Risk management
Risk Management System
Daido Steel believes that risk management and compliance are the starting points for ensuring the continuity of its businesses, and perceive them to be one of the most important management issues.
In order to achieve the sustained development of the Daido Steel Group, we have established Risk Management Regulations stipulating basic matters on risk management, and are conducting activities accordingly. Based on these regulations, risks are defined as events that could have a detrimental impact on the Company, and we perform comprehensive and integrated tracking and evaluation of risks, determine policies on responses to risks, implement preventative measures, and implement ongoing monitoring of these activities. The Company has appointed an officer who is responsible for risk management and compliance as the companywide supervisor of risk management and compliance to promote these initiatives. Furthermore, the Corporate Risk Management (CRM) Committee chaired by the President that is an advisory organ to the Board of Directors has been established as an organ to discuss matters related to the risks surrounding the Daido Steel Group and matters concerning internal control, and it supervises the status of operation of internal controls pertaining to risk management and financial reporting.
The Company periodically formulates and revises a risk map on the risks that impact business operation, assesses risks, and selects important risks related to the Company and notifies the relevant divisions. Furthermore, working groups (WG) are established for risks that should be addressed by the entire company, and they conduct companywide activities and periodically report to the CRM Committee.
Furthermore, we have built a three lines model with the CRM Department as the final line of defense as a system for dealing with various risks, laws and regulations.
Risk Map-based Risk Management Activities
Daido Steel uses a risk map to organize risks in business operation according to the degree of impact and frequency of occurrence.
Working groups are organized to respond to particularly high risks among these. There were no payments of fines or settlements related to ESG issues, and no provisions were made for these
Risk Map (Excerpted version)
2023 Medium-Term Management Plan Orange: Being handled by WG
| Frequency of occurrence | High | Risk that could occur at any time |
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| Medium | Risks that have the potential to occur |
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| Low | Risks that occur by chance or around once or twice per year |
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| Loss category | Moderate impact | Serious impact | Catastrophic impact | ||
| Degree of impact | |||||
Addressing major risks
Fiscal 2021 Results
Deliberation in the CRM Committee
The CRM Committee held six meetings, and deliberated issues and measures related to risk management under normal circumstances such as responding to priority management risks.
Working group (WG) activities
In addition to organizing working groups (WG) in coordination with the relevant divisions to promote activities for risks with particularly high importance or priority, the content of activities is periodically reported and deliberated in the CRM Committee. The following kinds of activities were carried out in fiscal 2021.
[Trade Security Control]
- Export control internal audits (Daido Steel Group) and education through e-learning system
- Establishment of workflow system for export classification review, introduction of system for halting incoming orders
[Prevention of Cartels]
- Arrangement of establishment of relevant internal rules for the prevention of cartels
[BCM]
- Implementation of BCM training with participation by management in anticipation of response immediately after the occurrence of a major earthquake in the Nankai Trough (Establishment and operation of temporary alternative headquarters in the Tokyo Head Office, utilization of MCA radio* as a means of communication in the disaster, etc.)
- Promotion of plant earthquake and disaster prevention measures (measures against oil leaks from equipment, measures to secure power supply during power outages, etc.)
- Support for BCP formulation for Group companies
[Strengthening of Governance of Group Companies]
- Education and study by theme and area led by Group companies and activities for the mutual exchange of information (subcommittees), for the purpose of enhancing the overall strength of the Group
- Six subcommittees: Audit & Supervisory Board members, important laws and regulations, internal control, internal audit, risk management & BCM, human resources management
- Various training seminars, individual consultations, provision of support
[Information Management]
- Information management training through an e-learning system based on the information management guidebook
- Response to the protection of personal information
- Promotion of cybersecurity measures (strengthening of monitoring system, consideration of incident response, etc.)
For risks other than the above, each risk owner implemented initiatives to prevent and reduce risks.
Fiscal 2022 Plan
- Implement risk management activities based on the “Risk Map for the 2023 Medium-Term Management Plan”
- Hold meetings of the CRM Committee: Reporting and deliberation of the status of risk management activities (including reports on the status of initiatives by each risk owner)
- Continue promotion of working group (WG) activities: export control audits, implementation of BCM training, holding subcommittee meetings for Group companies, continuation of cybersecurity measures, etc.
- Expand use of e-learning systems within the Group (implemented in 16 companies by the end of fiscal 2021 → expand to 90% of entire Group) and roll out to overseas Group companies. Further enhance the Group’s risk management and compliance education by expanding content
In addition to the above, we will proceed with the establishment, etc. of the necessary education, internal audits and rules for increasing the level of the Group’s risk management and compliance.
* MCA radio: A business radio system using Multi-Channel Access radio technology
Crisis Management System
In preparation for the occurrence of crises such as natural disasters, accidents, domestic or foreign terrorism or conflict, and scandals, Daido Steel has formulated regulations for emergency countermeasures in the event of a major accident, with the purpose of promptly sharing information with concerned parties, making a speedy response to the issue, and minimizing the impact on business activities. The Daido Steel Group as a whole, including Group companies, conducts business operations based on these regulations. The Group has also deployed emergency radios to create a system enabling reliable sharing of information when a crisis occurs.
Since fiscal 2020, as a response for the prevention of COVID-19 infection, we have swiftly collected information on not only people who are infected, but also those in close contact or semi-close contact, and people feeling unwell who may be infected, and centrally managed this at head office. Furthermore, as preventative measures, we are promoting remote work, promoting flex and staggered office hours, downsized and dispersed meetings, and promoted web conferencing.
Compliance
Code of Ethics and Code of Conduct
Daido Steel has established the Daido Steel Corporate Code of Ethics and the Daido Steel Code of Conduct as standards for behavior that all Company staff and other concerned parties should follow, and distributes these to all employees and offers training on these codes to each tier of its workforce. Furthermore, the status of compliance including the status of compliance with the above Code of Ethics and Code of Conduct such as the content, history and investigation results of internal reports are reported to the CRM Committee as needed.
Daido Steel Corporate Code of Ethics
Daido Steel strictly observes and adheres to the letter and spirit of all laws, as well as ethical standards applicable in all jurisdictions in which the Company conducts its business, and behaves in a socially sensible manner based on the following eight principles.
- Contribute to society through technology, service, and quality that maintain the satisfaction and trust of customers and society.
- Compete for business and conduct appropriate business in the marketplace in a fair, transparent, and free manner, and maintain sound and normal relationships with political and administrative institutions.
- Disclose Daido’s corporate information in a fair and positive manner through extensive communications with shareholders and members of society.
- Respect employees’ diversity, character, and individuality, while ensuring safe and comfortable working environments and realizing freedom and high quality of life.
- Act positively and voluntarily with the awareness that environmental issues are something common to all people.
- Conduct all corporate activities as a good corporate citizen in compliance with corporate ethics and legal requirements. Also, give careful attention to protecting personal and customer information. In conducting international corporate activities, respect local cultures and customs and manage in a way that allows contributions to the development of local cultures.
- Take a stringent and resolute attitude toward any unreasonable demands from antisocial forces or organizations that threaten the order and safety of civil society.
- To realize the Daido Steel Corporate Code of Ethics, the management assumes the responsibility to take the initiative to internally familiarize the spirit of the Corporate Code by setting good examples and to make group companies and customers know of the same. The management also assumes the responsibility to take the initiative to improve the company structure. In the event of any violation of this code, management shall personally investigate and resolve the matter, and make a prompt and accurate disclosure of information pertaining to the matter. After such disclosure, management will take measures to prevent recurrence, and will discipline violators appropriately
Internal Reporting System
We have established Internal Reporting Regulations and maintain an internal reporting system to receive consultations and reporting on compliance in Daido Steel and Group companies. We have established hotlines in the divisions in charge and an externally as the contact points for internal reporting, and the content of reports is reported to the officer in charge of risk management and compliance and the Audit & Supervisory Committee, which provides instructions for the divisions in charge to investigate and respond. Furthermore, in addition to reporting the status of operation to the CRM Committee, etc., we implement companywide initiatives according to the cause and frequency.
Compliance Initiatives
Compliance is the premise of the sustained development and business continuity of a company, and initiatives are continuously being carried out with the highest priority. The Company is instilling compliance in all Group employees through the following specific activities.
| Fiscal 2021 Results | Fiscal 2022 Plan |
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Issued messages from the President and Executive Officers, including New Year’s greetings from the President and the Corporate Ethics Month (October) message
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Hold lectures by the Executive Vice President (officer in charge of CRM Department) during Corporate Ethics Month*
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Made the internal reporting hotline and how reports are received widely known to employees through media such as internal newsletters
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Continue compliance awareness activities utilizing media such as internal newsletters
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Revised the “Important Laws and Regulations for the 2023 Medium-Term Management Plan” (identify important laws and regulations related to the Group’s business operations, organize legal requirements, and propose and implement countermeasures for laws and regulations of especially high priority), and collected and disseminated new information
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Revise “Important Laws and Regulations,” collect new information and communicate it to the Group
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Promotion of harassment elimination activities: Provided harassment prevention training to all office managers
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Continue to promote “harassment elimination activities” including Group companies
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Implemented compliance audits of the Company’s plants and offices, and Group companies (appropriate management of work hours, etc.)
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Implement compliance audits of the Company’s plants and offices, and Group companies (laws related to the business environment, Worker Dispatch Act, etc.)
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Implemented education and individual consultation on the internal reporting system for supervisors and persons in charge of internal reporting in Group companies
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Implement individual consultation on the internal reporting system for Group companies
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Provided training on laws and regulations to Daido Steel Group employees
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★ Implement employee awareness survey, assess and analyze survey results, and report to the CRM Committee
(★ New initiative in fiscal 2022 (will also be periodically implemented from fiscal 2022)) |
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Held Group CRM study sessions (members comprise officers responsible for compliance within the Daido Steel Group)
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| In addition, we provided support for the discovery and individual corrections of compliance issues within the Group | In addition to the above, we will continue to hold Group CRM study sessions and implement education on Group compliance. |
* Holding of keynote address on “Corporate Compliance”
Every October is positioned as Corporate Ethics and Compliance Month, and we are promoting activities to raise awareness of corporate ethics and compliance among all employees.
In fiscal 2022, the Executive Vice President in charge of the CRM Department will provide a keynote address and deliver a video message as part of Corporate Ethics and Compliance Month.
Ensuring anti-corruption compliance
The Daido Steel Code of Conduct stipulates restrictions on gifts and entertainment, and we ensure anti-corruption compliance among officers and employees.
In particular, we have incorporated items on anti-corruption compliance in the training for recruits and training for personnel before being assigned overseas, and conduct education on this.
Elimination of antisocial forces
The Daido Steel Corporate Code of Ethics and the Daido Steel Code of Conduct stipulate breaking off relations with antisocial forces, and we ensure the prevention of corruption among officers and employees.
In addition, we stipulate provisions on the elimination of antisocial forces when concluding agreements with new business partners.