Denka's Risk Management System

The Company’s Board of Directors creates an environment in which each Executive Officer can take risks while striving to establish a risk management system for the entire Group. To achieve this purpose, at the Management Committee and Business Issues Reporting Meetings held every month, we conduct discussions on risk management taking into account economic value such as profitability, including understanding and assessment of various risks that may affect the management of the Denka Group, preventing risks from becoming apparent, and formulating countermeasures to minimize the adverse effects of risks that have become apparent. Furthermore, the Business Issues Reporting Meetings monitor various risks, including the status of achievement of business plans.
Moreover, with regard to legal, capital investment, environmental, health and safety, quality control, and startup investment risks, cross-organizational committees conduct comprehensive and specialized risk management.
In addition, our management departments, including the Legal Department, Quality Assurance Department, and Environmental & Safety Department, conduct risk management for the Group as a whole with regard to the relevant risks based on various common Group rules.
Furthermore, with regard to risks specific to each business division, not only does the relevant division conduct risk management, but also with regard to those risks at Denka Group companies, Directors dispatched from the relevant parent company division to the Group company conduct risk management in consultation with the parent company’s specialized departments for legal affairs, environment, health and safety, and quality control.

• ※The Denka Group's risk management is based on ISO31000, an international standard, and the COSO ERM Integrated Framework, which was developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Integrated risk management and Risk Management Committee

Denka Group is working on integrated risk management, a cross-group risk management system, amid increasing business uncertainty. The Risk Management Committee, chaired by the President, analyzes the risks of the entire Group by their impact and frequency, and has identified 10 "priority risks," including earthquakes and tsunamis, serious crimes against the Company by third parties, economic crises, economic fluctuations, and exchange rate fluctuations. Based on these priority risks, we are conducting monitoring activities such as strengthening communication networks in the event of a disaster and conducting real-time disaster response drills by management and plant executives. Monitoring is regularly reported to the Board of Directors through a Management Committee independent of audit committee, and the Board is also responsible for regularly reviewing the proper functioning of these risk management systems. Denka Group will continue to enhance the effectiveness of its countermeasures through trial and error, reduce the impact of risks on business performance, and strive to increase corporate value over the medium to long term.