Sustainability / Governance Risk Management

Basic Approach

The Daicel Group recognizes the vital role of risk management, and responds appropriately to the risks inherent in its corporate activities and minimizes the impact should any such risks materialize.

Risk Management System

Past Initiatives for Risk Management

Daicel has been addressing risk management since 2006 through the Risk Management Committee, which coordinates and promotes 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 met once a year for a regular meeting and convened extraordinary meetings as needed.
Each organization submitted risk activity reports to the committee. At the regular meeting, the committee reviewed the progress of risk-related measures based on those reports, and an inventory of potential risks, and it provided advice and support as necessary. Risks requiring a company-wide response were 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 were designated as focus points, and each organization confirmed and reviewed their measures against these risks.
The committee reported 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 plan (BCP), and other key issues during the Management Meetings and Board of Directors Meetings at the end of each fiscal year.

Fundamental Review of Risk Management System from FY2025/3

Considering the changes in the circumstances surrounding the Daicel Group, we have fundamentally reviewed our approach to risk management described above from FY2024/3 onward. This review was prompted by:

  • The discovery in FY2023/3 of a serious problem of “Inappropriate Actions Related to Third-Party Certification” by a Group company.
  • The increasing significance of geopolitical and climate change risks, in addition to the rapid changes in the external environment in recent years, requiring an increasingly comprehensive response to diverse risks.

As a result, we revamped the Risk Management Committee in April 2024 and, as a first step, strengthened the secretariat team of the committee to substantively drive activities, thereby establishing a system for more effective operation. The secretariat includes representatives from various corporate divisions such as the Corporate Support Headquarters, the Corporate Planning & Strategy Headquarters, the SCM Headquarters, the Production Management Headquarters, and the Assessment Headquarters, and will essentially continue current activities while promoting necessary reforms in risk management. Specifically, we will enhance discussions and information exchange with each department, gather information from internal and external experts, share such information internally, and consider the implementation of taking an inventory of potential risks and the installation of management tools.

Furthermore, we recognize "taking an inventory of potential risks," which is a bottom-up approach to risk aggregation, as an important activity and re-implemented it with a clear understanding of its purpose and methodology. In implementation, we assigned key personnel to each department to lead risk identification and promotion within their respective areas, and also tasked them with serving as a consultation desk for risks identified by other departments.

Furthermore, regarding the "focus points" presented by the Risk Management Committee to the entire Daicel Group, we verified the impact of tariffs on the Group’s business, with a focus on the strengthening of domestic industry protection policies following the change in administration in the United States for FY2025/3.
Going forward, under the new risk management system, we will oversee and promote all activities related to risk management within the Group.

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.

  1. 1Identify and categorize risks that could have a major impact on the ability to achieve its business targets (Check)
  2. 2Categorize risks into three stages according to their frequency and degree of impact and identify risks requiring a priority response (Check)
  3. 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)
  4. 4Implement countermeasures (Do)
  5. 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

  1. 1Risks related to business strategy
  2. 2Risks related to production technology, production equipment and utilities
  3. 3Risks related to construction and repair (including safety, quality, purchasing, etc.)
  4. 4Risks related to stable supply of products
  5. 5Risks related to intellectual property
  6. 6Risks related to purchasing and procurement
  7. 7Risks related to quality management and product liability
  8. 8Risks related to responsible care (including environmental problems), accidents, and disasters
  9. 9Risks related to information systems / networks and information security
  1. 10Risks related to group management / control
  2. 11Risks related to legal and corporate compliance*1
  3. 12Risks related to employment, human resources and employee fraud / crime*2
  4. 13Risks related to finance / investment, credit, finance, and accounting
  5. 14Risks related to public relations and inappropriate information use
  6. 15Risks related to antisocial groups and social communities
  7. 16Risks related to climate change
  8. 17Risks related to human rights
  • *1Includes risks related to bribery and other corruption
  • *2Includes risks related to occupational health and safety

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.

Total Environmental, Health and Safety Assessment System

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.

Information Security / Information Management

Strengthening BCP Management

The Daicel Group formulates and manages business continuity plan (BCP) 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 BCP in three concrete stages, from “Preparedness” (BCP I) to “Initial Contingency Response” (BCP II) and “Resumption of Operations” (BCP III).

  1. 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.
  2. 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.
  3. 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 are continuously reviewing the overall plan as necessary and will address it again as a company-wide project in FY2026/3 to build an even more effective BCP.

In FY2025/3, we implemented the following initiatives.

Initiatives for FY2025/3

Preparedness (BCP I)
  • Consider and implement preventive measures through risk assessments, and post-measures through crisis assessments for processes dealing with self-reactive substances
  • In preparation for material procurement risks, procure long lead-time components needed for the maintenance of proper inventory levels
Initial Contingency Response (BCP II)
  • The planned installation of remote monitoring cameras and remote firefighting equipment
  • Review the information sharing system among sites in the company-wide disaster preparedness system
  • Review and consider disaster preparedness measures for wide-area disasters
  • Conduct disaster drills at each site, and confirm the operation of the company-wide information sharing system
Resumption of Operations (BCP III)
  • Prepare BCP for each product
  • Start considering a review of the systematization and operation mechanisms for the business continuity plan related to our Group's procurement, production, and sales through a company-wide project

*An assessment of response measures to prevent further damage or secondary accidents anticipating the occurrence of an accident

Emergency response system for large-scale disasters and disaster prevention drills (Process Safety and Disaster Prevention)

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 and the Safety and Quality Risk Management Regulations. The regulations designate the division responsible for each risk category as well as the divisions that will cooperate in the response. In the event of an accident or disaster, we will respond in accordance with the Safety and Risk Response Bylaws based on the Safety and Quality Risk Management Regulations.