Governance

The Group will establish effective governance frameworks to ensure the transparency, objectivity, and fairness of the management of its companies and earn society’s trust everywhere it operates.

Risk Management

Risk management system

The Company appropriately and continuously monitors risks associated with the business execution of the Group through reports and deliberations at important meetings, including those of the Board of Directors etc. In addition, the Company has established a Risk Management Committee, chaired by the Representative Executive Officer and President. The committee works on the management of important risks related to the safety, environment, and compliance of the Group and also on the continuous review and improvement of the internal control system. Moreover, the Audit Department, which is responsible for the Group's internal audit function, is establishing a system that monitors the effectiveness of the Group's internal control system.
The Risk Management Committee meets to set and implement themes to reduce serious risks. It also sets up subcommittees in a timely manner so that individual partner companies and departments can work together to reduce risks.
Moreover, the Risk Management Committee is also responsible for cross-group crisis management, and established our New Coronavirus Infection Control Headquarters in January 2020. Under the direction of the Representative Executive Officer and President, who chairs the committee, top priority is being given to ensuring the health and safety of executives, employees, and their families. At the same time, the Committee raises funds and implements business continuity plans, and also carries out actions in collaboration with domestic and overseas partner companies to expand business opportunities.

NPHD Risk Management CommitteeCommittee Chairperson: Representative Executive Officer and Co-President

Deliberates on the management of important risks related to the safety, environment, and compliance of the Group and also on the continuous review and improvement of the internal control system
  • Credit Management Subcommittee Mainly grasps and controls credit and credit management risks for common business partners of domestic operating companies, and examines, proposes and executes measures to alleviate these risks to realize safe sales transactions.
  • Information Security Subcommittee Examines, proposes and executes measures to realize the mitigation of information and IT security risks within the Group.
  • Security Trade Control (Export Control) Subcommittee Examines, proposes and executes measures to realize security trade control (export control) within the Group in accordance with the Foreign Exchange Act and Foreign Trade Act.
  • BCP Subcommittee Studies, proposes and implements business continuity plans within the Group.

Support / Collaboration / Information sharing

Risk Management Committees at partner companies, etc.These committees collaborate and share information with the NPHD Risk Management Committee, and examine, propose and execute the building of smooth risk management systems at partner companies.

Risk management activities

In the Group, each partner company and functional division of the Company independently follows the cycle of risk management activities to effectively respond to risks and seeks to improve the cycle through monitoring and reviews. The Risk Management Committee also follows the cycle of risk management activities related to the entire Group through support to, cooperation and information sharing with, and receiving reports from partner companies and the Company’s functional divisions. Thus, it works to appropriately respond to important risks and promote the improvement of the cycle based on monitoring and reviews.


Risk AssessmentRisk Treatment
Partner Companies and Our Functional Divisions
Monitoring and Review Monitor and review the effectiveness of each process, and improve them
1. Risk Grasp Grasp risks systematically and comprehensively by using the Risk Classification Table2. Risk Analysis Assume the level of each risk based on the Risk Criteria (judging the risk’s magnitude and occurrence frequency of risks)3. Risk Evaluation Create a Risk Map to visualize the status of risks and material risks4. Risk Treatment Based on the results of risk assessment, determine risk treatment policy and address risks
Cooperation

Support, cooperation and information-sharing

Support, cooperation and information-sharing

Support, cooperation and information-sharing
Reporting on the results of risk assessments

Support, cooperation and information-sharing
Reporting on the results of risk assessments

NPHD/Risk Management Committee
Monitoring and Review Monitor and review Group-wide activities, and improve them
1. Risk Grasp Grasp risks systematically and comprehensively by using the Risk Classification Table2. Risk Analysis Assume the level of each risk based on the Risk Criteria (judging the risk’s magnitude and occurrence frequency of risks)3. Risk Evaluation Create a Risk Map to visualize the status of risks and material risks4. Risk Treatment Based on the results of risk assessment, determine risk treatment policy and address risks

In addition to the above, environmental risks, including management of chemical substances, waste and water risks, and occupational health and safety risks are addressed by the Responsible Care Committee, while human rights abuses, including harassment, and compliance risks are addressed by the Compliance Committee. In particular, with regard to climate change risks, the ESG Committee, delegated by the Board of Directors and chaired by a Representative Executive Officers & Co-President, and its subordinate Global working team, identify and assess medium- and long-term business risks and opportunities, deliberate on action plans to address them, then determine relevant company-wide targets and action plans and report these to the Board of Directors. It carries out scenario analysis (identifying and analyzing risks and opportunities) on the impact of climate change on our Company, based on the advice of the Task Force on Climate-related Financial Disclosures (TCFD).

See the following related pages for details.
See our Environment site
See our Social site

Internal reporting system

Outline of internal reporting system (whistleblowing)

We have established an internal reporting hotline with contact points both within and outside the Group (external law firm) in order to ensure the confidentiality of internal reporting information, making it easier for employees to use the hotline. We have also established a system that enables employees to report directly to or consult with the Audit Committee. In addition to e-mail consultations, all contact points also accept reports by telephone or post. When a report is received at a contact point, we will investigate the situation while taking the utmost care not to identify the informant. If an investigation reveals a problem, we will promptly take corrective action.
In fiscal 2020, to enhance the Group's internal reporting system (whistleblowing), we revised the Group's internal regulations and further strengthened the system, renaming it the NPHD Group Hotline. As a result, our group's efforts were recognized as achieving the purpose of the "Guidelines for Private Enterprises Regarding the Development and Operation of Internal Reporting Systems based on the Whistleblower Protection Act", and we acquired WCMS (Whistleblowing Compliance Management System) certification under the jurisdiction of the Consumer Affairs Agency. The number of internal reports made by our partner companies in Japan in fiscal 2020 is shown below.

Number of internal reports in fiscal 2020 (in Japan)

Harassment10
Business improprieties and violations of rules5
Labor management3
Other1
Total19 cases

In addition to the internal reporting system (whistleblowing), we have established a permanent Harassment Desk to provide employees with consultation on harassment in order to create an environment in which they do not have to face harassment issues on their own. In fiscal 2020, we handled 10 consultations at the Harassment Desk.

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