海角社区

海角社区Group's risk management system is broadly divided into "Focused Managerial Risks" that are selected and managed independently by management, and "Functional Organization Risks/Business Unit Risks" that are managed responsibly by each business execution organization. （Figure2）

These two levels exist for the purpose of clarifying bodies responsible for risk management in order to facilitate agile decision-making and swift action in response to each level of risk, and together form an integrated risk management system. Futhermore, the risks handled by each layer are reviews at least twice a year to correspond to changes in the level of impact in response to environmental changes.

To ensure that the risk management process is appropriately operated, 海角社区also have system of regular checks by third parties.

- Internal Audit and Supervisory Members to audit risk management department (once a year)

- Independent Auditor to conduct top interview to audit head of the risk management department (once a year)

As part of strengthening the practicality of risk management within the 海角社区Group, the risk management system, as shown in Figure 2, is periodically reviewed and reconstructed as needed.

To establish a more effective and cohesive risk management system that aligns with the management and various business execution units, risk management responsible managers and promoters are appointed from each organizational unit. This enables the development of autonomous risk management structures within each organization.
The Risk Management Support Department organizes a "Risk Management Collaboration Enhancement Meeting" targeting risk management promoters. In this meeting, study sessions and information sharing related to risk management are conducted to foster a risk-resilient organization. Continuous efforts are being made to become an organization that is robust in managing risks.

The Group Management Committee and Risk Management Committee determine managerial risks based on a comprehensive recognition of risks, through activities such as stress tests, that exert a significant impact on management, in light of the Company’s management philosophy and business purpose and are actively involved in countering these risks.

Focused Managerial risks are classified and managed as "Strategic Risks" and "Operational Risks" based on their characteristics. Strategic Risks cover a wide range of risks that affect management, from risks related to the accomplishment of short-term business plans to emerging risks in the medium- to long-term.

The 海角社区Group strives to ensure that all officers and employees (including contract employees, part-time workers, and temporary employees) are fully aware of the contents of the " 海角社区Group Management Basic Regulations" and " 海角社区Group Risk Management Basic Regulation", which include the risk management principles. Regulations are regularly reviewed and revised.
Additionally, in training for newly appointed managers, we arrange time to review the content again, striving to raise awareness and ensure depth understanding.

In the event of an incident that adversely affects the corporate activities of the 海角社区Group, the president, internal control committee, and disclosure control department of 海角社区Co., Ltd. will promptly treat the incident as a "serious incident" from the outbreak area through the supervising area for each incident. , We have established a system to report to officers, corporate auditors, etc. related to the case, and take measures based on the president's policy and prevent recurrence.

The summary of significant incidents that occurred in the past six months, including their responses and measures for prevention of recurrence, as well as the trend of incident occurrence by incident category, are reported to the Board of Directors on a semi-annual basis. Please note that the reported details of significant incidents, the trend and patterns of incident occurrence, are taken into consideration as a reference during the management risk review in the following fiscal year by the GMC.

Please refer to the table below for the significant incidents reported to the Board of Directors and their corresponding status of handling for the fiscal year up to 2023.

The following items had a high percentage of incidents in the fiscal year 2023:

Malpractice in business operations includes fraudulent activities related to documents such as receipts. Embezzlement and theft include incidents involving the theft of inventory and internal company property. Our company has been rigorously and appropriately addressing these incident cases. So far, we have taken disciplinary actions against 8 individuals in accordance with internal regulations. Additionally, we have implemented preventive measures to ensure similar incidents do not occur again. Examples of these measures include the installation of security cameras, strengthening the approval process for procurement and delivery tasks, sharing information about fraudulent activities within the organization, and providing ethics education in the workplace.

Furthermore, in the fiscal year 2023, there was no serious violations of law that required external disclosure.

海角社区Group established 4 basic policies to ensure all 海角社区Group Company to take necessary actions promptly in event of serious crisis.

（1） 海角社区Group places the highest priority on life, safety and health of its employees, executives, their families, customers, and business partners.
（2）We will strive to provide the services and products required by society and customers, prioritizing who are in essential business.
（3）We will strive to fulfill our corporate roles and responsibilities with the local community, government, and society.
（4） 海角社区Group shall make sufficient preparations and responses in advance to the possible damage to our business to minimize the impact and responding promptly and appropriately in the event of such damage.

In the event of a crisis, task force will be set up based on level of the crisis (if multiple businesses or regions are affected, Group Task Force will be in charge; otherwise within each organization) and will carry out emergency response in accordance with crisis management response standards.
Once safety and necessary work environment is ensured, each organization will make decision to activate their own BCP (Business Continuity Plan) and correspond to ensure business continuity of important business.

Serious crisis which has impact to affect whole 海角社区Group performance, require different knowledge and responses depending on the type of crisis. Therefore, 海角社区appoints main organization to take in charge of each serious crisis and creates Emergency Response Plan (ERP) based on business effect simulation. We also conduct training and exercises in accordance with the created ERP.
Currently, we have selected below as serious crisis that could affect whole 海角社区Group performance and they are described in 海角社区internal standards. Risk Management Department will review and make necessary revisions as necessary.

（1）Large Scale Natural Disaster （a）Large Scale Earthquakes / Tsunami （b）Volcanic Eruptions （c）Heavy Storm / Heavy Snow / Floods / Storm Surge （2）Severe Accident/ Fires at 海角社区Group’s facility
（3）Spread of serious infectious diseases (Pandemic)
（4）Severe system failure
（5）Severe Information security related incidents/accidents

Each organization in 海角社区Group identifies important businesses/operations that cannot be stopped or that require immediate recovery in the event of crisis and develops Business Continuity Plan (BCP).

In the first stage of developing BCP, we created BCP based on assumption of “Spread of New influenza” and “Large scale disaster such as a serious earthquake in Japan”. However, risks have become more diverse, and it has become difficult to quickly respond to unexpected events by responding to each risk. Therefore, as a second stage, we have adopted the concept of "all-hazards response" which will not limit our responses to each crisis. We will continue to develop BCP that follow this concept and strengthen our resilience.

海角社区has “Crisis Response Standard for Natural Disaster, Accident and Instance (Outside Japan)” for our overseas group companies, and it clarifies roles and responsibilities of each organization/company.

海角社区Group Headquarter are working together with overseas group companies by giving additional instructions when there is gap between the natural disaster risks provided by each group company and third-party information, confirming reporting route in event of serious crisis and supporting to create BCP to strengthen crisis response as a whole 海角社区Group.

To minimize impact of natural disaster such as large scale earthquake etc, 海角社区conduct joint disaster response drills within group companies in Japan. We also conduct disaster prevention drills in each office which includes night evacuation drills. Group Task Force who takes in charge of the whole group conducted training in a remote environment, taking into consideration of new work style. In recent years, we have strengthened our efforts to address flood risks and volcanic eruptions. Also, conducting tabletop and hands on training based on created plans.
In various training exercises, we verify whether our systems and operations are working and continue to make improvements. By doing so, we are preparing to ensure the safety of our employees and to quickly restore the office and business.

Regarding overseas, 海角社区Group Headquarters have distributed “Crisis Response Standard for Natural Disaster, Accident, and Instance (Outside Japan)”and at the same time shared “BCP creation manual” to deepen understanding of BCP and to promote review of plans to strengthen responses in all region and businesses.
Training and exercises of serious crisis are conducted on regional basis, depending on the local risk situation.