1. Philosophy

JSR Group believes that preventing major crises from occurring and minimizing their impacts on business activities is a key part of management. The Group has formulated Risk Management Policies and established a Risk Management Committee through which it actively pursues risk management activities.

• Basic Views and Policies Related to JSR’s Corporate Governance

2. Risk Management System

JSR Group manages risk by largely classifying it into two types: risk related to business strategies and risk related to business operations.
For risk related to business strategies,^* we engage in risk management through deliberations and decisions made in important meetings, such as those of the Board of Directors, Executive Committee, and Business Issues Committee. Please click on the following link for the roles of each committee and other details.

* Risks associated with doing business include strategic risks concerning capital investment and M&As that are discussed at Board of Directors meetings and other important meetings.

• JSR’s Corporate Governance Report (PDF 993KB)

For risk related to business operations, we establish Risk Management Policies and engage in risk management centered on the Risk Management Committee.
The risk management system is incorporated into the internal control system. The status of the internal control system’s execution is reported to the Board of Directors. JSR has a Corporate Audit Department that continuously verifies and evaluates the preservation and operation of internal control for the entire JSR Group as required by the Companies Act and Financial Instruments and Exchange Act. It also ensures that risk in existing business does not exceed permissible levels. The department additionally maintains and strengthens internal control levels for the entire Group and conducts internal audits to ensure the appropriate and efficient execution of operations.

3. Risk Management Measures

(1) Identifying Risks and Selecting Important Risks

Since FY2009, JSR Group has fulfilled group-wide annual risk management procedures using its unique risk management system under the initiative of the Risk Management Committee. For each division of JSR Group companies in and outside of Japan, we identify and evaluate all potential risks, and formulate measures to control such risks.

Utilizing a risk map that represents level of business impact and frequency of occurrence, we identify risks that could have a significant impact on business continuity and organize them risks into the JSR Group Risk Factors. We build and maintain a system for prevention and crisis preparedness by monitoring and regularly reviewing the risks that senior management has identified.

Conceptual diagram of risk map

Click on the following link for information on the risks that could impact on JSR Group's business performance, financial standing, cash flow, etc.

• JSR Group Business and Other Risks (PDF 132KB)

(2) BCM (Business Continuity Management)

1) Formulation and Operation of BCM Procedures

JSR has formulated BCM procedures that summarize the BCM/BCP^* systems in place for both peacetime and emergency situations. These procedures define the BCM organization and the actual BCP, which includes stipulations on target recovery times, and BCP activation and cancellation standards. They also define the organizational structure that takes effect during activations of the BCP, and corresponding priority businesses and operations.

Moreover, we maintain a stable supply of funds on hand to allow us to manage our businesses flexibly if a major risk arises. We also acquire issuer ratings and commercial paper ratings from rating agencies each year. JSR's ratings are available on rating agencies' websites as well as the JSR website.
Amid concerns of a global economic slowdown resulting from the COVID-19 pandemic, we issued three types of unsecured straight bonds with a total value of 35 billion JPY on May 28, 2020.

* BCM: Business Continuity Management/BCP: Business Continuity Plan
A BCP defines activities to be conducted in anticipation of emergencies that could threaten a company’s survival (such as a large-scale natural disaster, explosion/fire, or terrorist attack), judgment criteria and action guidelines that enable business continuity in the event of such emergencies, and other matters necessary for ensuring the continuity and early restoration of important businesses. BCM is a management system that operates and continuously improves the BCP through the PDCA (plan-do-check-act) cycle.

2) Major Earthquake Preparations

JSR Group adopted a mid-term business plan in FY1995 concerning preparations for a major earthquake and has been conducting systematic activities to enhance those preparations. After FY2006, we began a seismic retrofitting project focused on high-pressure gas facilities in our plants, and installed an earthquake early-warning system at all JSR business sites. Based on lessons learned from the experience of the Great East Japan Earthquake, we are systematically reinforcing the aseismic capabilities of our buildings and implementing safety measures that include tsunami countermeasures. We completed aseismic retrofitting of our spherical tank braces in FY2020.

• Security and disaster prevention

(3) Enhancement of Initial Response to Emergencies

1) Crisis Management Training

Once a year since 2004, JSR holds crisis management training with the participation of “headquarters for accident and crisis control” members.

In FY2021, we conducted a general review of the Group's COVID-19 business continuity plan (BCP) from January to June 2020 with the cooperation of an external expert organization and identified areas for improvement. We verified that, by and large, appropriate and timely responses to the pandemic are being made throughout the Group.

By conducting drills that anticipate a variety of potential disasters, we will continue to make the preparations needed to ensure safety, control damage, maintain business continuity.

2) Disaster Management Training at Each Plant and Laboratory

JSR Group conducts disaster management and evacuation training and drills on a regular basis. FY2020 is no exception. While implementing measures to combat COVID-19 infections, we are holding drills that simulate disasters at each of our business bases to minimize the impacts of emergencies and improve our ability to ensure business continuity.

Drill to identify locations of fire with a drone at the JSR Yokkaichi Plant

Drill to identify locations of fire with a drone at the JSR Yokkaichi Plant

3) Safety Confirmation System

In FY2009, JSR introduced a safety verification system that uses employees’ mobile phones and smartphones. The system can promptly ascertain the safety of employees in the event of a large-scale earthquake or other disasters. In FY2011, we began expanding the system's coverage to include domestic Group companies and the families of JSR employees.
Training using this system is conducted regularly, and JSR is prepared for large-scale and wide-area disasters.

4) Infection Preparedness

We stockpile masks in preparation for an epidemic of influenza or another infectious disease. We sent masks and other protective equipment to all of our business bases in response to the COVID-19 pandemic that began in January 2020. We endeavored to minimize the pandemic’s effects on manufacturing, R&D, distribution, and other Group business activities that support the world’s key industries.
We also provide necessary information such as the announcement of flu outbreaks. To prevent flu infections from spreading in our workplaces and to also make sure that the cases of influenza that do occur stay minor, we invited doctors and nurses to JSR's Head Office and the Yokkaichi, Chiba, and Kashima Plants to administer vaccinations to those who desired one.

5) Responses to Legal Risks and Compliance Risks

Click on the following link for information on our responses to legal risks and compliance risks.

• Compliance