Risk Management

Daicel has been addressing risk management since 2006 by establishing the "Risk Management Committee," which coordinates and promotes risk management for Daicel Corporation and its Group companies. In FY2023/3, a serious problem was discovered regarding “inappropriate actions related to third-party certification” by a Group company, and in addition to the significant changes in the external environment, the significance of geopolitical and climate change risks has also increased, making it increasingly necessary to respond to a variety of risks. Therefore, in FY2025/3, we revamped the Risk Management Committee and strengthened the secretariat team of the committee to substantively drive activities, thereby establishing a system for more effective operations. Representatives from each corporate department, such as the Corporate Support Headquarters, the Corporate Planning & Strategy Headquarters, the SCM Headquarters, the Production Management Headquarters, and the Assessment Headquarters, participate in the secretariat and will essentially continue current activities while promoting necessary reforms in risk management regarding risk management activities.

The Risk Management Committee reviews the progress of risk response measures based on each organization's risk management activity reports and the results of the inventory of potential risks, and provides advice and support as necessary. Risks identified as requiring a Company-wide response are reported and discussed at management meetings, where appropriate actions are determined and countermeasures are implemented. In addition, considering the business environment and social circumstances surrounding the Daicel Group, risks with a significant impact on management are defined as "critical risks," and actions are clarified and countermeasures implemented after reporting and discussions at management meetings, etc.

In addition, 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 the business continuity plan (BCP), and other key issues during the Management Meetings and Board of Directors Meetings at the end of each fiscal year.

Risk management conducted by each organization constitutes the backbone of theseefforts for the Daicel Group as a whole.

Each organization implements its risk management in accordance with the following procedures.

Each organization follows a check-act-plan-do (CAPD) cycle^* from 1 through 5 by registering the risks and countermeasures in 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.

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.

The Daicel Group takes information security measures relevant to the IT systems of the entire Daicel Group, in accordance with the Information Systems Basic Policy.

The Group positons business continuity as one of the key management issue and organizes BCP in three concrete stages, from “Preparedness” (BCP I) to “Initial Contingency Response” (BCP II) and “Resumption of Operations” (BCP III).

In FY2026/3, we implemented a Company-wide project to improve our Business Continuity Plan (BCP).
Specifically, we adopted the Nankai Trough earthquake, which is anticipated as a major future disaster risk, as our main scenario, and focused on strengthening our business continuity capabilities by developing a highly effective BCP basic document.

In this initiative, we established a Company-wide, systematically structured Business Continuity Plan (BCP) based on the following six stages: "Formulation of basic policies," "Analysis of business impact,"Measures to address bottlenecks," "Consideration of alternative and recovery methods," "BCP document preparation," and "Establishment."
In particular, based on the premise of widespread damage caused by a Nankai Trough earthquake, we concretized damage estimates for each production site and business, identified critical businesses, and clarified recovery targets, thereby developing a feasible recovery plan.

The BCP basic document organizes the entire process from initial response to recovery and business resumption, clearly defining a crisis response system that prioritizes saving lives.
Furthermore, to strengthen the supply chain, we have implemented measures such as visualizing information on the manufacturing sites of raw material suppliers and conducting BCP surveys, thereby establishing a system that allows us to  promptly assess the impact on supply in the event of a disaster.

In addition, we are working to reduce the risk of supply disruptions through measures such as diversifying purchasing, considering BCP stock, and securing alternative logistics routes.
Furthermore, with a view to maintaining a stable supply to customers, we clarified priority suppliers, formulated inventory securing policies, and developed decision-making criteria formulated with practical operations.
Going forward, we will verify the effectiveness of the system and continuously improve it through periodic education, training, and reviews, and promote its adoption throughout the entire Group.
The Daicel Group aims to improve its business continuity capabilities by strengthening its resilience in preparation for large-scale disaster risks, including the Nankai Trough earthquake, thereby fulfilling its responsibility to provide a stable supply to society and establishing a sustainable business foundation.

When risks materialize, the division responsible for the relevant risk category leads the response in line with the Guidelines for the Response to Materialized Risks 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.