audits of operational risk management and offer necessary and appropriate advice with regard to operational improvement.
As part of corporate crisis management, to prepare for major natural disasters such as large earthquakes and other contingencies, the Nabtesco Group has fostered activities to create BCPs since FY2010.
Risks faced by business sites were assessed in FY2015. The risk assessment of in-house companies and domestic Group companies revealed that natural disasters such as earthquakes would pose the greatest risk to the continuation of our business due to possible damage to facilities of Nabtesco and its suppliers. It therefore became imperative that BCPs be reviewed and enhanced.
In FY2016, the office responsible for promoting Group-wide BCP efforts was transferred out of the Compliance Division and put under the supervision of the Production Innovation Division. This change prompted the establishment of a business continuity system for our entire production activities as well as the revision of policies.
In FY2017, to increase the effectiveness of the BCPs, we started a reform of BCP systems for major sites in Japan. Additionally, to ensure that critical materials required for production can be purchased stably, we started efforts for BCPs for procurement, with an eye to mitigate risks associated with supply chains in an emergency.
In FY2018, to stimulate the activities for BCP, which tend to stagnate, we built a scheme by establishing BCP offices at each business base and working together under the leadership of the administrative office at the head office. We laid out a company-wide mid-term goal according to which all the major business bases should obtain a certificate of an organization contributing to national resilience (certificate of resilience) from the Cabinet Secretariat of Japan, which was created in 2016 as a system for recognizing effective business continuity activities. We commenced full-fledged operation by using it as a scheme for instilling the effectiveness of BCPs in the organizations.
As a result, certificates of resilience were obtained in FY2018 by the Iwakuni plant of TOYO JIDOKI CO., LTD., a Group company, and in FY2019 by the Yamagata plant of Nabtesco Automotive Corporation and the Kobe plant of the railway company within Nabtesco Corporation.
Based on these achievements, we will proceed with our activities so that the certificates will also be awarded to all the major business bases of the Nabtesco Group.
In FY2018, many suppliers attended seminars on BCP that we held. We expanded our BCP activities, not only for our measures but also for the area of supply chain measures. These activities also contribute to strengthening small and medium enterprises, which is encouraged by the government. We will strongly advance our BCP activities together with our suppliers.
In addition, a certificate of an organization contributing to national resilience (certificate of resilience) from the Cabinet Secretariat of Japan, which shows the national government's recognition of the effectiveness of a BCP, was received by the BCP of the plant in Iwakuni of TOYO JIDOKI CO., LTD. This news was publicly announced. (It is the first company in Yamaguchi Prefecture to obtain this certificate.)
Based on this achievement, we will make efforts to ensure the effectiveness of BCPs so that the said certificate will also be given to all major business bases of the Nabtesco Group.
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