With the Daikin Group expanding rapidly around the globe, we have introduced company-wide, cross-organizational risk management in order to quickly get an overall picture of risks from a global point of view and reduce the risks. With our president as the highest ranking person in Daikin's risk management structure, we carry out risk management in the following three areas.
Strategic risk is deliberated on by management members through platforms such as the Group Steering Meeting and the Executive Officers Meeting. As for risk related to the reliability of financial reports and operational risk, the Internal Control Committee, headed by the president, inspects these biannually to ensure that they are being properly managed within the Group's risk management and overall internal control structure.
The following are possible risks affecting the Daikin Group's financial situation, business performance, and other areas.
For details about each risk, see pages 57-59 of Annual Report 2020.
The directors and executive officers in charge of a duty have the authority and responsibility to create a Group-wide, cross-organizational system that covers the entire sphere of that duty; for example, in terms of product liability and quality, safety, production and sales activities, and disasters.
To deal with risk across the entire company, officers in charge of compliance and corporate ethics, through the legal department, identify major risks based on risk management principles, and these are deliberated biannually by the Corporate Ethics and Risk Management Committee in order to formulate measures to deal with risk.
All divisions and major group companies around the world carry out annual risk assessments to determine the most important risks. Based on this, companies propose and implement countermeasures to reduce risk. They also make reports on the progress of these measures and present and share them via the Corporate Ethics and Risk Management Committee.
With natural disasters such as typhoons and torrential rains occurring with increasing frequency, Daikin Industries, Ltd. is taking measures against natural disasters as a whole, not just earthquakes. To this end, we have made disaster response a key company-wide theme and we are building stronger, more comprehensive disaster measures that include both hard and soft aspects.
In preparation for earthquake risk, we have made and are implementing proposals in areas including reinforcement of earthquake resistance at our plants and flooding measures at our chemical plants, as well as evacuation drills to prepare for flooding. Despite numerous instances of earthquakes, typhoons, and torrential rains in recent years, the measures that we had in place allowed us to avoid any fatal damage.
We are also creating a business continuity plan (BCP), identifying risks, and making and implementing proposals to, for example, prevent production equipment from toppling and ensure stable procurement of parts and materials.
Furthermore, taking into account the impacts of the aforementioned natural disasters, we are creating measures in divisions such as those related to materials procurement and distribution.
Group companies are also proceeding with their own BCPs.
Daikin has made preventing information leaks one of its key company-wide themes. IT-related divisions and compliance-related divisions cooperate closely, and personal information managers and information security leaders in each division lead efforts to minimize the risk of information leaks.
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