Mitsubishi Chemical Group Corporation
Mitsubishi Chemical Group Corporation

Risk Management

While the word risk can be defined in various ways, the MCG Group defines risks as “potential events that could, during the course of corporate activities, undermine public trust in or the corporate value of the MCG Group”.
We recognize, analyze, and evaluate risks and prevent materialization of significant risks. We take measures to minimize the personal, economic and social damage arising in case of materialization.

Charter of Corporate Behavior

The MCG Group Charter of Corporate Behavior, consisting of thirteen chapters, explicitly declares that we act with sound ethics and good common sense in every aspect of our corporate activities.
It also stipulates that we share the fundamental behavioral principles for sustainable development, our approach for major issues in contributing to the realization of KAITEKI, and the basic ideas and initiatives on the realization of KAITEKI, with our business partners and others.

  • Awareness and Responsibility
  • Valuing Stakeholders
  • Environment and Safety
  • Information Management
  • Shared Standards
  • Accountability and Transparency
  • Respecting Human Rights
  • Fair Business Practices
  • Science and Technology
  • Legal Compliance and Fairness, Equitability, and Integrity
  • Employment and Labor
  • Customer Satisfaction
  • Community Involvement

Risk Management

The MCG Group is engaged in corporate activities with the objective of raising its corporate value. These activities are related to social conditions, the global environment and various other external environments, and they involve potential risk.

Risk Management System

MCG has in place a risk management system whereby the MCG President is responsible for risk management across the entire Group based on the MCG Group Risk Management Basic Rules. The management of significant risks and risk management policy that affect the entire MCG Group are deliberated and decided by MCG’s Risk Management Committee. The contents of those deliberations and decisions are reported to the Board of Directors, as needed.
The Presidents of operating companies are in charge of risk management at their respective Group companies, embedding their Group risk management system locally and overseeing the operations through the local Risk Management Committees. Recognizing the importance of fostering risk control awareness among all executives, managers, and employees, everyone is expected to be involved in risk management from their respective standpoints.

Risk Management System Conceptual Diagram

Risk Management System Conceptual Diagram: The Risk Management System has “MCG’s Board of Directors,” “MCG Risk Management Committee,” “Each company’s Board of Directors,” and “Each company’s Risk Management Committee.” “MCG Risk Management Committee” consists of “Risk Management Committee Chairperson: President (Chief Risk Management Officer)” “Vice-Chairperson,” “Secretariat (Internal Control Office),” and “Committee members.” “Each company’s Risk Management Committee” consists of “Risk Management Committee Chairperson: Each company’s President (Chief Risk Management Operating Officer),” “Vice-Chairperson,” “Secretariat” and “Committee members.” Each company’s “Risk Management Committee Chairperson: Each company’s President (Chief Risk Management Operating Officer)” participates in “MCG Risk Management Committee.” “MCG Risk Management Committee” gives instructions to “Each company’s Risk Management Committee” and “Each company’s Risk Management Committee” makes reports to “MCG Risk Management Committee.” “MCG’s Board of Directors” supervises and receives reports from MCG’s “Risk Management Committee Chairperson: President (Chief Risk Management Officer),” and “Each company’s Board of Directors” supervises and receives reports from “Risk Management Committee Chairperson: Each company’s President (Chief Risk Management Operating Officer).”

Risk Management Process

1.Identification of risks

All companies in the MCG Group identify risks associated with business type, business characteristics, and other aspects of the internal environment as well as the country’s political and social situation and other aspects of the external environment.
Moreover, a unified system for each operating company has been established to understand and address the overall risks within the company.

2.Risk assessment and measures

Each operating company prioritizes identified risks in order of importance for each company, examines countermeasures, and takes action at relevant management departments to mitigate risks. Senior managers also review the risks and undertake screening for risks (major risks) that could have a major impact on Group management via businesses and operations under their control. The relevant departments then implement appropriate risk measures as instructed.

3.Detailed examination of risk measures

Risk measures are periodically scrutinized, and measures for major risks in particular are reported to each operating company’s Chief Risk Management Officer.

4.Auditing

To ensure the proper administration of these risk management systems, the Internal Audit Office periodically conducts audits and reports its findings to the Chief Risk Management Officer.

Measures Against Major Risks

The MCG Group has isolated the following categories of risks as warranting priority measures. After identification of such risks, we take measures to avoid their incidence or to minimize the resulting damage if the risks materialize.

Compliance

In order to entrench compliance within the Group, we have compiled rules and standards, such as the MCG Group Charter of Corporate Behavior, published a compliance guidebook, provided education, training and seminars on compliance, performed audits, and opened a compliance hotline. At overseas Group companies as well, we endeavor to strengthen compliance by compiling rules and codes of conduct in accordance with the laws, regulations and social norms of each country.

Accidents, work injuries, and large-scale natural disasters

Each operating site endeavors to prevent facility-related accidents by ensuring the soundness of facilities and equipment and proper operation of them through their appropriate maintenance as well as extensive education and training of operators. If an accident occurs, the Group works to avoid recurrence by analyzing the cause, taking measures, and verifying their effectiveness through inspections or maintenance patrols. Moreover, the Group works to prevent accidents by applying these measures laterally to similar facilities and equipment or operations. Learning lessons from past large-scale disasters, MCG has made further improvements to its business continuity plan (BCP). In the event that it becomes impossible to continue operations at the MCG head office (Tokyo), we have plans for transferring head office functions to a temporary backup site with the aim of minimizing damage and ensuring business continuity in disaster situations. We are also examining ways to maintain the procurement of raw materials and our responsibility of supplying products by procurement from multiple suppliers, as part of our BCP.

Information security

MCG has formulated an Information Security Policy in order to protect its information systems and assets from internal and external threats, with the aim of maintaining and improving corporate value. Based on this policy, we established the Information Security Committee and charged it with reinforcing the management of information security at our business sites inside and outside Japan. We regularly conduct educational and training sessions for all employees including those overseas on our policy to ensure employee awareness and compliance with it. For example, based on the “Cyber Security Management Guidelines” formulated by the Ministry of Economy, Trade and Industry (METI), we are striving to collect the latest information and establish an emergency response system, in cooperation with outside institutions, so as to prevent problem occurrence as much as possible and minimize damage in case of an occurrence. We are also working to increase employee awareness about information security by drilling them with e-mails made to look like targeted e-mail attacks and arranging e-learning opportunities.

Subsidiary governance

MCG clarifies the responsibilities of corporate organizations and improve systematic approaches to reduce overall Group risks in the governance of subsidiaries in Japan and overseas.
For example, in order to mitigate risks arising from laws and systems specific to the countries in which we operate, we have collected and disseminated cases of significant accidents and violation of laws in each country to raise awareness of those risks at overseas Group companies.
Furthermore, in preparation for political or other changes in such countries, we have established a system of communication between the local area, the operating companies, and the Company to ensure awareness of governance issues.

Response to emerging risks

The MCG Group is seeking to address the risks below as well, which are expected to expand in the future, by drawing up medium- to long-term strategies.

Climate change

While the chemical industry is a sector generating a large amount of GHG emissions, it is also an industrial segment that can contribute to reducing GHG emission volume through its products. In case the industry cannot meet requests for GHG reduction from customers such as lighting equipment and automobile manufacturers giving priority to compliance with environmental standards for their products and energy-saving effects, it will run the risk of its earnings being adversely affected in the future. Therefore, the MCG Group is pushing ahead with the development of products that will help battle climate change by setting a qunatitative target calling for “the supply of products and services contributing to reductions in GHG emissions” under its current Mid-term management plan APTSIS 20.

Digital technologies

There is a possibility of digital technologies such as AI and IoT bringing about significant changes to the chemical industry. Failure to cope with such changes in an adequate manner runs the risk of reducing the MCG Group’s competitiveness. Consequently, the Group established the “Emerging Technology & Business Development Office” in April 2017, with a Chief Innovation Officer (CIO) appointed to serve as general manager and a Chief Digital Officer (CDO) in charge of AI and IoT projects. The Office will employ AI and IoT technologies to promote the automation of process control, product quality inspections and analyses, the development of new materials and pharmaceuticals, etc., all with the aim of attaining and maintaining competitiveness.

Shortage of skilled human resources

In addition to worldwide intensified competition for skilled and talented human resources companies need to adapt to the multipolar world after COVID-19. Companies that are unable to contribute to the resolution of social issues or that are unable to successfully convey their contribution to solving social issues to stakeholders, face the risk not being able to attract the most talented and sought after human resources, especially among young personnel.
We are making efforts to improve our brand image and reinforce employee engagement through measures such as advocating a vision that we are aiming for business growth by contributing toward solving social issues (KAITEKI Vision 30) and other various branding measures.

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