Risk Management

Basic Approach

In accordance with Risk Management Regulations, risk management activities identify factors that obstruct the sustainable development and the improvement of the corporate value of the KOBELCO Group, and we take measures accordingly against them by referring to COSO, an international standard. In terms of the scope of Companywide risk management, Top Risks and Significant Risks are defined as risks that would require a Groupwide action and that have a major impact on the Group and its stakeholders. These Top Risks and Significant Risks include ESG risks regarding human rights, safety management, climate change and natural disasters.

Management Structure

The President is the person ultimately responsible for the Group's overall risk management, and the Director in charge of the Corporate Planning Department is the person responsible for overseeing risk management across the Group. Meanwhile, individual risks are managed by the relevant Directors in charge (the Risk Owners) as the persons responsible for Groupwide management activities, and the countermeasures to these risks are executed by the heads of businesses and the Directors in charge of the head offices to establish a risk management system that encompasses the entire organization. The Executive responsible for overseeing risk management across the group monitors plans and measures formulated by risk owners, reports the result to the Management Council, and gives instructions to risk owners based on the results of discussions at the Management Council. Under the leadership of the President as the person ultimately responsible for the Group's overall risk management, the risk management system is operated independently of the Audit & Supervisory Committee.

Types and Definitions of Risk&Framework

The Company applies an annual PDCA cycle to manage individual risks. Under the instruction of the Risk Owners, the heads of the businesses and the Directors in charge of the head offices who are the individuals responsible for risk countermeasures in each organization, identify and assess the risks faced in business activities, incorporating this information into annual risk management plans (Plan). Next, organizations implement these plans (Do) and evaluate the results together with the Risk Owners (Check). The areas requiring improvement identified through these evaluations are reflected in the risk management plan for the following year (Act).

To ensure the effectiveness of risk management activities, the Board of Directors manages and supervises these activities for Top Risks and Significant Risks including ESG risks and confirms the annual activity results of organizations. This process is actively adopted at Group companies.

The KOBELCO Group’s Risk Management Cycle

Business and other risks that may impact Kobe Steel and have the potential to influence investor decisions are described in the Company’s annual securities report (Japanese only).

To the bottom is a list of the risks described in the annual securities report for fiscal 2019.

Business and other risks

Changes in Operating Environment
1) Economic trends in major markets
2) Product supply and demand conditions
3) Fluctuations in prices of raw materials, etc.
1) Occupational accidents, equipment accidents, etc.
2) Natural disasters, pandemics, wars, and acts of terrorism
3) Quality-related risks
4) Impact of environmental regulations, etc.
5) Legal and public regulations
6) Litigation risks
7) Human rights-related risks
8) Financial risks
9) Factors affecting progress of current medium-term management plan
10) Protection of intellectual property rights and violations of rights of third parties
11) Information management issues and information leaks

In addition, in the event of an emergency that an urgent and serious risk of loss arising from Top Risks and Significant Risks, etc., appropriate communication and decisions are made based on internal rules Reporting System against Risks, and precise actions are taken to minimize damage.

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