Risk Management

Policy

The Asahi Kasei Group has established and is working to reinforce basic guidelines for risk management and emergency response in the Asahi Kasei Group's business operations in accordance with the Asahi Kasei Group Basic Regulation for Risk Management & Compliance.

Strengthening risk management

The Asahi Kasei Group has a variety of businesses across the three business sectors of Material, Homes, and Healthcare, and we are expanding business activities globally in a wide variety of fields. In this tumultuous business environment, we aim to reduce threats and capitalize on opportunities presented by changes and uncertainty that may impact Asahi Kasei Group management and business, by continuing to expand risk management activities as a united Group, through a combination of adapting to the characteristics of each sector and business and responding in an interorganizational manner across the Asahi Kasei Group.

Risk Management Processes and Risk Management Framework

Under the supervision of the Board of Directors, the Executive Officer for Risk Management and Compliance assists the President, who is responsible for overall risk management. Under the direction of the President, said Executive Officer promotes risk management activities, and gives instruction and support to each department head (Executive Officers for administrative departments, heads of business departments, etc.) regarding individual risk response measures. Additionally, we have established a Risk Management Team under the Executive Officer for Risk Management and Compliance. The team monitors the activities of each internal department, supports specific risk countermeasures, and promotes stronger interorganizational collaboration between administrative departments and business departments. The Risk Management & Compliance Committee, chaired by the President, ensures that all department leaders are well informed of management-level decisions and instructions regarding risk management.

Risk management through Group-wide activities and individual business department activities

We clearly designate the risk response leader in the administrative departments and business departments, establish autonomous risk management by each organization as a foundation, and then implement risk management with regular inclusion of a Group-wide perspective.
Significant Group Risks are risks that may severely impact management across the entire Group. These risks are established by a resolution by the Board of Directors, and the administrative department takes the lead in managing these risks in an interorganizational manner. Significant Business Risks are risks that may severely impact a business or may hinder the achievement of annual management plans based on the business’s unique characteristics. Each business department selects these risks, implements countermeasures, and reports all response conditions to the Board of Directors. The Asahi Kasei Group engages in risk management as a combination of these two activities.
Furthermore, starting in fiscal 2024, we will reinforce organizational risk management activities that are closer to the workplace, as we engage in initiatives to strengthen workplace-focused awareness.

Risk management PDCA cycle (Significant Group Risks and Significant Business Risks)

Significant Group Risks and course of action regarding the principal initiatives in fiscal 2025

Significant Group Risks		Course of action regarding the principal initiatives
Risks of accidents at Japanese and overseas production sites, and risks involving laws and regulations on the environment, safety and health		Reinforcement and enhancement of Life Saving Actions (defining and thoroughly enforcing prohibited actions to eliminate serious occupational accidents) Improvement of fire prevention and extinguishing technology at each production site Identification of sources of hazard at each production site, transmission and education of process safety technologies, and thorough PDCA cycle for responding to abnormalities Disseminating information on laws, regulations and legal revisions, and thorough education
Quality fraud risk in Japan and overseas (including risks related to laws, regulations, and certifications, etc.)		Fostering quality awareness and culture through regular dialogue between management and the workplace Quality education and strengthen transmission of information on quality risks, by Corporate Quality Assurance Strengthening of governance through quality inspections and enhancement of training of quality assurance human resources Dissemination of information on laws and regulations and legal revisions, thorough provision of training, assignment of specialist personnel, and strengthening of the internal consultation system Strengthening of compliance with laws and regulations through establishment of systems
Risks related to economic security and global supply chains	Risks related to US tariff policy	Regarding the increase in cost of procuring raw materials for our subsidiaries located in the US, we are looking to shift the cost of the increased tariff burden onto the sales price as we dialogue with clients, while also examining the utilization of tariff reduction measures such as a drawback program Regarding export to the US by the Asahi Kasei Group in Japan or other countries in which we are located, we are revising our global strategy as necessary with an eye on US demand trends, and researching and developing high value-added products that are less influenced by price competition
	Risks related to tighter economic sanctions and export control regulations (both upstream and downstream)	Timely understanding of legal and regulatory developments and advance consultations with relevant authorities and experts as necessary before implementing necessary response Careful transaction screenings using a deal partner screening system
	Risks related to corporate activities due to geopolitical issues	Understanding the impact that economic security risks and geopolitical risks exert on business strategy, and examining and implementing countermeasures Establishment of contingency scenarios in case of materialization of geopolitical risks, understanding the impact on employee safety, procurement, sales, and other business activities, and implementing and examining countermeasures Specification of the initial response and BCP to be implemented by the emergency response headquarters in emergency situations
	Risks related to human rights (both upstream and downstream)	Promotion of business activities in line with the Asahi Kasei Group Human Rights Policy Fostering of awareness and culture of respect for human rights through the implementation of human rights due diligence, education and awareness-raising activities
	Risks related to procurement of raw materials and other materials	Visualization of raw material procurement risks and priorities for each business, and enhancement of corporate support system Diversification of procurement routes for raw materials for major products and businesses and maintenance of appropriate levels of inventories Thorough search for and maintenance of alternative suppliers for equipment and materials in case of uncertain supply Review of methods for managing delivery dates and replacement dates of equipment and materials
Risks related to cybersecurity and the management of technical information	Risks related to cybersecurity and communications infrastructure	Implementation of flexible and speedy countermeasures against ever more sophisticated cyber-attacks through employee education to raise security awareness and "technical measures" using security systems Training in and implementation of BCP measures to maintain communication and information access in the event of a major disaster Strengthening security monitoring of overseas group companies, and developing measures to handle risks Strengthening cyber incident response capabilities through participation in public-private joint exercises and information-gathering in coordination with external organizations
	Risks of technical information leakage	Establishment of rules for managing technical information and strengthening measures to prevent leakage Strengthening of the centralized group-wide monitoring system to prevent leakage Strengthening awareness-raising activities for employees Establishing stricter, more sophisticated monitoring using confidential information systems and expanding the scope of the information covered
Risks related to natural disasters, pandemics, terrorism and conflicts	Head office and office districts (Japan and overseas)	Formulating response policies and manuals based on past cases such as large-scale natural disasters and pandemics, and implementation of drills for risk occurrence Establishment of action manuals for overseas contingencies such as terrorism and conflicts
	Manufacturing sites (Japan and overseas)

The following other risks are monitored by the Board of Directors as risks that may have a significant impact on the Group's management.

Other significant risks	Course of action regarding the principal initiatives
Risks related to M&A	Careful implementation of due diligence on companies under consideration for acquisition Careful verification of post-merger integration plans
Risks related to climate change	Timely understanding climate change and related governmental policy trends, and examining and promoting countermeasures in consideration of both risks and opportunities

Risk Analysis

Risk management system based on external standards

To ensure transparency in its risk management system and reporting, the Group references external standards that include frameworks and standards such as the GRI, the Ministry of the Environment “Environmental Reporting Guidelines (2018),” SASB Standards, ISO 26000, and others.

Guidelines consulted

Handling ESG risks

In light of environmental issues such as climate change as well as changes in industrial structure, decreases in the working population, and so on, it is possible that new ESG-related risks will become apparent from social changes related to sustainability. We address these ESG risks as a vital management issue. In particular, given that our businesses rely heavily on energy, addressing climate change is essential, and we consider it to present both risks and opportunities in terms of management.
Based on this mindset, we conducted an analysis of the risks and opportunities present in the various scenarios that could result from climate change based on their level of severity in keeping with the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures) and devised countermeasures. We are working to make responsible parties in Corporate Strategy and each business sector aware of these results and take appropriate action.

Disclosure based on TCFD Framework

Information Security

Recognizing the importance of countermeasures to protect against information security risks, we established the Asahi Kasei Group Information Security Policy and aim to ensure and further improve information security. In particular, due to the sharp rise and growing sophistication of cyber-attacks, we are strengthening detection and response tools, building any timely escalation and response systems in the case of an incident, and implementing security awareness-raising policies for employees globally through e-learning and email training.

Asahi Kasei Group Information Security Policy

As ensuring information security is an important management responsibility, the Asahi Kasei Group declares that it faithfully applies its established information security policy.

1.Compliance
We comply with laws and internal regulations concerning information security.
2.System Establishment
We have an established system to safeguard information security throughout the organization.
3.Implementation of Countermeasures
We implement appropriate information security countermeasures corresponding to our information assets to prevent information security incidents. In the event that an incident occurs, we respond swiftly and appropriately, strive to minimize any damage, and endeavor to prevent any recurrence.
4.Education of Employees
We provide information security training to all employees to ensure full awareness of the importance of information security and the proper use of information assets.
5.Continuous Improvement
We assess our efforts for information security, and apply improvements as necessary to safeguard information security continuously.

Established December 1, 2016

Protection of Personal Information

The Asahi Kasei Group is committed to the proper handling of personal information as we are aware of the serious responsibility to properly manage personal information we obtain and use, and we have formulated regulations for handling personal information at each company in accordance with the Asahi Kasei Group Principles for Personal Information Management. An information security handbook which describes our rules for handling information is distributed to all employees, and education is performed via e-learning.

Protection of intellectual property

In order to prevent the unintentional leakage of important technical information to outside the Asahi Kasei Group, we have enacted management regulations and issued “Guidelines for the Prevention of Technology Leakage from Technology Sites” and “Guidelines for the Prevention of Technology Leakage through Licensing.” We are also committed to centralizing management of important technical information at each business unit, reporting to Management Council, expanding improvement activities, and implementing educational and awareness-raising activities for employees such as e-learning, etc.
For more information about our intellectual property, please refer to the Asahi Kasei Group Intellectual Property Report.

Asahi Kasei Group Intellectual Property Report

Crisis response system

Due to accidents, incidents, or problems, if Asahi Kasei Group operations are significantly damaged or the business activities of our Group would cause serious adverse effects on the general public, we have a system to establish a group emergency response headquarters which works with the relevant departments to ensure that the proper response is taken.
In fiscal 2017, we established the Asahi Kasei Group Emergency Response Regulation which stipulates basic policy when an emergency occurs, standards to institute an Emergency Response Headquarters, and the functions thereof.
Regarding response to natural disasters, we have formulated risk assessments, a damage mitigation plan, and an emergency response plan for each production site, as we pursue countermeasures that include continual training. In addition, at the head office location in fiscal 2024, we compiled an Asahi Kasei Group Safety Measures Headquarters Manual as preparation for a large-scale earthquake, and confirmed our first-response readiness at the safety measures headquarters with training and implementation of a hypothetical large-scale disaster. Moving forward, we will implement natural disaster training using different hypothetical conditions, prepare BCPs, and ensure that our countermeasures are even more thorough.