Approach to Risk Management

To ensure the sound and smooth operation of business, Nihon Kohden has established a management framework to prevent risks in overall business operations and has prescribed methods for dealing with risks when they occur.

Risk Management Framework

The Board of Directors is responsible for establishing basic policies concerning risk management in overall Group business operations, and ascertaining the improvement and promotion status of the Group-wide risk management framework. The Risk Management Supervisory Divisions are tasked with improving and promoting the overall risk management system of the Nihon Kohden Group.
The risks present in the execution of business activities have been classified into nine types, and the Risk Management Divisions and Risk-Related Committees have been assigned to each risk type. The Risk Management Divisions provide training and support to operating divisions and subsidiaries with regard to their assigned risk types, and report the system improvement and promotion status to the Risk Management Supervisory Division. The Risk-Related Committees report to the Board of Directors and Management Council on matters including assessments of management system appropriateness, validity, and effectiveness for related risk types. The Internal Audit Department reports to the Representative Directors and the Board of Directors on risks discovered during audits.
In FY2023, the Company will develop a company-wide sophisticated risk management framework. The Board of Directors will discuss the important risks and response policies identified by the newly established Risk Management Committee.

Risk Types

The Risk Management Regulations, which set forth the basic policies for risk management, classify risks into the nine types of risk shown in the following table.



Compliance Risks

Risk of losses due to failure to comply with laws and regulations, etc.

Quality Control Risks

Risk of losses due to problems related to the safety or reliability of our products or services

System Risks

Risk of losses due to failure, malfunction, or unauthorized use of networks and computer systems used in internal IT infrastructure, products, and services

Disaster and Accident Risks

Risk of losses due to interruption of business operations caused by disasters or accidents

Environmental Risks

Risk of losses due to occurrence of environmental pollution, etc., caused by insufficiency in reduction of environmental impact or prevention of environmental pollution

Financial and Accounting Risks

● Risk of losses due to change in value of assets held, which is caused by changes in market environment and credit standing of business partners, etc.

● Risk of losses due to inappropriate accounting practices

Information Disclosure Risks

Risk of losses due to inappropriate disclosure of information

Strategic Risks

Risk of losses due to incorrect business strategies

Human Rights Risks

Risk of being liable for compensatory damages or decrease in its corporate value due to human rights violations by the Company or its business partners

Self-Assessment of Risk Management

Nihon Kohden’s offices, subsidiaries, and the departments in the head office conduct self-assessment of risk management regarding compliance and others using divisional inspection sheets. The Risk Management Supervisory Division verifies the progress of risk management system implementation and future responses, and reports the results of the self-assessment to the Board of Directors. Overseas subsidiaries also report to the Board of Directors on the development and progress of their risk management systems and measures to strengthen the implementation. In addition, the Company provides education on risk management to its executives and employees to ensure that they are fully aware of the importance of risk management.
In FY2022, we introduced groupware and a security monitoring environment equivalent to that of the head office to our overseas subsidiaries in Asia and the Middle East. We also strengthened measures against system risks by conducting targeted attack training emails and information security education for overseas employees. Additionally, as a countermeasure to human rights risks, we analyzed the results of the questionnaire survey on human rights and related issues conducted in FY2021 using an outside consultant, identified human rights risks in the Company, and formulated measures to reduce those risks. We will systematically reduce risks by continuing to conduct monitoring of Group companies and suppliers in Japan and internationally.

Response in the Event of a Risk

The response to be taken when a risk occurs has been set forth in the regulations established for each risk type.

Response as a Medical Equipment Manufacturer

As a medical equipment manufacturer, Nihon Kohden focuses on product risk control to avoid accidents related to its products. In addition to the rules for normal operation, we have stipulated the rules and reporting line in case of an accident.
In order to prevent an accident and communicate quickly when an accident takes place, we have established a system to collect a broad range of information from clinical practice quickly and accurately as well as a framework for disseminating information.