AKEBONO REPORT 2015

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Risk ManagementAkebono’s risk management structure is supported by the RiskManagement Committee comprising a group of directorschaired by the Representative Director & CEO and the RiskEvaluation Committee which oversees the implementation ofthe PDCA* cycle in risk management and is chaired by theRepresentative Director & Executive Vice President. Under theformer’s supervision the latter plays two key risk managementfunctions controlling Groupwide critical risks and promotingbusiness continuity management (BCM) activities.For fiscal 2014 we classified Groupwide critical risks into sixspecial risk management fields and seven regular risk managementfields. In each of these fields the Risk EvaluationCommittee implemented risk mitigation initiatives closelymonitoring them for progress and areas needing attention.For our fiscal 2015 operations we have identified 10Groupwide critical risks and are addressing them throughPDCA management. Expanding the scope of our BCM activities we are also examining all possible catastrophic scenarios thatmay result in the disruption of the Company’s operations andare formulating countermeasures for domestic and overseaslocations. Efforts are now under way to implement these plansto secure a greater resilience to risk.Groupwide critical risks: Quality risk labor administration risk financial risk cartel risk environmental and workforce safety risk raw material procurement risk intellectual property risk informationsecurity risk credit risk and corporate communication riskBCM themes: Risk of natural disasters in Japan risk of naturaldisasters overseas country risk and related security risk overseas cyber-attack risk in Japan and overseas pandemic risk in Japanand overseas.* PDCA: A management methodology that controls company’s activities from the fouraspects of Plan (planning) Do (implementation of a plan) Check (checking the outcome)and Act (effecting improvement based on the check)Compliance StructureAs it expands globally it is important that Akebono beyondcomplying with the law and regulations correctly understandsand fulfills its corporate social responsibility. Accordingly wehave set up the Compliance Committee chaired by a managingexecutive officer and established the “akebono Global Codeof Conduct” and “akebono Global Standard of Behavior” tobe observed by each associate.Fiscal 2014 Compliance ActivitiesWe are implementing a range of educational programs in orderto raise the level of compliance awareness among our associateswith regard to such issues as information control and the preventionof harassment. In fiscal 2014 we asked all associates inManagement SystemsJapan to take a “compliance proficiency test” while incorporatingcompliance education in job level-based training programs.For the prevention and early detection of problems we haveset up in-house and outsourced consultation counters to acceptinquiries from any Group associate. The inquiries can be madeanonymously. In fiscal 2014 a total of 15 such inquiries werereceived and they were addressed under the leadership of theCompliance Committee. In addition in January 2014 weestablished the “Supplier Hotline” to field and address inquiresmade by our suppliers in connection with the business conductof Akebono associates. As of May 31 2015 however thishelpline has yet to receive any inquiry. Akebono conductshearings on compliance for Group associates every year. Infiscal 2014 we conducted hearings for over 200 persons insideand outside Japan. The results of the hearings helped improvecommunications between Group members. Furthermore wecarried out additional training and campaigns focusing on theprevention of cartels and bribery.Information Security ActivitiesAkebono has established the Information Security Committee while clearly defining information security policies guidelinesand rules for the handling of information based on its significanceand risk in order to implement appropriate measuresaimed at protecting information systems and data owned inhouseor provided by our customers from all kinds of threats.We have also created a structure in which each section carriesout self-checks against the information security risks theirrespective operations are vulnerable to. While raising associates’awareness through the implementation of the PDCA cycle weare strictly enforcing our information security guidelines andother internal rules to ensure information security and associateswho violate these rules are subject to punishment.We are also upgrading our information management structureto match the changing business environment. In light ofthe heightening risk of information leakage due to global businessexpansion growing dependence on IT and the increasedliquidity of employment we are developing a globally unifiedstructure to further strengthen controls on critical information.Specifically after revising the information security guidelines infiscal 2012 we expanded the scope of their application toinclude overseas Group members in fiscal 2013 thereby promotinginformation security activities at locations across theglobe. In fiscal 2015 we began to step up countermeasuresagainst “targeted cyber-attacks ” which recently have enteredthe cybercrime mainstream. Given the growing sophisticationof cyber-attackers’ methodologies we are striving to securegreater preparedness on a global basis.Corporate Governance Compliance and Information Security ActivitiesSupporting a solid corporate structure every Akebono associate is committed to ensuring thoroughgoing risk management and legal complianceand implementing information security policies.