Risk Management

Approach to Risk Management

As we conduct a wide range of business activities throughout Japan and on a global level, we believe that a solid risk management system is essential for capturing business growth opportunities and implementing our strategies. In formulating long-term management strategies and medium-term management plans, we identify multiple opportunities and risks that we recognize in each segment and closely monitor them as we conduct our business activities. We also engages in various initiatives such as formulating measures to offset risks. In addition, the Total Risk Management Council, which is chaired by the Company president, has been established to control risk management activities. We aim to continuously improve our sustainable corporate value by appropriately managing various risks that may affect our earnings from a short-term perspective and medium- to long-term perspective.

Total Risk Management Council

In accordance with the basic policies established by the Board of Directors, the Total Risk Management Council identifies risks associated with business activities and formulates/promotes a risk management plan to prevent risk events from materializing or to minimize possible loss. Total Risk Management Council meetings are held regularly once a month to promote preventive risk management by compiling drafts of risk management plans prepared by each division for each fiscal year and then formulating the Company-wide Risk Management Plan. Total Risk Management Council members are appointed by the chairman after discussions are held by the Management Council. Executive Officers of Nippon Koei are obliged to conduct risk management related to the assigned duties each was given. Total Risk Management Council members consist of individuals who are at the Executive Officer level or above.

The Total Risk Management Council meetings implement PDCA (Plan-Do-Check-Act) cycle in the form of identifying and monitoring risk items and reviewing the progress of countermeasures. When a significant risk event becomes apparent, we conduct a self-assessment of the risk management plan, take necessary measures and improvements, and reflect them in the risk management activities of each division. The state of risk management at Group companies is also reported to the heads of each division.

Process for responding to apparent risk

Process for responding to apparent risk

Business Continuity Initiatives

If we do not have adequate countermeasures for natural disasters, including earthquakes, windstorms, floods, as well as for epidemics and outbreaks of infectious diseases, it is anticipated there is a risk that we will be forced to suspend operations for a long period of time, which could result in significant losses that would have a major impact on our stakeholders. As a company involved in the social infrastructure that supports people's daily lives, we believe that it is our social responsibility to continue to provide stable services. Therefore, we have established a business continuity plan and are working to create and periodically review rules for responding quickly and appropriately in the event of a crisis.

In accordance with those rules, the Total Risk Management Council centrally manages the collection of information on disasters, accidents, incidents, and other crises that have occurred in Japan and overseas as well as the responses to them.

Responses to Major Risks Identified

Risk Opportunities

Item Risk Description Response and Business Opportunity Creation
Legal Restrictions Occurrence of incidents that violate laws and regulations
  • Thorough compliance with laws and regulations and internal education
Business Operations Loss of trust resulting from compliance violations by Group companies
  • Strengthening of internal control systems at Group companies
Orders and Sales Dependence on sales from specific customers (Domestic Consulting, International Consulting and Power Engineering are impacted by public investment trends, ODA budget trends, and trends including capital investment in power facilities by TEPCO Power Grid, Inc. respectively.) Domestic Consulting/International Consulting
  • Concessions, PPP/PFI projects and other private sector projects, Expansion of orders for non-ODA projects
  • Increase of added values through IoT such as BIM/CIM
Power Engineering
  • Strengthen design and procurement capabilities and proposals to obtain orders from public and private sectors
Business Execution Defects in deliverables provided to clients
  • Perform accurate verification to prevent technical defects
Labor Loss of human resources due to overwork and harassment
  • Regular labor monitoring
  • Improvement of productivity through DX promotion using RPA, AI, etc
Safety and Health Serious accidents involving employees caused by terrorism and conflicts during overseas field operations, Penalties and compensation based on laws and regulations for accidents caused by inadequate field management
  • Safety patrols by the Safety & Health Management Office and third-party experts and follow-ups on matters indicated
  • Establishment of a network with Safety Officer at Group companies
Information Management Leakage of customer information and confidential information
  • Implementation of training sessions on confidential information management, etc.
  • Periodic system improvements to improve the effectiveness of management
  • Stricter management of customer information (restriction of users)
Financial Reporting Unexpected economic conditions and rapid changes in the financial market
  • Monitoring and guidance by the Internal Control over Financial Reporting Committee under the Total Risk Management Council
  • Review of portfolio in medium-term management plan, etc.
Disasters and Incidents Risk to business continuity due to large-scale earthquakes and other disasters
  • Proactive response to disaster countermeasure business including disaster prevention and mitigation and infrastructure maintenance (countermeasures against aging), areas in which we excel
  • Application and periodic review of business continuity plan
  • Promotion of efficient and flexible work styles
Climate Change Changes in the business environment due to the impact of global warming
  • Proactively respond to projects that contribute to climate change countermeasures for which demand is growing (transportation infrastructure development, environmental conservation, renewable energy-related projects, etc.)
  • Development of related technologies
Country-based Risk Unexpected restrictions on business activities and occurrence of costs due to the impact of change of government, Brexit, etc. on business conditions
  • Reduction of dependence on UK customers and development of new markets through overseas expansion of BDP (BDP and Quadrangle in Canada, BDP and Nippon Koei in Asia)
  • Diversification of the countries and areas where we conduct business
Decline in the working population in Japan Lack of human resources in the industry and lack of human resources to whom technology and know-how can be passed on to
  • Secure and cultivate overseas human resources
  • Operation of a regional engineer system to enable overseas human resources to be active in third countries
  • Actively recruit new employees and strengthen the post-employment training system
Investment Business Loss due to the occurrence of events beyond expectations in the investee environment
  • Strengthen monitoring of existing investment business
  • Careful selection of new investment targets
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