Denka's approach to sustainability and risk management

Denka’s Board of Directors recognizes that responding to the changing business environment and various social issues is an important management issue that leads to reductions of risks and to profit opportunities. The Board of Directors has established The Denka Group Basic ESG Policy as Denka’s basic policy to proactively address these issues, and is working to improve the corporate value of the Denka Group over the medium to long term by appropriately responding to each risk, such as by strengthening compliance systems at the corporate group level and by transforming our business portfolio, challenging ourselves to create new businesses to solve social issues.

Denka's risk management structure

Denka’s Board of Directors is working to develop and improve an environment in which each executive officer can take risks, while at the same time developing and improving Denka’s risk management structure for the entire Group. In order to achieve these purposes, the Management Committee and the Business Issues Reporting Meeting, both of which are held monthly, discuss risk management in light of economic values such as profitability, by identifying and evaluating various risks that may affect the Group’s management, preventing the materialization of such risks, and devising countermeasures to minimize their adverse effects. In addition, the Business Issues Reporting Meeting monitors various risks, including the status of achievement of the business plan.
Also, each of cross-organizational committees conducts comprehensive and specialized risk management depending on the type of risk, such as legal matters, capital investment, the environment, health and safety, quality control, startup investment, and more.
Furthermore, Denka’s management divisions, including the Legal Department, Quality Assurance Department, and Environment & Safety Department, is striving to manage Group’s risks of which each of the departments is in charge based on the Group’s common rules.
In addition, with respect to risks specific to business divisions, the relevant divisions not only carry out risk management, but also, especially with respect to those risks at each of the Denka Group companies, directors and officers dispatched to the Group companies from the division of the parent company carry out risk management with support from the specialized departments of the parent company such as the Legal Department, Environment & Safety Department, and Quality Assurance Department.
Denka is working to further strengthen the risk management system of the entire Group based on the concept of Enterprise Risk Management, enhancing the functions of risk identification, assessment, and planning of countermeasures.

Enterprise Risk Management initiatives

The Denka Group is working to strengthen its risk management system in order to minimize capital costs in the face of increasing uncertainty surrounding its business, including rapid changes in the business environment and the full-scale transformation of its business portfolio. Specifically, in order to strengthen our risk management activities in normal times, Denka is working to construct an integrated risk management process based upon COSO Enterprise Risk Management framework that provides advance prediction, assessment and analysis, visualization, planning of risk countermeasures, and monitoring of risks that may have significant impacts on Group management. By doing so, Denka will strive to improve corporate value for stakeholders over the medium to long term by reducing impacts of risk exposure on its business performance and minimizing its capital costs.

Denka's Risk management activities

Denka has established the Basic Guideline for Crisis Management as basic rules for responding to emergencies in the event that a risk that could have a significant impact on the management of the Denka Group materializes. Based on this guideline, all management departments, including the Administrative Department, Environment & Safety Department, Corporate Communications Department, Quality Assurance Department, and Legal Department, develop appropriate initial response rules, including early detection and response to risks, rules for the centralized aggregation of information, and rules for communication with management team and external stakeholders. In order to minimize risks that could affect business continuity, such as information leaks caused by cyber-attacks, Denka has established common Group policies such as the Denka Group Information Security Policy, and Denka is implementing various initiatives related to information security, including the protection of personal information.
Also, with regard to risks in connection with product quality which is important for a manufacturer, to minimize risks that may affect business continuity, Denka has established the Denka Group Quality Issue Response Policy, and is implementing various initiatives across the entire Group.
If, in a case of misfortune, a crisis does take place, CEO is to decide whether to establish a crisis task force in accordance with the seriousness of the incident based on the Basic Guidelines for Crisis Management. The relevant departments, including the Legal Department, Environment & Safety Department, Quality Assurance Department, and Internal Control Department, work closely together and, when necessary, obtain the advice of outside experts to conduct various investigations, analyze causes, and formulate various countermeasures in an effort to prevent recurrence.
Based on the concept and framework of Enterprise Risk Management, Denka is working to strengthen the risk management system of the entire Group by conducting various activities to enhance its functionalities regarding risk management, such as risk identification, risk evaluation, devising countermeasures, and drills.