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Corporate Governance

Risk Management

Corporate GovernanceRisk Management

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Basic Approach

Policy
Basic Approach

With regard to business activities in the near future, we must precisely understand various business risks that may manifest in the future and ensure that we provide for them in order to implement our business strategy and increase corporate value in unstable global circumstances with increasing complexity and lack of clarity. With this awareness, we consider that it is necessary for each business unit of the Meiden Group to increase their sensitivity when considering business risks, and establish their own PDCA risk management systems while enhancing risk management during times of normal operation through the establishment of a specialized risk management department. Furthermore, we aim to create a system that is capable of responding to constant change and all risks by creating a risk management system for all companies that incorporates Business Continuity Management (BCM) in order to respond to risks to the business continuity of the entire Group.

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Initiatives to Establish a Risk Management System

Organization
Initiatives to Establish a Risk Management System

The Meiden Group deems risks to be “uncertain future events that could impede the achievement of plans,” and defines management as “devising and implementing response measures,” so risk management is defined as systematic management of risks. We have introduced control self-assessment to identify, evaluate, and control risks relating to the strategy and management of business units, including factories and affiliates, and the Internal Auditing Department is conducting verification of each business unit’s control self-assessment, as well as unique risk audits. The status of risk management ascertained through these internal audits is reported to the Board of Directors and relevant managers as appropriate. Going forward, we will continue to promote the establishment of a risk management structure, and work to foster even greater awareness of risk in employees, in order to completely achieve our business plan by precisely understanding and controlling a range of business risks.

Risk Management Structure

Operation of the Risk management Committee

Meidensha has established the Internal Control Promotion Headquarters in order to enhance governance of the Group, and has newly established the Risk Management Division within the headquarters. The Risk Management Division promotes the business self-assessment system in each business unit, and identifies key business risks to be dealt with by the entire Meiden Group in conjunction with the Headquarters Staff Business Unit and the various committees. The Risk Management Committee, which is convened by the Risk Management Division, is chaired by the head of the Internal Control Promotion Headquarters. It scrutinizes the Meiden Group’s business risks that have been identified by the Risk Management Division and provides an opportunity for key members of the Headquarters Staff Business Unit to debate response policies. Managers further debate business risks debated by the Risk Management Committee, stipulate key business risks facing the Meiden Group, and determine response policies.

The Meiden Group’s Risk Management Structure

The Meiden Group’s Risk Management Structure
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Crisis Management System

Initiatives
Risk Management Relating to Business Activities

Preliminary Risk Assessment

Preliminary risk assessment was initiated for the proposing business unit and the reviewing business unit to scrutinize information necessary to make management decisions relating to projects that may seriously negative impact the Group and provide it to managers. More than 100 projects have been reviewed to date. Projects subject to review are generally classified as large scale EPCs, M&A, partnerships, joint developments, new businesses, or other matters that require a resolution by the Executive Committee according to regulations.
In preliminary risk assessment, we encourage proposers to:

(1) Identify and assess the high risk factors of EPC project such as risk of construction works and project profit and take necessary measures to the project.
(2) Identify and assess contract risk such as commercial and technical conditions regard to tenders, partnerships etc., and enhance risk management to the relatives.
(3) Analyze risk from multiple perspectives by third party experts and take measures to reduce risk.

As mentioned above, in the preliminary risk assessment, we evaluate not only financial risks, but project risks, operation risks, etc. At present, preliminary risk assessment is operated by the Management Planning Headquarters and the Internal Control Promotion Headquarters, and their responsible executives decide whether or not to conduct preliminary review. Depending on the content, the Legal Division, the Overseas Strategy Headquarters, and the Accounting and Finance Headquarters participate in the assessment.

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Business Continuity Plan (BCP)

Business Continuity Plan (BCP)

Promotion of Business Continuity Plan (BCP)

We conducted the following initiatives to promote formulation of BCP as a project of the entire Meiden Group in fiscal 2019.

1. BCP Education:
In fiscal 2019, we conducted BCP education at all sites in Japan, including branches. The purpose of this education was to clearly explain the importance of BCP and the meaning of business continuity, and increase awareness for independent engagement with BCPs. Education was conducted 17 times in total at 15 locations in Japan. 730 people participated.
2. BCP Implementation:
Under the BCM Committee, which determines the Meiden Group’s BCP policy and measures, in fiscal 2019, the Meiden Group newly established the Corporate BCP Promotion Committee, BCP promotion committees for each business, Domestic Affiliate BCP Subcommittee, and the Working Group to Consider Priority Businesses, and promoted BCP throughout the Group. We also held workshops to create BCP manuals in conjunction with each of the aforementioned committees, and consider ways to enable each department to understand and create effective BCP.

New staff education

New staff education

BCP education (Chubu branch)

BCP education (Chubu branch)

Business BCP creation workshop

Business BCP creation workshop

Company-wide BCP creation workshop

Company-wide BCP creation workshop

“Disaster response card” carried by all employees

“Disaster response card” carried by all employees

BCM Promotion System

BCM Promotion System

Increasing Effectiveness of BCP

Based on resolutions of the BCM committee, we conducted the following initiatives to enhance disaster response measures.

1. BCP drills for business sites (FY2019: Numazu Works)
2. e-Learning for all Meiden Group employees (including Group companies)
3. Ongoing safety confirmation system drills and satellite telephone drills
4. Launch of the Meiden Disaster Portal, which is operated in times of disaster

BCP drill at the Numazu Works

BCP drill at the Numazu Works

BCP drill at the Numazu Works

 

Response to the novel Coronavirus Disease (COVID-19)

The global spread of the novel coronavirus disease (COVID-19) impacted the Meiden Group in ways such as suspension of production at overseas sites such as China, delay of parts procurement, and postponement of sales.
The Meiden Group established the Company-Wide Response Headquarters, created the Novel Coronavirus (COVID-19) Response Action Guidelines and the Novel Coronavirus (COVID-19) Response Manual, and is continuing to act with awareness of preventing infection after the state of emergency has been lifted (avoiding the three Cs and reducing commuting outside of the region of factories by 70%, etc.) with the health and safety of employees as our utmost priority, and reducing the impact on business activities such as by continuing operation of all factories in Japan in accordance with the guidelines.
Furthermore, we have ensured both the health and safety of employees and business continuity at overseas sites, by creating behavior standards to prevent infections, introducing working from home and rotation shifts, and accelerating the introduction of Internet communication tools, in accordance with relevant national government policies. We expect global restrictions on the movement of people to extend into the long term, so we will promote new work styles through greater use of Internet communication tools.

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Strengthening Information Security Management

Policy and Organization
Strengthening Information Security Management

The Meiden Group understands that ensuring the security of the information we handle is a most critical issue. We therefore protect information assets from disasters, accidents, criminal acts, errors, and other threats. We also maintain and enhance information management to prevent leaks, tampering, or theft.

Information Security Control System

Information Security Control System

Initiatives

In fiscal 2019, we are continuing to implement initiatives to reinforce information security for the entire Meiden Group.

1. Analysis of Incidents and Countermeasures for Each Cause

We conducted analyses and implemented measures to cover both aspects of hardware/software and human factors: the former includes data protection from unauthorized logins, virus infections from suspicious emails, targeted email attacks, etc. as well as the theft, loss, or mishandling of information devices.

2. Sustainable Information Security Measures

We had previously conducted initiatives based on “defense,” but we are now working to implement sustainable security measures in the areas of “prediction,” “defense,” “detection,” and “response.” We introduced the Security Operation Center (SOC) in fiscal 2017, established a detection system that operates 24 hours per day, 365 days per year, and in fiscal 2019 we installed next-generation antivirus software on all computers, in order to enhance detection.
We established the Meiden Computer Security Incident Response Team (CSIRT), joined the Nippon CSIRT Association, and promoted the establishment of an internal system to speed up responding to incidents in fiscal 2019, in order to enhance response.
Going forward, we will continue to strengthen hardware and software measures and continue to conduct personnel measures, such as information security education and suspicious email drills. We are continuously rolling out measures for information security on a group-wide basis.

3. Enhancement of Supply Chain Information Security

Since fiscal 2017, we have continuously conducted activities to enhance information security together with our suppliers. We ensure that suppliers are aware of information security measures as management issues, and we hold training and information sessions as required.
In fiscal 2019, we began conducting site visits for some suppliers and activities to confirm the status of measures. In this way, we are continuing to conduct activities to enhance information security throughout the entire supply chain.

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