Risk management policies and risks

We are entering an age in which business activities are impacted by climate change, depletion of resources, large-scale disasters, outbreaks of infectious diseases and shortages of materials such as semiconductors, and social and environmental issues such as the destabilization of society caused by growing inequality are having a significant impact on companies’ value creation and business models. With our business environment changing so drastically, we need to assess the risks that could stand in the way of sustainable growth in the long term and take suitable measures to address them.

Aisin considers risk management to be a crucial element that needs to be tackled in order to achieve sustainable growth and stability. After the fire at our Kariya Plant in 1997, we established a Consolidated Risk Management Committee (formerly Risk Management Committee) to apply the lessons we learned and carry out all-encompassing management of the risks that we face. As part of our group-wide efforts to build resilience against disasters, we undertake education and awareness-raising activities to enable each and every employee to take appropriate action in accordance with the Risk Management Guide when risk events occur. This guide stipulates procedures to be followed in ordinary times (before a situation occurs) and during an emergency (when a situation occurs).

Group-wide risk management initiatives

Risk assessments are conducted to predict and then minimize risks in a company‘s business environment. Aisin carries out activities to identify key risks each year based on societal changes and environmental issues, including interviews with top management and divisions affected by each risk. We map various risks of all levels, with impact on one axis and likelihood of occurrence on the other. High-priority risks are designated as AISIN Group‘s 27 Critical Risks (14 Most Critical Risks and 13 Critical Risks), and Aisin and 11 group companies take the lead in rolling out mitigation measures at domestic and overseas group companies after receiving approval from the Consolidated Risk Management Committee.

For the Most Critical Risks, various committees carry out mitigation measures, training and standardization, which are monitored by the Consolidated Risk Management Committee. For the Critical Risks, departments in charge of these risks similarly carry out mitigation measures, which are monitored by the ERM Department. The progress of these risk mitigation measures is managed by the Consolidated Risk Management Committee.

Risk management framework and activities

Fast and accurate initial response to minimize damage in an emergency

Aisin strives to carry out a fast and accurate initial response in the event of an emergency based on our Risk Management Guide to minimize damage and enable a fast recovery. As a group-wide initiative, AISIN Group‘s Disaster Response Division carries out regular training on initial responses to major earthquakes.

Training held by the Disaster Response Division
Training held by the Disaster Response Division

Passing on lessons and insights from past disasters

Aisin is strengthening its disaster risk reduction measures and initial responses by passing on lessons and insights that were gained when emergencies such as natural disasters and major fires occurred in the past. As a measure to reduce damage in the event of a major earthquake, AISIN Group is systematically carrying out building and facility safety measures based on the AISIN Global Safety Standard (AGSS) and measures based on experience gained from the Kumamoto, Osaka and Hokkaido earthquakes as required group-wide measures. AISIN Group is also enhancing its initial response to earthquakes and other large-scale disasters to minimize damage and enable fast recovery, with the basic policies of 1) saving lives and ensuring safety, 2) contributing to local communities and 3) restoring production. To train personnel and pass on the lessons and insights we gained from our recovery from the Kumamoto earthquakes in 2016, we have established the Kumamoto Earthquakes Learning Zone in Aisin Densho-kan, which has exhibits of records from immediately before the earthquakes to the recovery, and along with initiatives to reduce earthquake damage.

Kumamoto Earthquakes Learning Zone at Aisin Densho-kan
Kumamoto Earthquakes Learning Zone at Aisin Densho-kan

Risk plan for fiscal year 2020

AISIN Group‘s 27 Critical Risks

AISIN Group‘s 27 Critical Risks
AISIN Group‘s 27 Critical Risks

(as of the end of March 2021)

Risk item Final KPIs for
risk measures
Measures against risk so far Measures for FY2022
Natural disasters
Major earthquakes 0 fatalities resulting from earthquakes
・Disaster reduction measures according to Aisin Global Safety Standard (AGSS), our safety standard to prevent fatalities, injuries and damage to production equipment (buildings, hanging objects, cranes, racks, large equipment, cubicles)
・Mutual inspections under AGSS to maintain and manage disaster reduction measures
・Rollout of the Group BCP Guide, our group-wide standards for action plans in the event of a disaster, along with evaluation and measures to address weaknesses
・Preparation for operations by the disaster response division to prevent the spread of COVID-19
・Ongoing execution of earthquake-proofing and disaster reduction measures for building and hanging objects
・Inspections under AGSS to maintain and manage disaster reduction measures
・Ongoing resolution of weak areas according to the Group BCP Guide
・Training of the disaster response division to improve initial responses under our new post-merger framework
Water damage 0 fatalities
・Creation and implementation of a framework to make operational decisions that will prevent fatalities and injuries in the event of a disaster causing water damage, such as a typhoon
・Flood risk assessments at each site
・Identification and resolution of issues through the use of new alert rules
・Floor-level anti-flooding work (Handa area)
Incidents and accidents
Infectious disease 0 infected persons
・Establishment and rollout of manual on measures against novel flus
(Consists of from infection prevention, prevention of spread of infection through business continuity plan)
・Establishment and rollout of guide for preventing the spread of COVID-19
・Securing necessary quantity of sanitary goods
・Decision-making about travel restrictions based on reflection on measures
・Revision and update of guide on measures against infectious diseases
・Implementation of measures against infection in workplaces
Damage resulting from theft 0 cases of abduction, threats or theft
・Provision of overseas alert information for personnel who are posted overseas or traveling overseas for business
・Pre-departure seminars for personnel posted overseas
・Provision of support services by assistance companies in the event of an emergency
・Designation of times for teleconferencing with overseas personnel (overseas personnel must not be asked to attend meetings at night)
・Ongoing execution of activities mentioned to the left
・Revision of contents of training for personnel posted overseas (based on instructions by external experts)
Occupational accidents 0 severe accidents
・Improvement of awareness of dangerous work through the use of training for Aisin’s work supervisors and process supervisors
・Unification of Aisin’s standards for construction management
・Making improvements by checking in with domestic group companies that have experienced a disaster and sharing concerns
・Sharing of occupational accident information with group companies to make optimal improvements
Fire and explosion 0 fires
・Thorough elimination of flammable items around heat sources
・Thorough implementation of 4 basic actions when a fire occurs
・Initial fire training and evacuation training
・Revision and standardization of inspection and cleaning rules (AGSS)
・Creation of environments to carry out training at subsidiaries
・Creation of standards for patrols and monitoring after work that uses flames
Information
Cyber attacks (0 cases of information leakage or suspensions of production (due to cyber attacks)
・Establishing group CSIRT (response team) for AISIN Group
・Training on suspicious emails for all group companies
・Establishment of specialist organization (Information Security Promotion Office) to strengthen response capabilities
・Introduction of GA-Falcon (action tracking system)
・Establishment of framework for responding to information security incidents worldwide
・Entrenchment of monitoring against external attacks
・Ongoing execution of training at each level (new employees, personnel who have been promoted)
Information leakage 0 major cases of leakage
・Awareness-raising and workplace inspections at times such as our month for strengthening privacy management
・Creation of framework for submitting and receiving drawings and technical information
・Circulation of All Toyota Security Guidelines (ATSG) Ver. 7 in AISIN Group, including Aisin; activities to ensure that personnel understand these
・Trial of system for internal detection of unauthorized actions
・Domestic supply chain security assessments
・Promotion of improvement activities based on ATSG Ver. 8
Economy and society
Terrorism, coups, riots 0 fatalities or injuries
・Provision of overseas alert information for personnel who are posted or traveling overseas for business
・Pre-departure seminars for personnel posted overseas
・Top management training
・Establishment of emergency evacuation guidelines
・Provision of support services by assistance companies in the event of an emergency
・Training for Risk Management personnel in AISIN Group companies
・Ongoing execution of activities mentioned to the left
・Revision of contents of training for personnel posted overseas (based on instructions by external experts)
Handling of bad publicity 0 mishandlings of PR situations
・Enhancement of manual on handling media crises and use of the manual in domestic AISIN Group companies
・Media training for top management at 12 group companies
・Media training for newly appointed presidents
・Training of new executives in domestic group companies
・Establishment of routes for gathering of crisis information at new companies
Production, supply and supply chains
Suspensions of production due to disasters 0 stoppages of our own lines (due to disasters or accidents)
・BCP measures for products produced at one site
・Consideration of globally compatible products and confirmation of production performance
・Consideration of non-compatible alternatives
・Creation of framework for promotion of BCP activities in AISIN Group
・Identification of disaster risks at each company and clarification and response to issues that needs to be overcome in order to continue deliveries
Suspension of infrastructure supply (electricity/ water/gas) 0 stoppages of our own lines (due to stoppages of infrastructure supply)
・Establishment of guidelines for installing emergency generators
・Introduction of 2 emergency generators for die casting in Nishio
・Introduction of additional emergency generators for die casting in Nishio (6 units)
・Simultaneous operation of rentals for efficient use of emergency generators
Suspension of suppliers’ operations 0 stoppages of our own lines (due to stoppages at supplier sites)
・Use of supply chain systems to handle unpredicted situations at supplier sites
・Creation of framework for initial response by Aisin (cooperation between relevant departments)
・Rollout of reminder letters at supplier sites
・Accurate ascertainment of supply chain information for the whole process, right back to raw materials
・Ascertainment of parts and materials that cannot be substituted or which are subject to an oligopoly
・Ascertainment of risks for each supplier site by crossreferencing with various hazard maps
・Enhancement of provisions for unpredicted situations at supplier sites based on the above information
Products and services
Quality issues and falsification of quality data 0 quality issues
・Promotion of activities to improve quality at all companies according to quality policies
・Verification of impact of changes such as new products and services or design changes
・Issuing of quality information and deployment in relevant departments in the event of a major quality issue
・Awareness-raising about falsification of quality data by holding quality compliance trade fairs
・Workplace meetings on falsification of quality data to coordinate employees’ approach to data falsification
・Strengthening of global, group governance (quality, compliance)
・Revision of framework for recurrence prevention and horizontal expansion to eliminate critical quality issues
・Quality monitoring at a global, group level
Environment
Environmental pollution 0 cases of external thresholds being exceeded
・Establishment of AISIN Global Environmental Standard (AGES) (wastewater, waste, exhaust, groundwater in soil)
・Support for employees at group companies from Aisin on request
・All-out efforts to continuously achieve zero abnormal environmental situations
Response to climate change (CO2 reduction) Carbon neutrality at all group companies
・Execution of energy saving activities
・Implementation of CO2 reduction activities in FY2022 to achieve carbon neutrality by 2050
・Creation of framework for introduction of renewable energy
・電Make one electric product CO2 -free
Accounting and finance
Fraudulent accounting and theft of company assets 0 cases of this nature
・Monitoring through use of management letters by accounting auditors
・Execution of 10-point inspections at group companies based on our basic accounting requirements
・Workshops for group companies
・J-SOX audits
・Reporting on J-SOX audits in annual securities reports
・Ongoing workshops for group companies
・Remote audits of group companies; establishment of a method for this procedure
・Activities to entrench 10-point inspections; revision of guidelines
Politics and policy
Intellectual property disputes 0 conflicts caused by AISIN Group
・Intellectual property guarantee activities for new products
・Appropriate handling of lawsuits
・Improvement of investigations to prevent patent violations by other companies
Violation of Antimonopoly Act 0 violations
・Use of pre-contact confirmations and post-contact reports when interacting with other companies
・Screening of emails in sales departments
・E-learning for all domestic companies
・Establishment and use of policies and guidelines for compliance with the Antimonopoly Act
・Expansion of companies subject to our rules for use of pre-contact confirmations and post-contact reports when interacting with other companies
・Broadening of scope of email checks
・Expansion of training on the Antimonopoly Act to domestic and overseas group companies
・Confirmation that policies and guidelines for compliance with the Antimonopoly Act are entrenched
Violations of Personal Information Protection Act 0 major cases of leakage
・Data mapping of transfers of personal information in Europe; revision of internal management methods
・Conclusion of SCC (transfer contract)
・Creation of Privacy Policy, Privacy Regulations and Notification of Purpose of Use for Employees at domestic group companies
・Revision and thorough dissemination of rules for notification of purpose of use of personal information that is being acquired and management of personal information by contractors
・Response to amendment of Personal Information Protection Act
・Safety management measures at GDPR (EU General Data Protection Regulation) level
・Conclusion of comprehensive SCC contract for transfers according to GDPR
Violations of export trade regulations 0 violations of regulations
・Establishment of common export management rules for domestic and overseas sites
・Use of common export management system for domestic sites
・Registration and training of export managers at all domestic companies
・Introduction and implementation of global, groupwide export management rules (commencement of training and use of rules)
Compliance violations 0 serious violation of laws and ordinances
・Creation of advance reporting system for sale and purchase of our own stocks; training for relevant personnel
・Establishment and rollout of AISIN Group Anti-Corruption Policy
・Training at each level (new employees, personnel who have been promoted)
・Designation of Corporate Ethics Month to improve awareness of compliance
・Ongoing execution of training at each level (group executives and core personnel)
Labor and human resources
Human rights issues 0 human rights issues
・Rigorous application of Corporate Behavioral Guidelines and AISIN Group Principles of Corporate Behavior
・Reception at compliance contact centers
・Employee CSR surveys
・Training for new hires and employees in new roles
・Establishment of mineral procurement policies
・Optimization of management of technical intern training program (supervising organization type)
・Establishment of specialist division to support female employees in the workplace
・Establishment of Human Rights Advisory Committee and Human Rights Policy
・Establishment of Human Rights Due Diligence
・Establishment of grievance system
Issues between management and employees 0 suspensions of operations (due to issues between management and employees)
・Execution of overseas labor management investigations
・Establishment and revision of HR and labor assessment tools
・Instructions to group companies
・Sharing of issues and promotion of measures at regular meetings between management and employees
・Strengthening of governance at headquarters and local holding companies
・Exchange of information through Toyota Group labor management training
・Assessment of individual labor risks using labor assessment tools, etc.