Governance

Identifying priority risks

Aisin determines its priority risks at the Risk Management Committee twice a year. When annually determining priority risks based on the companywide "Opportunities and Risks (short- and medium-term management strategy risks)" confirmed by the Executive Management Committee and the Board of Directors at the time our Group management policy is formulated, we identify, through risk assessment, the risks arising from changes in the external environment, drawing on trends in the external risk environment, societal demands including customer expectations and stakeholder concerns, and risk forecasts by specialized external agents. In addition, we identify risks arising from changes in the internal environment from the distinctive vantage of each department in charge of a particular risk, as defined by the operational characteristics of Group companies and the geographic perspective of overseas sites.
We analyze and evaluate these risks in terms of their probability of occurrence, trends, and degree of impact, and, taking into account the preventive and mitigating effects of our past risk countermeasures, we determine the "priority risks" that the entire Group should focus on addressing.

Aisin Group priority risks for FY2027

Risk countermeasures and monitoring

For the high-priority risks and priority risks enumerated by the Risk Management Committee, the various committees and the departments tasked with managing each class of risk implement measures to minimize their occurrence and mitigate their impact. The Risk Management Committee monitors high-priority risks, while the ERM Office monitors priority risks, as both work toward continuous improvement.

Emergency response

In the initial response when an emergency occurs, starting from a "Risk Report," the occurrence of the risk is promptly communicated to the President and other executives and to the departments overseeing each risk classification. On that basis, we establish a ”response headquarters” (Level 1 to Level 3) according to the crisis level. In cases of Level 1 risks, the Chair of the Risk Management Committee appoints a headquarters leader according to the nature of the risk. In a Level 2 scenario, in principle, .the Executive General Manager of the relevant division of the relevant risk serves as head and, in a Level 3 situation, the General Manager of the department responsible for the risk. In assigning a secretariat of each response headquarters, the department in charge of each risk together with .the Enterprise Risk Management Section, which serves as our risk-management promotion department, oversees a Level 1 response headquarters, while the departments in charge of each risk handles Level 2 and Level 3 response headquarters.
Under this structure, in responding to emergencies such as disasters, we set forth as our basic policy the priority order of (1) human life and safety, (2) community contribution, and (3) production recovery, and we define in our action guideline that assistance be early and ample. Based on these principles, we have formulated emergency response plans (BCP).
When a disaster or other emergency transpires, we give top priority to securing human life and safety and work to minimize damage.

Next, based on the premise that there can be no recovery of Aisin's operations without the recovery of the community, we focus on contributing to our neighbors’ well-being. Specifically, we work in cooperation with the governments of affected areas to provide scarce relief supplies and offer material support to suppliers in the affected areas.
In a production recovery situation, we restore function prioritized according to operational criticality as determined in advance and based on the extent of the damage. Furthermore, when damage is severe, we shift to alternative operations or alternative production to continue doing business.
To prepare for these emergencies, the departments in charge of each risk systematically implement risk control and mitigation measures and render education and training in advance in line with our emergency action plans.

To prepare for these emergencies, the departments in charge of each risk systematically implement risk control and mitigation measures and render education and training in advance in line with our emergency action plans. In particular, when major earthquakes occur that are expected to cause severe damage, our initial and immediate response is the key to minimizing damage. We therefore regularly hold initial response training for the disaster response headquarters," with top management leading the response headquarters. We further enhance recovery effectiveness through formal BCPs and training and the development of staff who are resilient in emergencies. Even under normal conditions, we use these tactics to build an organization, workplace, and workforce that are resilient to crises.
During the 2026 Kumamoto Earthquake of July 28, 2026, Group company Aisin Kyushu Co., Ltd., recorded a seismic intensity of Upper 6 on the Japanese scale, exceeding the mark of Lower 6 recorded in 2016. Under the basic policy described above, we gave top priority to ensuring the safety of employees and assessing the extent of damage, then turned to supporting the recovery and reconstruction of local communities while pressing ahead with the early restoration of production. Partial production resumed on August 2 and normal operations on August 5. Whereas it took 22 days to resume normal operations after the 2016 Kumamoto Earthquake, this time we took only eight days. Countermeasures informed by the lessons of the 2016 Kumamoto Earthquake enabled us to limit the damage and recover quickly. We will review our response to this incident and further improve our earthquake countermeasures.

Education and awareness

We provide education and promote awareness in order to deepen the risk management capabilities of all our employees. We have published a Crisis Management (Risk Management) Guide, which codifies standard operating procedures for risk countermeasures to be implemented under normal conditions (prevention and mitigation) and emergency responses. Moreover, we hold tiered risk management training for each management layer, including our executives, and publish the Aisin Group Risk Management Bulletin for all employees. This document educates and promotes awareness so each employee comes to regard risk as a personal responsibility and ensures countermeasures are thoroughly implemented.
Furthermore, Aisin has established the Kumamoto Earthquake Learning Zone within the Aisin Densho-kan to ensure the devastating damage caused by major earthquakes of the past is never repeated. Through panels and videos, the exhibit shares lessons and insights gained from the damage and recovery efforts following the 2016 Kumamoto Earthquake, ensuring the proper mindset and preparedness for natural disasters. As a result of these efforts, in the Noto Peninsula Earthquake of January 2024, measures based on lessons from the past, such as countermeasures for suspended objects and training for establishing the response headquarters, proved effective and contributed to reducing damage.
At the same time, through the earthquake responses of Group companies during the Northern Osaka Earthquake, the Hokkaido Eastern Iburi Earthquake, and the Noto Peninsula Earthquake, we reaffirmed the importance of reliably instilling and embedding the lessons learned throughout the entire Group. Moreover, during past earthquake responses, we have seen the indispensable role played by experienced and knowledgeable personnel who rushed to disaster sites and dealt with these crises on the front lines. As we mark the 10-year milestone since the 2016 [KM1.1]Kumamoto Earthquake and anticipate the retirement of experienced personnel, the importance of reliably passing on this knowledge and these lessons as an organization is growing ever greater.
In light of these challenges, we have renewed our "Lessons and Insights from Earthquakes," adding the new failures and lessons obtained from each earthquake since the Kumamoto Earthquake, standardizing them, and incorporating them into our rules and guides. We will sustainably pass on knowledge contained in Aisin's constantly updated resource, Lessons and Insights from Earthquakes, and contribute to disaster mitigation and the enhancement of business continuity across the entire Group.

Changes in market environment

As the automotive industry undergoes a period of intense transformation centered on electrification and intelligence, Aisin is responding by further accelerating the transformation of its business portfolio. Specifically, we position electrification and intelligent systems as growth domains and, by reallocating staff, infrastructure, and capital and reskilling our workforce, we are building a business structure capable of flexibly responding to the diverse needs of each region and customer. In addition, with respect to Aisin's medium-to-long-term direction and Group-wide decision-making, matters are deliberated and resolved by the Board of Directors in accordance with the Board of Directors' operating standards, while the Executive Management Committee, the Executive Meeting, and various function meetings monitor the performance and significant investments of each AISIN Group company and examine potential future directions along with measures for raising performance.

Economic security and export controls

Countries and regions where Aisin operates pose inherent risks, including adverse changes to laws and regulations relevant to business operations, modifications to tax systems, unfavorable political or economic factors, terrorism, war, disease, and social or economic unrest due to other causes.
In addition to domestic Group companies, the heads of each regional headquarters overseeing North, Central, and South America, Europe, China, ASEAN, and India share information on management risks common to the Group as well as risks that differ by country and region, thereby advancing effective countermeasures and strengthening risk management from a global perspective. Specifically, led by the AISIN-GROUP Corporate Strategy Division, we centrally compose business and regional strategies that reflect our understanding of business issues in each region and the risks described above. Moreover, we gather timely information not only on the countries or regions where Aisin operates but also on other areas relevant to our business. We respond in a timely manner with appropriate action.
In recent years, in response to geopolitical and economic security risks that are highly uncertain and difficult to foresee, owing to abrupt changes in trade policy, including tariffs and import/export regulations, and to rising military tensions, we gather timely information on trends in policy and regulatory changes and take the necessary action against risks that arise. In addition, we have established a system whereby the Economic Security Committee, a companywide cross-functional body, examines and implements activities aimed at mitigating economic security risks (including security export control and sensitive-technology management).

Major earthquakes, flood/snow crises, tornadoes

For natural disasters expected to cause enormous damage, drawing on actual experience with disasters and based on the Risk Management Guide and on "Lessons and Insights from Earthquakes," a guide that standardizes our past experience of disasters, we advance the prevention of risks and the minimization of damage as a unified Group. For example, because the entire Group worked on measures such as seismic reinforcement of buildings and countermeasures against falling suspended objects, drawing on the lessons of the 2016 Kumamoto Earthquake, in the Noto Peninsula Earthquake of January 2024 there were almost no falling suspended objects, and we minimized the time to production recovery and avoided any impact on deliveries.
On the other hand, regarding liquefaction, which caused serious damage in the Noto Peninsula Earthquake, we regard it as a new challenge and, across the Group, have established and are implementing appropriate countermeasures at sites exposed to liquefaction risk.
In addition, the entire AISIN Group is working to reduce the risk of rainfall damage and landslides that exceed projections amid recent linear rain bands.

Terrorism, political unrest and rioting

In recent years, security risks have worsened globally due to conflicts and terrorist incidents affecting various regions.
Aisin educates personnel dispatched overseas on secondment or business trips through means such as viewing videos produced by overseas risk consultants, thereby heightening their vigilance and working to prevent risks before they occur. In consultation with experts, we have established response procedure manuals for both normal and emergency situations, and we conduct simulation training with group affiliates to test communication systems and validate initial response strategies. Furthermore, in preparation for evacuation due to deteriorating security, we have formulated an overseas evacuation manual and are organizing the response items and internal understanding for each crisis stage; in the event of a military conflict, we promptly implement measures such as travel bans and the repatriation of seconded employees and their accompanying family members, thereby working to avoid harm to people.

Infrastructure supply disruption

In the Hokkaido Eastern Iburi Earthquake of 2018, Aisin Hokkaido experienced a power outage lasting more than two days and faced the danger of serious equipment failure, such as the solidification of aluminum holding furnaces. In response, we urgently arranged temporary emergency power sources from across the country and averted the failure. Learning from this experience, in order to avoid supply interruptions caused by problems at power companies, we have been securing the emergency power sources required by equipment at risk of failure during outages, and we have formulated a Group-wide guideline ensuring that, even in the event of a large-scale power outage, supply can be maintained by emergency power sources for three days, completing all related measures.
In addition, lightning storms have become more frequent in recent years, and because a lightning-strike accident affecting the power-receiving and transforming equipment of an entire plant occurred even at a Group site, we are systematically installing additional transformers across the Group at sites exposed to the risk of supply interruption from lightning strikes.
Furthermore, in response to the drought risk of the Toyokawa Canal in Aichi Prefecture that arose this year, three sites in the Toyokawa water system implemented water-saving measures in line with the government's water-conservation requests, thereby minimizing the impact on production. Drawing on this experience, we are now developing a manual for responding to the water shortages anticipated to occur at various locations in Japan.

Logistics disruptions

In Japan, to address the chronic shortage of drivers, two logistics-related laws (the Logistics Efficiency Act and the Trucking Business Act) took effect in April 2026, requiring proactive activities and initiatives on the part of shippers.
Working closely with suppliers and carriers, we have reduced the working hours of truck drivers by shortening driving times through route optimization and by shortening cargo-handling times through improvements to the shipping and receiving environment and greater work efficiency. Looking to the future, we will work to further reduce the burden through the expansion of joint Group transportation and the in-housing and automation of cargo-handling operations.
In addition, by detecting early signs of risks such as snow damage from weather information and considering in advance the early dispatch of truck shipments and alternative transportation routes, we will continuously reduce both the probability and the impact of logistics disruption risks.
In marine transportation for overseas destinations, the recent rise in geopolitical risks may cause global logistics disruptions. As a result, there are concerns about the risk of cancellations of planned sailings and delays in operating schedules. To prevent parts shortages caused by delays, Aisin takes proactive action in coordination with customers and local production sites, considering measures such as setting alternative routes, changing ports of landing, and increasing inventory.