Risk Management

Policy

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

Strengthening risk management

While we are accelerating our global expansion in a variety of businesses in three sectors, the business environment surrounding the Asahi Kasei Group has been drastically changing due to the economic decoupling of the United States and China, and growing tensions in international relations such as the situation between Russia and Ukraine, and in the Middle East. New risks and increasingly complex risks are having a greater impact on the Asahi Kasei Group than ever before. As such, we need to visualize the risks group-wide to strengthen countermeasures. To do so, we are promoting concrete measures for the reinforcement of risk management.

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 ascertains overall risk management and gives instruction and support to each department head (Executive Officers responsible for administrative functions, heads of business units, etc.) regarding risk response measures in each organization. Additionally, a Risk Management Team has been set up under the Executive Officer for Risk Management and Compliance to monitor the activities of each organization within the company and provide support for specific risk countermeasures. The Risk Management & Compliance Committee, chaired by the President, ensures that all organizational leaders are informed of management-level decisions and instructions regarding risk management.

Strengthening the PDCA cycle for risk management

With autonomous risk management by every organization as the basis, the Asahi Kasei Group is working to strengthen its PDCA cycle. Within this, Asahi Kasei has set Significant Group Risks as those particularly important risks that the Board of Directors regularly supervises on in terms of monitoring risk response. We have also defined Significant Business Risks as those that may hinder achievement of the annual management plan in each business unit.

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

Significant Group Risks and course of action regarding the principal initiatives in fiscal 2024

Significant Group Risks		Course of action regarding the principal initiatives
Risk of accidents at Japanese and overseas production sites (environmental accidents, industrial accidents, injuries)		Reinforcement and enhancement of Life Saving Actions (defining and thoroughly enforcing prohibited actions to eliminate serious accidents) Improvement of fire prevention and extinguishing technology at each production site Reinforcement of auditing functions for operational safety and development of human resources specializing in the Environment, Safety and Health Identification of sources of hazard at each production site, transmission and education of process safety technologies, and thorough PDCA cycle for responding to abnormalities
Quality fraud risk in Japan and overseas (data falsification, etc.)		Strengthening of quality awareness and culture through regular dialogue between management and the sites Thorough dissemination of information on quality risks through stronger spread of information by corporate quality assurance departments Strengthening of governance through quality inspections and enhancement of training of quality assurance human resources
Risks related to domestic and international laws, regulations, certifications, and other requirements related to the Environment, Safety, Health and quality assurance	The Environment, Safety and Health	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
	Quality assurance
Risks related to economic security and global supply chains	Risks related to tighter economic sanctions and export control regulations (both upstream and downstream)	Understanding of legal and regulatory developments and advance consultations with relevant authorities and experts as necessary Careful transaction screenings using an external client screening system
	Risks related to corporate activities due to geopolitical issues	Establishment of risk scenarios for geopolitical contingencies and consideration of the impact on employee safety, procurement, sales, and other business activities 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 deepening cyber-attacks through employee education to raise security awareness and "technical measures" using security systems Planning and implementation of BCP measures to achieve minimum IT utilization (communication, information access) in the event of a major disaster
	Risks of technical information leakage	Establishment of rules for managing technical information and implementation of measures to prevent leakage based on those rules Strengthening of the centralized group-wide monitoring system to prevent leakage
Risks related to natural disasters, pandemics, terrorism and conflicts	Head office and office districts (Japan and overseas)	Reformulation of 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 standards and systems for setting up emergency response headquarters and 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 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	Annual analysis and review of climate-related risks, assessment of the situation and promotion of response measures

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 management as well as our business and environmental divisions 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.

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 continuously assess our efforts for information security, and apply improvements as necessary.

Established December 1, 2016

Protection of Personal Information

Asahi Kasei Group is committed to the proper handling of personal information we obtain and use, in accordance with the Asahi Kasei Group Regulation for Management of Personal Information. An information security handbook which describes our rules for handling information is distributed to all employees, and education is performed via e-learning. Furthermore, we made necessary changes to the Asahi Kasei Group Regulation for Management of Personal Information to comply with Japan's revised Personal Information Protection Act that took effect in May 2017.

Response to the EU GDPR

To comply with the General Data Protection Regulations (GDPR) that took effect in the EU in May 2018, we have newly formulated the Asahi Kasei Group Regulation for Management of Personal Information and established the necessary standards and systems.

Protection of intellectual property

The Asahi Kasei Group implements strict measures to prevent unauthorized or unintentional outflow of technological information and know-how in accordance with its basic policy and management standards for prevention of technology outflow. The Asahi Kasei Group also applies internal guidelines summarizing related precautions to take when entering business overseas as well as procedures to ensure the preservation of prior-use rights overseas. The company's internal magazine is used to raise further awareness among employees, and workshops are held for training and education regarding protection of intellectual property.

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 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 divisions and 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.