Basic Concept for Risk Management
The CITIZEN Group assesses, analyzes, and evaluates risk and engages in activities to appropriately manage risk based on the results of these efforts, in order to achieve Group-wide business targets and ensure sound and sustainable development.
Group Risk Management Structure
Enhancement of Group Risk Management
To achieve Group-wide business objectives and ensure sustained growth, the CITIZEN Group has developed a structure to enable centralized risk management and swift responses Group-wide.
The CITIZEN WATCH CSR Office, the core of the Group risk-/crisis-management structure, cooperates with individual sections of CITIZEN WATCH and Group companies in Japan and overseas to advance and check on efforts to enhance Group governance and quality compliance, check on the state of responses to priority risks in the Group, and respond to emerging risks.
Through this cooperative structure, we carry out efforts to ascertain and respond to important risks under the leadership of top management. In addition to financial risks, these include ESG risks related to such areas as compliance and business continuity plan (BCP), intellectual property, information security, labor practices, and environmental issues.
In addition, this cooperative structure makes it possible to carry out uniform risk management Group-wide, as well as sharing risk-management expertise among individual Group companies, by the sharing of information in the Group concerning Group-wide priority risks and risks affecting individual companies.
Furthermore, in order to enhance quality compliance Group-wide, in addition to promoting the CITIZEN Group Quality Assurance Code of Conduct as an integrated Group code under the management responsibility of the Director in charge of Group risk management, we also are carrying out other initiatives intended to reduce quality-related risks. These include organizational changes to secure the independence of quality-management sections, training on quality management, and setting uniform Group standards in such areas as contracts and quality inspections. At present, we plan to formulate audit lists from the perspective of quality-related compliance and use these together with quality auditing. The CITIZEN Group will continue planning improvements to enhance risk management Group-wide in the future as well.
Group Risk Management Organizational Structure
Main Activities in FY 2019
Under the Group Quality Compliance Committee, we have established a working team consisting of quality managers from the business management companies. In terms of ISO9001 standardization and the CITIZEN Group's own quality management system (QMS), the working team operated with two purposes of deliberation continuingly on what could be done and what related issues are faced regarding quality compliance and of sharing information within the Group concerning quality assurance. The working team consequently concluded that ISO9001 standardization and the CITIZEN Group's own quality management system (QMS) are included under the subject of quality compliance.
The Group Quality Compliance Committee has been also reported the followings.
- The phrase "compliance with the CITIZEN Group Quality Assurance Code of Conduct" will be added to the quality manual or quality policy of each company. The approval of the President or another person responsible, such as the Director responsible for quality, will be required for any revisions.
- A system will be developed for continual activities toward permeation of the Group Quality Assurance Code of Conduct. The Group Quality Assurance Code of Conduct will be incorporated into e-learning on the Group Code of Conduct to enable a structure for continuous and integrated Group implementation.
To prevent the reoccurrence of any quality improprieties in the Group, development of a structure for periodic auditing of the following elements, which could lead to such improprieties, will be studied through means that include a review of case studies from other companies.
- Inspection process
- Mechanism related to the reliability of inspection data
- Mechanism that focuses on the motivation and opportunity for falsification of inspection data
- Mechanism that enables prevention and detection of falsification
- Mechanism to secure inspection accuracy
- Handling of irregular products
- Confirmation of rules related to irregular products; mechanism to ensure compliance with quality requirements imposed by customers
- Management of records at the time of occurrence of irregular products; management of records on communication with customers
- Concluding and fulfilling contracts
- Confirmation of contract-related operations to ensure quality compliance; examination of contracts
- Rules on management
- Mechanism to ensure the fulfillment of processes and contract details; recording and managing contract terms and conditions
Actions Taken Against Group Risks
Response to Crisis
In preparation for a major crisis (incidents/accidents, terrorism, natural disasters, scandal, etc.) that could occur in various areas of the world, The CITIZEN Group are working on constructing a global crisis management system. To swiftly and accurately gather, determine, and disclose crisis information, we are laying the groundwork to minimize impact on business and stakeholders by clarifying standards of reporting to the Head Office, establishing an emergency recognition conference to make crucial decisions on matters, and setting up a crisis management headquarters that reviews specific measures.
Overseas Safety Management System
The CITIZEN Group promotes safety management for employees overseas. There increase in numbers of employees who work abroad, and unforeseen circumstances such as terrorism, political unrest, natural disasters, and infectious diseases have occurred around the world. Any of these circumstances could have a significant adverse impact on our business operations.
We have put in place a system in which the Overseas Safety Management Office is constantly aware of the location of staff on business trips or who resides overseas. In the event of unexpected incidents or accidents, the office can confirm staff safety and, if necessary, provide suitable instructions.
The office also monitors overseas risk information on a daily basis and actively provides the information to staff on business trips or who reside overseas.
Business Continuity Plan (BCP) for Disaster
To prepare for an event where management resources are significantly impacted by a large-scale natural disaster and business must be halted or suspended, or an event in which the possibility of business suspension is high, the CITIZEN Group has determined the necessary systems, tasks, and procedures to continue or quickly restore business operations, and formulated a BCP. We, then, conduct BCP trainings and maintenance the BCP in order to adjust to changing risks and pursue effectiveness and sophistication.
We prepare for disaster risk throughout the group-wide value chain by conducting BCP trainings not only at production sites but also at domestic and overseas logistics sites, such as trainings that simulate fires.
Trade Secret Management
In order to protect trade secrets and the information crucial to our business activities, the CITIZEN Group established the Group Trade Secret Management Regulations in FY2011.Currently, the Group Information Governance Committee promotes the management and operation concerning trade secrets, and works on information-sharing and addressing raised issues. Along with these activities, the Group also conducts employee education to ensure that employees are well informed about these matters.
Importance of Continuing Firmly Grounded Initiatives as a Group
CITIZEN MACHINERY, which leads the machine tool business in the CITIZEN Group, in FY2011 launched a Committee to Promote Building of a Trade Secret Management System. The committee set quickly to work, and the system began operating in FY2012. As it oversaw the building of the system, the committee wrote "Five Points to Trade Secret Management" (see box at the lower right) and aimed to conduct down-to-earth initiatives. Centering on the Special Committee of Trade Secret Management and each department manager, every year, each department reviews information subject to trade secret management and manage the updated trade secrets.
Currently, in addition to regulations and bylaws, we established “Guidelines on the Handling of Drawings.” Based on these guidelines, we are rolling out specific management operations, including at Group subsidiaries in Japan and overseas, thereby enhancing our trade secret management system. Going forward, CITIZEN MACHINERY aim to increase our internal trade secret management quality through previously described efforts, and intend to enhance our corporate value by managing trade secrets relating to such department as product development, manufacturing, sales, service, administration, and other areas, and by thoroughly managing information as sources of added values for new business models associated with trade secrets.
Five Points to Trade Secret Management
- The Company's important information (trade secrets) that support its added value shall be appropriately managed
- Appropriate management of trade secrets is a precondition to being legally protected
- It is important that trade secrets be effectively managed
- Trade secrets entrusted to us by other companies shall be protected just like our own information
- Overseas expansion of reliable operational management of this system are indispensable
-the Special Committee of Trade Secret Management-