Sustainability / Governance Risk Management
Basic Approach
Daicel recognizes the vital role of risk management and adheres to its Risk Management Regulations so that it responds appropriately to the risks inherent in its corporate activities and minimizes the impact should any such risks materialize.
Risk Management System
Initiatives of the Risk Management Committee
Daicel established the Risk Management Committee in 2006 to coordinate and promote the risk management for Daicel Corporation and its Group companies. Chaired by the corporate compliance officer and comprising the heads of each corporate support division as members, the committee meets once a year for a regular meeting and convenes extraordinary meetings as needed.
Each organization submits risk activity reports to the committee. At the regular meeting, the committee reviews the progress of risk-related measures based on those reports, and an inventory of potential risks, and it provides advice and support as necessary. Risks requiring a company-wide response are addressed by setting up projects and implementing other measures. Given the changes in business environment and social circumstances surrounding the Daicel Group, some risks considered to require closer scrutiny are designated as focus points, and each organization confirms and reviews their measures against these risks.
The committee reports on its discussions about the focus points, the status of countermeasures addressing risks that could have a major impact on the Daicel Group’s management, the risk management policy for the coming fiscal year, the status of business continuity plans (BCP), and other key issues during the Management Meetings and Board of Directors Meetings at the end of each fiscal year.
Initiatives of the Daicel’s Corporate Divisions and the Group Companies
Risk management conducted by each organization constitutes the backbone of these efforts for the Daicel Group as a whole.
Each organization implements its risk management in accordance with the following procedures.
- 1Identify and categorize risks that could have a major impact on the ability to achieve its business targets (Check)
- 2Categorize risks into three stages according to their frequency and degree of impact and identify risks requiring a priority response (Check)
- 3Consider the best possible countermeasures for preventing the risks from materializing and for minimizing damage in the event they materialize and formulate plans (improve the content of the countermeasures based on consultation with the managers in charge of risk management of each corporate support division of Daicel) (Act/Plan)
- 4Implement countermeasures (Do)
- 5Re-evaluate the risks (Check) and reconsider countermeasures based on the results (Act)
Each organization follows a check-act-plan-do (CAPD) cycle* from 1 through 5 by registering the risks and countermeasures into an intranet database and updating the status of implementation, leading to more appropriate countermeasures. At the end of each fiscal year, they prepare a risk activity report which is submitted to the Risk Management Committee to provide updates on their risk inventory, including the status of implementation, newly identified risks, and the results of their review of the focus points.
*Instead of a Plan, Do, Check, and Act (PDCA) cycle, the most widely known approach to continuous improvement, Daicel has adopted a CAPD improvement cycle to avoid the risk of overlooking crucial facts and realities that often lie hidden in the initial planning stage.
Targeted Risk Categories
- 1Risks related to business strategy
- 2Risks related to production technology, production equipment and utilities
- 3Risks related to construction and repair (including safety, quality, purchasing, etc.)
- 4Risks related to stable supply of products
- 5Risks related to intellectual property
- 6Risks related to purchasing and procurement
- 7Risks related to quality management and product liability
- 8Risks related to responsible care (including environmental problems), accidents, and disasters
- 9Risks related to information systems / networks and information security
- 10Risks related to group management / control
- 11Risks related to legal and corporate compliance
- 12Risks related to employment, human resources and employee fraud / crime
- 13Risks related to finance / investment, credit, finance, and accounting
- 14Risks related to public relations and inappropriate information use
- 15Risks related to antisocial groups and social communities
- 16Risks related to climate change
- 17Risks related to human rights
Focus Points for FY2023/3
In FY2023/3, a serious problem of “inappropriate conduct related to third party certification” by a Group company was found. Regarding this, the Group established an expert investigation committee. Based on the recommendations of this committee, and considering “risks related to quality compliance” to be of the utmost importance in risk management, the Group made concerted efforts to implement comprehensive checks for similar incidents and strengthen measures to prevent recurrence.
In FY2023/3, we also focused on the impact of risks related to economic security and other geopolitical issues on business and strategy. In addition to gathering information from outside experts, business units led efforts to identify the impact on each business.
However, changes in the external environment are becoming increasingly dramatic and a diverse range of previously unforeseen risks are emerging. To carry out proper risk management under such conditions, the Risk Management Committee believes it is necessary to conduct a radical review of the risk management system and the content of our initiatives, and has begun discussions toward this end.
Risk Assessments of Critical Cases
When deliberating on capital investments or investments and loan projects important to management strategy, Daicel extensively considers the risk inventory and countermeasures during the Management Meetings and other gatherings.
Under the total assessment system we have established, we take every possible precaution in terms of the environment and health and safety by comprehensively* assessing all business activities and diverse risks in advance.
*This covers new plans in all business activities, including research and development, production, consumption, and disposal.
Information Security
The Daicel Group takes information security measures relevant to the IT systems of the entire Daicel Group, in accordance with the Information Systems Security Policy.
Strengthening BCP Management
The Daicel Group formulates and manages business continuity plans (BCPs) to minimize damage and decreases in operational capability in the event of emergencies, such as major disasters or a pandemic caused by a new virus, as well as to maintain business operations or at least ensure the early resumption of business operations.
The Group organizes BCPs in three concrete stages, from “Preparedness” (BCP I) to “Initial Contingency Response” (BCP II) and “Resumption of Operations” (BCP III).
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BCP Ⅰ
- Development of infrastructure for software and hardware
- Anti-seismic reinforcement, measures against liquefaction and inundation, system redundancy (operational and information systems), secure methods of telecommunications and information gathering, reviews of stockpiled materials including spare equipment and supplies, safe storage of raw materials and products, measures for crime prevention and security, and other initiatives.
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BCP Ⅱ
- Initial response to contingencies
- Systematic repetition of drills for fast and effective decision-making and action; preparation and revision of procedural documents and manuals used in the event of emergencies and contingencies.
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BCP Ⅲ
- Systematic planning for recovery of all operations
- Assessment of damage at plants, suppliers, and customer locations toward formulating and executing optimal plans for the resumption of operations.
In addition, the Daicel Group has prepared “BCP for Individual Products” summarizing plans and information required to maintain or resume business operations for individual products or product groups as part of BCP III. It has also provided “Guidelines for formulating BCP” to stipulate the approach, procedures, and basic flow to maintaining or resuming business operations. Each business unit applies the guidelines to enable a faster and more appropriate response in the event of a disaster or damage.
We review the overall plan when appropriate to build an even more effective BCP.
In FY2023/3, we implemented the following initiatives.
Initiatives for FY2023/3
| Preparedness (BCPⅠ) |
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|---|---|
| Initial Contingency Response (BCPⅡ) |
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| Resumption of Operations (BCPⅢ) |
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*An assessment of response measures to prevent further damage or secondary accidents anticipating the occurrence of an accident
Response to Risks That Have Materialized
When risks materialize, the division responsible for the relevant risk category leads the response in line with the Emergency Risk Management Guidelines. The regulations designate the division responsible for each risk category as well as the divisions that will cooperate in the response. We also have the Disaster Response Rules based on the regulations and follow these rules in the event of an accident or disaster.