Risk Management
The Citizen Group has established group-wide committees for each important business theme, including security trade control, subcontracting and information security.
Basic Approach to Risk Management
We are working on risk management for the purposes of properly controlling risks that may impede the realization of our Corporate Philosophy, the accomplishment of management plans, and the fulfillment of our social responsibility to achieve sustainable growth in corporate value.
Risks involving the Group are classified into two types: strategic risks and operational risks. The strategic risks are dealt with by the Management Committee and by the Operational Management Committee, whereas the operational risks are addressed by all companies in the Group in an organized manner.
Promotion of Risk Management
We have developed Basic Risk Management Rules. In the executive section, the Group CSR Promotion Committee monitors the operational risks of individual companies in the Group to determine whether they should be addressed by individual companies or by a Group-wide committee or equivalent body. A proposal is then made to the CSR Committee. Risks referred by the Group CSR Promotion Committee are considered by the CSR Committee. The resources needed to deal with the risks are then coordinated within the Group. If necessary, proposals are made to the Group Management Committee.
During fiscal 2010, risks were analyzed and evaluated mainly at individual subsidiaries. They studied their own actions for the following fiscal year. With regard to business continuity plans (BCPs) for use in the event of disasters, regarded as a high priority risk for the Group, individual companies took their own actions. We will review common issues to develop the BCPs. As trade secret management, a Group-wide initiative will commence in fiscal 2011.
Basics of the Risk Management Process
Overseas risk management
Fundamentally, subsidiaries should be in charge of overseas risk management. In fiscal 2010, we began by seeking to understand the circumstances in China and marshaling issues. In China, there are challenges of coping with risks associated with changes in different laws, regulations, and systems and risks in personnel management policies, including labor issues. In view of management strategies, we share three points with the relevant departments to address business risks. These are: first, the system for information gathering and sharing at Chinese works (risk of information inadequacy); second, the system for responding in the event of emergency (risk of slow emergency response); and third, the system of minimal necessary day-to-day management as a function of the headquarters or head office on the Japan side (risk of information confusion).
Business Continuity Plans (BCPs)
We are working to develop business continuity plans (BCPs) to prepare for natural disasters, specified as a high priority risk in the risk evaluation carried out by individual Group companies. Given that actions vary from company to company depending on local conditions, the scale and structure of their businesses, and other circumstances, individual companies studied suitable plans and began taking action. Meanwhile, the Group is studying actions that are difficult for individual companies to take on their own for reasons of resource efficiency. Priority actions in BCPs in the event of natural disaster include, first, clarifying the chain of command; second, clarifying the functions of the head office and other key workplaces; third, making information public; fourth, backing up information systems; and fifth, supplying products and services. To address these issues, Group companies act according to their own order of priority. In their actions, priority is placed on ensuring and confirming the safety of human lives.
Learning from the delays in confirming the status of employees and their families in the wake of the earthquake in March 2011, we have introduced a safety confirmation system designed to enable rapid confirmation of the safety of Group employees and their families and for providing quick instructions.
Fire and Disaster Prevention Initiatives
Emergency drills at the Tokyo Works
As we continue to comply with laws and ordinances, endeavor to prevent fires and disasters and fulfill our social responsibilities, we are also strengthening collaboration with the local community and working on advance preparation and damage mitigation in anticipation of potential disasters. As well as implementing countermeasures in accordance with Falls and Falling Object Prevention Guidelines to ensure the safety of visitors and employees and minimize physical damages in the event of an earthquake, the Citizen Holdings’ Tokyo Works has introduced cloth stretchers able to negotiate narrow stairways in the event of an emergency and reviewed the arrangement of stretchers inside the business premises. With the cooperation of the fire department, city businesses, and hospitals, joint self-defense fire-fighting training that assumed a fire involving dangerous substances following an earthquake was conducted in June 2010.
Security Trade Control
We set out the Citizen Group Security Trade Control Rules in order to effectively enforce security trade controls within the Citizen Group. We established the Citizen Group Security Trade Control Committee, comprising Citizen Holdings and major Group companies, to provide individual Group companies with advice, education, and information and handle other operations such as auditing. To promote these activities we also have in place the Export Control Company Coordination Committee, which is made up of Citizen Holdings and operational management companies.
Information Security
The Citizen Group has established the Information Security Committee, which is made up of major companies including Citizen Holdings Co., Ltd. and Citizen Watch Co., Ltd., to determine information security policies for the Group. We have also set up an Information Security Promotion Committee, a subdivision of the Information Security Committee made up of information security officers from each of the Citizen Group companies and tasked with the actual work of rolling out policies determined by the Information Security Committee across the Group. As one of those activities, the promotion committee conducts information security training and Personal Information Protection Law training via e-learning. Roughly 5,000 of the 8,000 domestic Group employees have completed the training. In addition, to enhance the levels of security protecting our data and systems, we relocated from our current data center to a data center outfitted with the latest equipment. This move has allowed us to provide IT infrastructure services in a more safe and secure fashion. Further, the fully environmentally-friendly design of the new data center has also helped us reduce power consumption and CO2 emissions.
Efforts at Each Group Company
Business Continuity Plans at Citizen Heiwa Watch Co., Ltd.
Citizen Heiwa Watch Co., Ltd. is situated in the southern part of Nagano Prefecture, which is designated as an area requiring preparatory measures with respect to an earthquake in the Tokai region. Consequently, for the purpose of business continuity in which ensuring the lives and safety of employees is considered paramount, we have proceeded with efforts to securely fasten equipment, prevent the shattering of glass, institute a data backup regimen, and prepare communications equipment and emergency stockpiles to be used in the event of a disaster.
In response to the most recent earthquake, we initiated a headquarters disaster prevent organization. While this organization fulfilled its functions, including confirming the safety of employees and checking equipment, a number of issues have also come to light. Specifically, issues were found regarding the means and method of evacuation orders issued immediately after the earthquake, problems with equipment and other items, operation of disaster radio systems between factories, methods of collecting information, and the network (and methods) of emergency contacts. Moving forward, we coordinate with the Disaster Prevention Committee and Health and Safety Committee, using the lessons learned in the recent earthquake to create proposed measures on the basis of individual cases and work in a systematic fashion to produce more effective business continuity plans.
Business Continuity Plans at Citizen Seimitsu Co., Ltd.
At Citizen Seimitsu Co. Ltd., we have made progress with initiatives under our business continuity plan as an automobile parts supplier.
We were affected by the recent earthquake in terms of damage to equipment such as automatic lathes as well as rolling blackouts. Since the earthquake struck just one month after we conducted simulations in accordance with our business continuity plan, the disaster headquarters and departments specializing in countermeasures performed their designated tasks and we managed to respond in a short time. However, the disaster did expose areas in which routine preventative activities were lacking, such as confusion with producing handling for some manufacturing processes.
While our business continuity plan had only just begun, by experiencing the large earthquake that struck in March, we learned what actions to take not from assumptions but from an earthquake that actually occurred. As we move forward, we will revise our business continuity plan in order to “protect employees,” “protect the company” and “protect the local community” with respect to all manner of emergency situations.
Business Continuity Plans at Citizen Electronics Co., Ltd.
The safety confirmation system is designed to be used by Citizen Electronics Co., Ltd. as an emergency contact network in the event of a disaster.
The system is essential from the standpoint of business continuity, as a means of quickly and effectively confirming that all employees (and their families and dependents) are safe in the event of a large-scale disaster.
Other potential uses for the safety confirmation system include the following:
(1) Contacting all employees with urgent information, such as site closures due to heavy snow or changes to work hours;
(2) Contacting specific employees with urgent information.
We have also proceeded with improvements to our business continuity plans in preparation for disasters such as earthquakes and fires.
In the Great East Japan Earthquake that struck in March 2011, blackouts occurred due to the damages sustained by nuclear power plants during the earthquake. A host of failures occurred due to the power outage and identified issues in need of urgent attention. For instance, the internal broadcasting facilities shut down as a result of the power outage, and this meant that evacuation orders and other guidance were not accurately communicated to employees from the disaster headquarters. Also, some disaster prevention equipment failed to operate.
Under the safety confirmation system, which included ascertaining the status of employees away on business travel, confirming the safety of employees and handling changes to working hours due to rolling blackouts, we were able to take immediate action to make contact via email. This demonstrated the effectiveness of the system.
To handle employees returning home, employees rode home together in cars, since there was no damage to the roads. In addition, a smooth response was implemented with the cooperation with the company operating our cafeteria, including the provision of meals to people finding it difficult to get home and members of the disaster headquarters. However, some issues were exposed, such as our response when gas facilities shut down.
In terms of future efforts, we plan to undertake a range of initiatives aimed at transforming our business structure into one that is more resilient against disasters. Those initiatives will include making use of the lessons learned during the recent earthquake to revise our business continuity plan, improvements to our disaster prevention manuals, initial response training in anticipation of disasters, and restoration training in anticipation of being cut off from lifelines
Security Trade Control at Citizen Machinery Co., Ltd.
· In order to comply with the Foreign Exchange and Foreign Trade Act, we are working to prevent the illegal export, resale and relocation of machine tools via Citizen Machinery Co., Ltd. We fit relocation detection devices to all of our products in every series as standard, irrespective of whether they are bound for the domestic market or overseas markets. Such devices are designed to stop machine tools from working if they are relocated and can be used to control exports, by preventing the illegal use of machine tools for instance or verifying the location of machinery. We also license technology relating to such devices to other machine tool manufacturers.
