In keeping with the global expansion of its business, DENSO is striving to strengthen risk management as part of its internal control system to help minimize increasingly diverse risks.
Specifically, the emergence of circumstances with the potential to cause damage to corporate management are classified as risks (situations in which risks have not yet been realized) and crises (emergency situations in which risks have already been realized). For the former, efforts focus on preventing risks at an early stage before they have the chance to manifest themselves; for the latter, DENSO strives to takes initial action to minimize damage and works to restore business operations in a prompt and appropriate manner.
We have established the Risk Management Committee and are conducting the following overall management strategies for Group-wide risks and crisis response.
- We selected 55 risk items based on frequency and degree of impact on life, credit, business activities, and property, and designated a responsible department for each. We are working to strengthen preventive, primary, and recovery measures.
- We regularly confirm the status of improvement of DENSO Group risk management systems and mechanisms and are deliberating and shaping priority activities based on environments and trends both internal and external to the Company.
- Based on reporting rules for times of crisis (emergency situations), information is consolidated by the Risk Management Committee Office, which subsequently sets out quick and accurate primary response mechanisms.
- At domestic and overseas companies subject to our managerial consolidation rules, as well as Group companies in which DENSO Corporation is the largest shareholder, we are working continuously to upgrade our risk management based on support from key functional departments and regional headquarters.
Risk Management Structure (Normal Operations)
Development of Systems for Quick and Accurate Responses in Times of Crisis
DENSO established the Crisis Communication Manual to ensure quick and accurate responses in times of crisis. To minimize damage, this manual specifies situational assessments, reporting standards, reporting channels, bases for responses internal and external to the Company, and other matters.
We have also formed specialized contingency organizations depending on the extent of the situation and degree of urgency, thereby facilitating an agile response to minimize damage.
Crises countermeasures structure
Responding to Increasing Risk along with the Development of Our Global Business
We learned that along with the globalization of the supply chain, the impact of a risk occurring in one region, such as the 2011 Great East Japan Earthquake and flooding in Thailand, can spread to other regions and become a major risk. On this basis, from the perspective of Group global management we are identifying major risks and strengthening our risk response.
Specifically, to respond quickly to such international crises as the Tianjin explosions and the terrorist attacks in Paris of the same year, which occurred in fiscal 2016, DENSO Corporation is gathering crisis information and promoting the introduction of a system that shares said information through simultaneous transmission to domestic and foreign Group companies via methods such as a dedicated website. Furthermore, we are working to improve our system of rules to ensure that initial information is certain to reach the relevant persons and executives regardless of working days or hours.
Strengthening Earthquake Disaster Risk Response (Formulate Business Continuity Plan [DENSO Corporation and Domestic Group])
DENSO and the domestic Group has commenced the strengthening of earthquake disaster risk response measures (formulation of Business Continuity Plan [BCP])* for the entire DENSO Group from the perspective of business continuity management. We are also working to prepare an emergency situation manual and complete countermeasures for disaster reduction. Furthermore, based on the premise of Life First, we are developing activities to include spreading and raising awareness among both employees and their families (such as initial response training and safety confirmation system drills).
* Business Continuity Plan (BCP): A plan for restoring business operations within a target time frame and minimizing damage to business in the event that business is interrupted due to a major disaster such as an earthquake
We will continue to upgrade risk management and promote enlightenment to prevent the emergence of risk and to minimize damage when risk emerges. Especially during fiscal 2017, we will promote activities to improve visibility of the degree of importance and status of response, as well as strengthen preliminary measures (preventive and primary), in regard to risk affecting Group business activities.