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 and outbreaks of infectious diseases, 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 Group 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, chaired by our Chief Risk Officer (CRO), to apply the valuable lessons we learned and carry out all-encompassing management of all the major 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).

Organization diagram of Consolidated Risk Management Committee *

*As of the end of FY 2020

Ascertaining risks and conducting risk assessments during normal times

Risk assessments are conducted to predict and then minimize risks in a company’s business environment. AISIN Group carries out activities to identify key risks each year based on societal changes and environmental issues, including discussions with top management and divisions affected by each risk.

Risks with varying degrees of severity are mapped on two axes: degree of impact and likelihood of occurrence. Highpriority risks are tackled through risk management activities led by the relevant divisions.

Risks that have become more critical in fiscal year 2021 are water disasters, cyber attacks and suspension of suppliers’ operations. In addition to targeted activities against these risks, we are taking measures against new risks on our radar, such as infectious diseases and fraud. These measures are approved by the Consolidated Risk Management Committee and addressed through countermeasures by all companies and relevant divisions in AISIN Group.

Tackling and monitoring risks through risk assessments
Tackling and monitoring risks through risk assessments

Risk assessments and measures for response and recovery in the event of an incident

AISIN Group carries out response and recovery measures according to our guide to measures in the event of a major earthquake (response) and our manual on our process for handling disasters (response and recovery). These were created based on the section in our Risk Management Guide about when an emergency occurs (response and recovery). We also build a group headquarters framework when we discover or predict a hazard, and group-wide training is carried out regularly so that employees are able to take measures to minimize damage at any time.

Business continuity plan (BCP) and companywide risk management

To pass on lessons and observations that AISIN Group has gained from past disasters to all of our employees, an AISIN Group BCP Committee comprising the top management, officers and relevant managers in the group’s 5 core companies meets each year on the anniversary of the Kumamoto earthquake with the aim of strengthening our business community plan (BCP) activities.

In fiscal year 2021, we carried out disaster mitigation activities, put measures in place at one of our production sites (diversification into multiple sites, etc.) and installed backup power sources. We also carried out systematic measures to minimize damage caused by major earthquakes based on the AISIN Global Safety Standard (AGSS) and what we have learned from the earthquakes that occurred in Kumamoto, Osaka and Hokkaido over the last few years.

AISIN Group is also enhancing its response capabilities in preparation for responding to earthquakes and other large-scale disasters, with the basic policies of saving lives, ensuring safety, contributing to local communities and restoring production.

To prepare for flooding and fires, two disasters that cause widespread damage, we have established a system to visualize our supply chain 24 hours a day, 365 days a year, so that we can respond to and recover from disasters more quickly.

AISIN Group BCP Conference (on the
anniversary of the Kumamoto Earthquake)
AISIN Group BCP Conference (on the anniversary of the Kumamoto Earthquake)

Risk plan for fiscal year 2020

Risk item KPIs for risk measures FY2020 Main issues/initiatives
for FY2021
Main issues
(activity plan)
Activities Results
Risks of accidents and disasters
1 Major earthquakes
・0 fatalities resulting from earthquakes
・Full implementation of disastermitigating measures to prevent fatalities
・Measures against omissions in AGSS after changing the layout of the facilities
・Continuation of disaster-mitigating measures (completion of securing of facilities)
・Mutual inspections according to Aisin Global Safety Standard
Not achieved
・Securing of facilities incomplete
・Continuation of disastermitigating measures (details reported at BCP meeting)
2 Lightning damage
・0 injuries or faults in testing facilities
・Ensuring safety and preventing damage to facilities in the event of lightning
・Implementation of countermeasures by each domestic group company
・Introduction of services for distributing local weather information (Fujioka)
Achieved
・Sharing of details on measures against risks with group companies
3 Water damage
・0 fatalities or impact on communities
・Assessment of risks at each company from hazard map
・Faster collection of information from group companies
・Completion of risk evaluation at domestic sites
・Typhoon warnings and collection of information on damage
Achieved
・Review of details of measures against water damage and support for planning of measures
4 Occupational accidents
・0 severe accidents
・Systematic installation of lockouts based on correct understanding (until end of FY2020)
・Introduction of All Toyota work manager and construction manager qualification systems at group companies
・Completion of lockout installation and commencement of operation
・Completed introduction of All Toyota work manager and construction manager qualification systems at group companies
Achieved
・Training for work managers and construction managers
・Unification of standards to construction management in the group
5 Fire and explosion
・0 fires
・Thorough reiteration of 4 basic actions to ensure awareness among all employees at all workplaces
・5S from the perspective of fire prevention
・Prevention of fires caused by abnormalities in equipment
・Thoroughly maintaining hazard management
・Measures for fires in ducts and dust collectors
・Small-group activities in workplaces (5S around heat sources)
・Training on the 4 basic actions for all employees
Not achieved
・Continuing 100% completion of training on the 4 basic actions
6 Suspension of production due to a disaster or accident
・0 suspensions of production due to disasters or accidents
・BCP measures for products produced at one site (acceleration of consideration of S/A ranking for group)
・Establishment of recovery procedure as a model for actions in the event of a disaster
・Considerations for S/A/B rankings completed
・Consideration of globally compatible products and confirmation of production performance
・Consideration of non-compatible alternatives
Achieved
・Faster action using SCRAM procurement system
7 Suspension of infrastructure supply (electricity/water/gas)
・Completion of installation of backup power supplies for 202 facilities where suspension would severely impact production
・Investigation of whether generators are needed
・Selection of lines for backup power supplies and calculation of capacity
・Prioritization of transmission lines for Kariya cogenerator and establishment of startup procedure
Achieved
・Creation and execution of plan to introduce backup power supplies for selected facilities
Social and political risks
8 Terrorism,
9 coups, riots
・0 fatalities or injuries
・Handling of threats to life due to terrorism, riots, etc.
・Strengthening of training and provision of information for employees who are posted overseas or traveling for business
Achieved
・Thorough safety procedures (group training, etc.)
10 Cyber attacks
・0 cases of information leakage or suspensions of production due to cyber attacks
・Strengthening of advanced log analysis by specialist security organization
・Implementation of security measures for content published online
・Building of framework for fast response to cyber incidents
・Introduction of specialist security systems
・Making employees aware of CSIRT (response team) contact point and establishing group CSIRT
・Training on suspicious emails
Not achieved
・Activities to prevent incidents of this nature from occurring
・Building of a framework for information security measures
11 Damage resulting from theft
・0 cases of damage, threats or theft
・Strengthening of threats to life due to disturbance of the peace
・Training and provision of information for employees who are posted overseas or traveling for business (warnings, travel restrictions, thorough safety procedures, etc.)
Achieved
・Training for employees transferred to dangerous areas
Administrative risks
12 Information leakage
・0 major cases of leakage
・Compliance with and thorough reiteration of information management rules for mobile work
・Third-party evaluations for all companies in the group
・Creation of operation/management rules based on reforms to make work more fulfilling
・Support for risk assessments covering confidentiality, completeness and availability in group companies
Achieved
・Support for unachieved items, establishment of tools to carry these items out from our group head office
・Achievement rate
12 group companies: 100%
Group subsidiaries: 80%
13 Environmental pollution
・0 cases of external thresholds being exceeded
・Measures to prevent contamination of groundwater at overseas sites
・Regular confirmation of continuation of management at subsidiaries
・Continued cleaning of hexavalent chromium
・Monitoring and detection of deterioration in barrier wells (Nishio)
・Support for employees at subsidiaries
・An environmental incident : Value in BOD agreement exceeded at Kyodokan, Aisin Seiki
Not achieved
・Renovation of 16 wells in reorganization of Nishio District (Nishio)
・Strengthiening prevention of environmental abnormal of waste water.
14 Quality issues
15 Falsification of quality data.
・0 quality issues
・Thorough compliance with laws, regulations and quality agreements
・Promotion of activities to improve quality according to quality policies
・Creation of workplaces ensuring compliance with laws, regulations and quality agreements
Achieved
・Strengthening of response through group-wide/global cooperation
16 Suspension of suppliers’ operations
・0 stoppages of our own lines
・Use of system throughout group
・Anticipation and prevention of impact on suppliers
・Fast impact assessment and response in the event of a suspension
・Creation and commencement of use of manual detailing system operations
・Environmental risk inspections
・Identification of possible alternatives in BCP considerations
Achieved
・Reduction of cases of disruption of supply due to fire, water damage, etc. at supplier sites and minimization of impact
・Establishment of response framework at each company
Legal and HR risks
17 Intellectual property disputes
・Completion of building of framework to handle lawsuits
・Creation of system for sharing information between group companies
・Handling of US patent violation lawsuits
Achieved
・Organizational framework, legal response, policy building (accompanying management merger)
18 Fraudulent accounting
19 Theft of company assets
・0 cases of this nature
・Thorough reiteration of rules and raising of awareness on replacement of employees
・Workshops for group subsidiaries
・10-point inspections at subsidiaries
Achieved
・Workshops for new accountants (target: 100% attendance)
20 Violation of Antimonopoly Act
・0 violations
・Raising the level of legal compliance throughout the group
・Prevention of failures to check and report hazards due to decrease in awareness
・Establishment of rules for collaborations with competitor (BluE Nexus)
・E-learning for domestic subsidiaries
Achieved
・Introduction of group-wide/global guidelines on the Antimonopoly Act
・Broadening of scope of email checks
21 Labor disputes
・0 suspensions of operation due to labor disputes
・Smooth accomplishment of staffing strategies through business restructuring
・Increasing level of labor management worldwide
・Revision of employee assessment tools
・Guidance for group companies using knowledge base including Toyota Group’s labor management guidebook, etc.
Achieved
・Assessment of employees’ understanding of and agreement with company policies
・Exchange of information through Toyota Group labor management training
22 Violations of Personal Information Protection Act
・0 major cases of leakage
・Ongoing compliance with laws and regulations in each country
・Establishment of fully consolidated policies, regulations and notifications in domestic companies
Achieved
・Handling of business restructuring, data mapping in each country
・Revision of regulations and thorough communication through training
23 Violations of export trade regulations
・0 violations of regulations
・Uniform HS code judgments
・Handling of export regulations in Thailand
・Standardization of operations according to guidelines for certificates of origin
・Establishment and execution of overseas rules
Achieved
・100% complete introduction of rules at overseas companies
Failure to handle incidents
24 Public knowledge of a compliance violation
・0 severe violations of laws and regulations as a result of measures to contain incidents
・A system for early detection of violations within the company is required
・Increasing employees’ awareness of reporting service in domestic group companies
・Training for reporting service personnel in domestic group companies
Achieved
・Appropriate external disclosure of scandals
・Maintaining and improving percentage of employees aware of reporting service
25 Mishandlings of media situations
・0 mishandlings of PR situations
・Enhancement of manual on handling media crises and use of the manual at remote subsidiaries
・Media training for top management at 13 group companies
Achieved
・Training for newly appointed presidents and officers at the 13 core group companies
・Establishment of action plan to establish PR framework overseas