Risk Management

We Are Increasing Risk Sensitivity and Improving the Quality of Our Activities Through Further Strengthening of Our Risk-management Structures

Management Approach

Basic PhilosophyA System That Can Be Brought to Bear on Ever-changing Risks and Crises

Here at Sekisui Chemical Group, we are working to build a risk management structure that unifies “risk management,” which aims to prevent risks from occurring in the first place, and “crisis management,” which responds to serious risks that have manifested. Through this unification of concepts, we aim to build a system that can be brought to bear on ever-changing risks and crises.

  • 8-001

Management StructureExplicitly State Risk Management Policies in Writing and Share Them with All Company Employees

To date, the head of the HR department has overseen Sekisui Chemical Group’s risk management structure and systems. Ultimate responsibility has shifted to the Managing Director of the ESG Management Department, who now handles day-to-day risk management operations from April 2020.

We are striving to publicize and thoroughly install among the directors, executive officers, and employees of Sekisui Chemical and its Group companies the “Sekisui Chemical Group Risk Management Guidelines,” which were established based on the revised “Basic Philosophy on Internal Corporate Governance Systems” of April 2015, to identify significant risks and to prevent them from manifesting by centrally and comprehensively collecting and evaluating information about risks. In the event that a significant risk does become manifest, an Emergency Response Headquarters will be established based on the “Sekisui Chemical Group Crisis Management Guidelines,” creating a framework capable of swiftly and appropriately handling the situation.
In preparation for such rare contingencies, a code of conduct regarding this framework, to be referred to by all employees, has also been shared with all group employees via the group intranet and other means.
In the New Medium-term Management Plan, which will get its start in fiscal 2020, we will deploy ERM* in a way that fuses our existing organization-specific risk management activities with our Group-wide risk management activities. In addition to domestic organization, we will accelerate the deployment of existing organization-specific activities in overseas Group companies (including M&A and new businesses), and instill these throughout every corner of the Group. Moreover, we will newly carry out risk assessments specific to each business domain and region as a mode of Group-wide risk management. At the same time, we will identify and evaluate major risks throughout the Group and incorporate them into action plans, design Group-wide targets, and manage progress.

  • ERM: ERM, which stands for Enterprise Risk Management, refers to the Group-wide mechanisms and processes involved in Group-wide and integrated risk management and risk management activities.

Bolstering Risk Management (Prevention) StructuresIncreasing Risk-sensitivity Using PDCA Cycles

It is extremely difficult to accurately monitor for risks that could foreseeably occur at some point in the future, as our corporate activities become more complex. We at Sekisui Chemical Group believe that increasing risk sensitivity among employees is essential to handling such risks, and the Group continuously runs PDCA cycles in line with the international standard for risk management ISO 31000.
These activities were launched during fiscal 2011 among 27 organizations, primarily business units within the Company. The number of organizations engaged in these actions has increased each year, reaching 175 in total, including Japanese and overseas affiliates, in fiscal 2019. While steps have again been taken to reorganize and add to the number of organizations, the number of organizations remains the same at 175 in 2020. The percentage of consolidated revenue covered is also unchanged at approximately 93%. In addition, the Group is also working to improve the effectiveness of these actions through inter-organizational cooperation and linkages among specialist divisions.

  • 8-014
  • *1
    Temporary decline resulting from a large-scale M&A. Recovery is expected once new organizations begin participating in Risk Management Activities.
  • Notes:
    The ratio of consolidate revenue for the entire Group accounted for by those organizations involved in Risk Management Activities serves as an indicator that considers the extent of impact on Sekisui Chemical Group.

Identifying and Assessing RisksRisks for Which the Group Should Be Prepared

To make clear which risks the Group as a whole should prepare itself for, in terms of both organization-specific risk management and Group-wide risk management, we have broadly categorized these as business environment, strategic, and operational risk, and have further subcategorized each category in order to comprehensively identify risk.
Based on the different risk criteria for organization-specific risk management and Group-wide risk management, we quantitatively assess the risk level for each of the identified risks using a risk matrix that combines results and likelihood of occurrence.

●Major Risks Faced by Sekisui Chemical Group

  • 1.
    Business environmental risks
    Major market trends
    Fluctuations in exchange rates, interest rates, and asset value
    Raw material price volatility and procurement
    Natural disasters
    Climate Change and environmental issues (resource depletion, water, marine plastics)
    Politics and society (political change / terrorism / infectious diseases)
  • 2.
    Strategic risk
    M&A / New Business / R&D
  • 3.
    Operational risk
    Information-management (information leaks / technical information outflow)
    Quality (responsibility for manufactured goods / Major Quality Issues)
    Safety (fire and explosions / major workplace accidents / hazardous substance leakage)
    Laws / Compliance / Human Rights (unethical or criminal behavior / volitions of the Monopolies Act or fraudulent transactions / unauthorized overwriting of data / bribery/ harassment/ environmental regulations, etc.)
    Intellectual property (IP disputes)

Bolstering the Crisis-management SystemThe Operating of the Crisis-management System

Based on its experience during the Great East Japan Earthquake, Sekisui Chemical Group carried out a full-scale overhaul of its crisis management system in fiscal 2011 and has been refining that system ever since.
Specifically, the Group, among other initiatives, has been conducting drills (at least twice yearly) based on the Emergency Response Headquarters Procedures Manual, annual education (for all employees) using the Emergency Situation Initial Response Procedures Manual, and organizing disaster-preparedness systems based on disaster-preparedness checklists in all offices (around 800 within Japan).
As of January 2012, the rate of sufficiency regarding disaster-preparedness systems, in reference to the Cabinet Office’s “Table of Self-evaluation Items,” averaged 41% among all offices. Because of instituting concrete measures, however, the Group has, since fiscal 2015, reached a point where it has been able to maintain an average rate of over 90%.

The Operating of the Crisis-management System

In preparation for emergency situations, Sekisui Chemical Group implements Companywide response measures for emergencies as provided for in the Crisis Management Guidelines and the Emergency Response Headquarters Procedures Manual. Through training and providing the Emergency Situation Initial Response Procedures Manual to all employees, including temporary and other staff, who carry this manual at all times, we ensure that all employees can take the appropriate action in the event of an emergency. In 2018 we also prepared an English version of our Emergency Situation Initial Response Procedures Manual, which has been provided to those employees that require English. Moreover, in fiscal 2019 we implemented a safety confirmation system for all Group employees that allows us to rapidly confirm the safety of our employees, even during emergency situations.

  • 8-008_018

Emergency Response Headquarters Procedures Manual (April 2020 revised edition)

  • 8-015

Initial Response Procedures in the Event of a Large-scale Earthquake

  • 8-016

Emergency Response Headquarters Functions

  • 8-017

Contact the Company/headquarters from the site immediately after the emergency occurs

Business Continuity Planning (BCP)Basic Philosophy Toward BCP

BCP is the very essence of business strategy. Therefore, Sekisui Chemical Group, whose adoption of a Company system has made the range of the business in which it engages broad, has decided on a basic posture of having those in charge of each line of business (the heads of business units, the presidents of business companies, etc.) determine the necessity of BCP individually, based on the particulars of the business in which they are engaged. Because of this, the Group has created a support system, such as by establishing “Guidelines for Formulating BCP (BCM)” and drawing up a checklist for performing this formulation. Each person in charge of a line of business is recommended to formulate business-continuity plans and to implement business continuity management (BCM) based on these guidelines and on ISO 22301, a standard for methods of implementing BCM.

Crisis Management Systems OverseasA Support System Centered on Overseas Crisis-management Organizations

Based on its corporate “Overseas Safety Management Regulations,” Sekisui Chemical Group supports employees traveling abroad, those stationed abroad, and locally based employees in a variety of ways. This includes classifying global activities into nine regions, sharing crisis management-related information spearheaded mainly by the Overseas Crisis-management Office, calling for caution and attention to important matters in a timely manner, instructing employees about travel restrictions, and implementing other emergency-response measures.
As the number of Group locations increases with each passing year, and given the growing importance of overseas business activity, we established Regional Headquarters in each of the four main regions and appointed the person responsible for the Regional Headquarters as the Regional Head. During an overseas crisis, the Overseas Management Group within the Headquarters Business Strategy Department and the Global Crisis Management Office (HR Risk Management Group*) cooperate and lead the response to the crisis.
Regarding risks particular to overseas sites, including civil unrest, terrorism, and infectious diseases, the Group has organized a support system based on signing contracts with crisis-management companies, such as those that provide security assistance and medical assistance.
Additionally, the Group conducts training sessions for employees seconded overseas before they are dispatched abroad, provides pre-trip e-learning for employees sent on business trips, and explains its overseas crisis management system to its employees; it also issues warnings about risks overseas.
In recent years, in particular, business trips and secondments to frontier regions have become more common, and thus the Group has stepped up its partnerships with Japanese diplomatic missions abroad and has created and distributed region-specific crisis management handbooks detailing the types of risks and levels of danger for each region, 20 in total.

  • The Risk Management Group within the ESG Management Department since April 2020.
  • 8-003

Global Crisis Management Guidelines

  • 8-009
  • 8-010
  • 8-011
  • 8-012
  • Japanese edition

  • English edition

  • Chinese edition

  • Korean edition

Major Initiatives

Improving the Effectiveness of Risk Management ActivitiesIntroducing the Digital Dashboard

With the introduction of the Digital Dashboard, a database covering the implementation status of risk management activities, we have substantially improved the efficiency by halving the preparation work for feedback to each organization. In addition, we have used the search function, which has made it easier to horizontally deploy management measures and identify risks at each organization. Moreover, in fiscal 2019 we added a function for the purpose of collaboration with the different types of audits and are now able to closely examine risk without fail.

Enriching e-Learning

We enriched the contents of our intranet-based e-Learning programs for those on overseas business travel. We also prepared quiz-format content that incorporates the circumstances, customs, and other aspects of each country and region. By including detailed explanations for answers, etc., we are working to provide those on overseas business travel with an insight into the types of acceptable behavior at each local site and to increase awareness toward safety. In fiscal 2019, we also deployed a practical program for regions that are often traveled to on business, and provided opportunities to study the content in greater detail.

Conducting Risk Management Training Sessions for Risk Managers

In fiscal 2019, risk management training was provided to 24 newly appointed risk managers.

Sekisui Chemical’s Response to Preventing the Spread of the Novel Coronavirus

Since January 2020, as concern over the spread of infection by the novel coronavirus began to emerge, we have implemented various measures designed to prevent infection in order to manage the health of our employees and address our social responsibility as a company.
In particular, we have taken the following actions (as of March 31, 2020)

  • 1.
    Broadcast information and protective measures to be taken by individuals
  • 2.
    Voluntarily cancel functions and events organized by Sekisui Chemical
  • 3.
    Change working hours
  • 4.
    Encourage meetings over the internet and working from home
  • 5.
    Prohibit travel to affected regions

Moreover, we shipped masks and disinfectants as support for China and our affiliates in China. In the event a state of emergency is declared or infections are discovered within the Group, we will prioritize the safety of employees and further strengthen our response, including establishing a Group-wide Emergency Response Headquarters.

Performance Data

Data on the Number of Organizations Engaged in Risk-management Activities

  • 8-004
  • Number of organizations

Data Relating to the Sufficiency Rate for Disaster-preparedness Systems

  • 8-005
  • Disaster-preparedness Sufficiency Rate (Average for Japanese Business Sites) Over Time