Governance

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

Risk Management

The Group is globally engaged in the paint and coating business and therefore believes that appropriately understanding and managing risks is essential to the sustainable growth of the business. Accordingly, the group is establishing a risk management system based on the basic policy of the internal control system.

(1) Risk management system

The Company appropriately and continuously monitors risks associated with the execution of the Group's business through reports and deliberations at important meetings, including those of the Board of Directors and Executive Management Committee.
In addition, in the fiscal year ended December 2020, the Company has newly established the Risk Management Committee, chaired by the Representative Executive Officer and President, in place of the CSR Committee, which was previously established. The committee 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. 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 regularly to set and implement themes to reduce serious risks. It also sets up subcommittees in a timely manner so that individual Group companies and departments can work together to reduce risks through various activities.
Moreover, the Risk Management Committee is also responsible for cross-group crisis management. In January 2020, it established the New Coronavirus Infection Control Headquarters at the Head Office of the Company. 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 is raising funds and implementing business continuity plans, as well as carrying out actions in collaboration with domestic and overseas partner companies to expand business opportunities.

NPHD Group Risk Management Committee
Chair: Representative Executive Officer and 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 risk for common business partners of domestic operating companies, and examines, proposes and executes measures to alleviate these risks to realize safe sales transactions.

Information Management (IT 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 and Foreign Trade Act.

Others
矢印
Support / Collaboration /Information sharing
Risk Management Committee at group companies, etc. These committees collaborate and share information with the NPHD Group Risk Management Committee, and examine, propose and execute the building of smooth risk management systems at group 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 spiral 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 report reception 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 spiral based on monitoring and reviews.

Partner Companies and Our Functional Divisions

Monitoring and Review
: Monitor and review the effectiveness of each process, and spiral them up.
Risk Assessment Risk Treatment
1. Risk Grasp
Grasp Risks systematically and comprehensively by using the “Risk Classification Table”
2. Risk Analysis
Assume the level of each risk based on the “Risk Criteria” (judge on risk’s magnitude and occurrence frequency)
3. Risk Evaluation
Create a “Risk Map” to visualize the status of risks and material risks
4. Risk Treatment
Based on the results of risk assessment, decide on risk treatment policy and address risks
Cooperation 矢印
Support, cooperation and Information sharing
矢印
Support, cooperation and Information sharing
矢印2
Support, cooperation and Information sharing
Report on the results of risk assessment
矢印2
Support, cooperation and
Report on the results of risk assessment
NPHD/Risk Management Committee

Monitoring and Review
Promote spiral-up by monitoring and reviewing group-wide activities.
1. Risk Grasp
Grasp Risks systematically and comprehensively by using the “Risk Classification Table”
2. Risk Analysis
Assume the level of each risk based on the “Risk Criteria” (judge on risk’s magnitude and occurrence frequency)
3. Risk Evaluation
Create a “Risk Map” to visualize the status of risks and material risks
4. Risk Treatment
Based on the results of risk assessment, decide on risk treatment policy and address risks
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