GOVERNANCE

BASIC APPROACH

The Noritsu Koki Group views risks as potential events that could impede the progress of its business plans. We identify significant business risks through an assessment of the likelihood of occurrence and degree of impact on our business and operations. We analyze the causes of these significant risks and take measures to prevent them from materializing. For unavoidable risks, we examine them individually to manage them appropriately and reduce their potential impact.

RISK MANAGEMENT SYSTEM

Noritsu Koki has established the Risk Management Supervisory Committee, with the representative director and CEO as the chief risk officer to manage matters concerning risks and crises from a Group-wide perspective. The committee also formulates business continuity plans (BCPs) so that a rapid initial response can be taken in the event that a risk arises, and prepares various manuals to serve as crisis management guidelines for employees. In addition, each Group company has established a risk management committee, where members discuss matters concerning risk management and formulate countermeasures. This structure results in a higher level of risk management across the Group.

Noritsu Koki Group Risk Management System
ZOOM UP
  • ＊Subcommittees are set up at subsidiaries as needed according to the nature of risks

RECOGNITION OF MAJOR RISKS AND RESPONSES

The Group conducts a risk assessment for the entire Group every year. In the risk assessment, the business risks, and management and business issues identified by the business divisions of each Group company are evaluated and mapped according to “likelihood of occurrence” and “degree of impact,” and countermeasures and annual plans are formulated. The results are discussed by each company’s risk management committee and ultimately reported to the Noritsu Koki Risk Management Committee and monitored throughout the year.

In addition, in 2024, following the issuance of emergency information on the Nankai Trough Earthquake that occurred in Japan in August, the entire Group reviewed its BCP response and forecast of damage in the event of an earthquake.

The “likelihood of occurrence” and “degree of impact” taken into account in risk assessments are based on the following classification.

(1) Likelihood of Occurrence

Level Expected Frequency
of Occurrence		 Notes

HighLow

 5 Several times a month May occur on a daily basis
4 Several times a year May occur quarterly or semiannually
3 Approx. once a year Even if it does occur, it occurs about once a year
2 Approx. once every few years Rarely occurs
1 Approx. once every 10 years May occur, but very rarely

(2) Degree of Impact (impact: impact on the company’s business (performance),continuity of business operations, etc.)

Level Definitions Impact on Management
(performance) (loss/
damage amount, expenses)		 Duration of Impact
on Business (time
until recovery)		 Human Resources
(human lives and
resources)		 Scope of Impact
(loss of credibility,
scope of damage)

HighLow

 5 Severe impact Over ¥2 billion 2 years or more,
several years		 Fatalities Society (public
opinion)in general
4 Major impact Over ¥1 billion to
less than ¥2 billion)		 1 year or more,
but less than 2 years		 Multiple serious
injuries		 All stakeholders
3 Minor impact Over ¥500 million to
less than ¥1 billion		 Several months,
but less than 1 year		 Hospitalization
required		 Limited stakeholders
2 Slight impact Over ¥10 million to less
than ¥500 million		 1 week,
but less than 1 month		 Medical treatment
required		 Within the Group
1 Limited impact Less than ¥10 million Less than 1 week First aid possible Within the Company
  1. ＊The definitions of degree of impact levels above apply to Noritsu Koki only

Likelihood and Potential Impact of Major Risks Affecting the Group

Risk Categories Anticipated Risks Likelihood of
Occurrence		 Degree of
Impact
(1) Supply chain
  • Delays in procurement and production, inventory shortages, sales declines, etc.
  • Decline in reputation
  • Suspension of operations due to disasters (natural disasters, fires, etc.)
 Medium High
(2) Country risk
  • Deterioration of business performance due to various risks arising from overseas subsidiaries (sales companies), overseas customers, and production contractors (e.g., natural disasters and economic conditions)
 Medium Medium
(3) Foreign exchange risk
  • Impact of exchange fluctuations on financial and business performance
 High Medium
(4) Cyber risk
  • Impact on business continuity due to information leaks, suspension of operations, etc., and reputational risks, etc.
 Low High
(5) Human resources related
  • Difficulty in recruiting new employees, brain drain, organizational weakness, etc.
 Low Medium

For details, including other risks, please refer to the “Business and Other Risks” section of our Securities Report (70th fiscal year). *Available only in Japanese
https://ssl4.eir-parts.net/doc/7744/yuho_pdf/S100VIFV/00.pdf