Risk Management
Policies and Basic Approach
Under the guidance of our Risk Management Policy and the Basic Risk Management Regulations, the Taisei Group has instituted a risk management system that is systematically implemented across the entire Company. It addresses ESG-related risks, including quality, compliance, information, safety, and environmental concerns.
To ensure the effective functioning of company-wide risk management and maintain the integrity of our operations, we implement preventative risk measures as stipulated in internal policies and manuals to prevent risks from occurring. Should a risk manifest unexpectedly, we promptly take appropriate measures to minimize losses, ensuring business continuity and maintaining public trust.
Structures and Systems
Promotion of Company-Wide Risk Management
At Taisei Corporation, we work to continuously operate the risk management system to appropriately identify and manage risks associated with business operations. Under the risk management system, the President serves as Chief Executive Officer of Risk Management, and Chief of the Business Administration Division serves as the Chief Risk Management Officer (CRO). Each year, we take into account the risks that became apparent during the current fiscal year to review the risk management for the following fiscal year through the PDCA cycle and verify the effectiveness of the risk management system.
Based on the Basic Risk Management Rules, each division of the Head Office, in cooperation with the branches, reviews and identifies all risks associated with their business activities and selects the “Head Office-governed risks.” The “Head Office-governed risks” are then narrowed down to risks that can possibly have a material impact especially on corporate management. Such risks are selected as “business operation risks” and are subject to risk management across the entire company. The “business operation risks” are deliberated upon by the Risk Management Committee, chaired by the CRO, and finalized by the CRO. The President and the Board receive reports and regularly confirm and maintain the operational status and effectiveness of the risk management system.
Advancement of Company-Wide Risk Management
Business and Other Risks
The main risks to which the businesses of the Group are exposed and that may have a material impact on decision-making of investors are described below. In the event that these risks materialize, the Group’s business results, financial position, and social credibility may be affected. The Group recognizes the possibility of the materialization of these risks and strives to avoid it and deal with such risks if they do materialize.
| 1. Risks Related to the Business Environment |
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In order to achieve sustainable growth of the Group and increase its corporate value over the medium-to-long-term, the Group sets the overall direction for corporate strategy and other major initiatives at the Board meetings and creates an environment that supports appropriate risk-taking by senior management. In executing business, the Company makes decisions based on standards established in line with the management policy and medium-term business plan, and continues to conduct qualitative and quantitative ongoing assessments of risks and returns for each project. The main risks related to the business environment are as follows:
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| 2. Business Operation Risks |
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We identify and select risks that could have a significant impact on management, and incorporate them into our companywide risk management framework, in accordance with the Basic Risk Management Rules. The key risks related to business operations are as follows:
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Priority Management Risks in FY2024
| ▶ Risk Associated with Quality Due to Construction Failure | ▶ Risk of Process Delays |
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We are working to strengthen the system to ensure that the quality control process functions properly by establishing the Quality Control Division and assigning full-time quality control specialists. We also continue to provide in-house training, including at the Steel Frame Academy, as well as technical education for specialized contractors. |
We ensure effective process management by examining the appropriate construction period before the contract is signed, discussing with the clients, and supporting worksites through the head office and branch offices. |
| ▶ Risk of Accidents | ▶ Risk Associated with the Working Environment |
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In the event of an accident, we are striving to create an environment that encourages prompt and appropriate reporting and ensures psychological safety, while maintaining a high level of compliance awareness in our response. |
As the legal upper limit on overtime working hours is applied from FY2023, it is expected that there will be a shortage of workers at worksites in the future. Accordingly, we are promoting further work efficiency and taking necessary measures, such as having the head office and branch offices provide backup to workplaces, while being mindful of appropriate staffing and workload. |
| ▶ Risk of information leakage and system trouble | ▶ Risks Related to Human Rights Issues |
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We will strengthen our security measures, including strict management of personal and customer confidential information, appropriate management of PCs and portable media, and implementation of anti-virus measures. In addition, we will provide educational and training sessions for employees, executives and specialized contractors. |
We evaluate the impact of insufficient efforts to address human rights issues across the entire supply chain, including executives, employees, and skilled workers, on the Group. To prevent such issues, we have identified discrimination, harassment, and long working hours as “priority human rights issues,” and are providing education and training to address them. |
Climate Change-Related Risks
In terms of climate change-related risks, we specify and assess risks based on various scenarios created and promote initiatives in response to the TCFD Recommendations.
Provisions for ESG-Related Fines and Settlements
Fines and settlements, etc. relating to environmental, social and governance (ESG) issues that are caused by events prior to the current period and are highly likely to occur in the future are estimated and allocated as provisions. Applicable provisions are not allocated for the three most recent business years.
Activities / Efforts
Business Continuity Planning (BCP)
The Taisei Group classifies as major disasters large-scale earthquakes, storms, heavy rains, and other extreme weather events and natural disasters, as well as infectious diseases that significantly impact the company's business continuity. In addition to ensuring the safety and protecting the lives of our executives / employees and their families, we have established business continuity plans according to the Policy on Business Continuity in Times of Disaster and other internal regulations to fulfill our mission as a general construction company supporting the infrastructure for socioeconomic activities.
The business continuity plan is based on scenarios where a major earthquake occurs during the season and time with the worst conditions for business continuity. It outlines procedures and instructions for: verifying the safety of executives and employees; rescuing lives; preventing secondary disasters at properties under construction; implementing emergency measures for infrastructure; responding to the restoration needs for previously constructed properties; securing response bases, personnel, and information infrastructure; and coordination with government offices, local communities, infrastructure companies, subcontractors and suppliers.
Additionally, our group conducts a large-scale disaster response drill once a year with the participation of the group's executives and employees to verify its effectiveness. Based on the results of each drill, we review and improve the business continuity plan as needed. Furthermore, since 2015, we have been annually conducting joint training with the Japan Federation of Construction Contractors and other organizations, working with our subcontractors and suppliers to establish a system capable of instantly responding to aid requests from government organizations and the like.
These initiatives to improve business continuity planning have earned us the Resilience Certification (certification for a contributor to national resilience) from the National Resilience Promotion Office of the Cabinet Secretariat and a certification verifying our basic ability to ensure business continuity in times of disaster from the Kanto Regional Development Bureau of the Ministry of Land, Infrastructure, Transport and Tourism.
In addition, in response to the COVID-19 pandemic that emerged in 2019, we have established a system to implement necessary measures, such as imposing activity restrictions by centrally managing infection status information at our domestic and international offices during a pandemic, and have updated our plan as the "Business Continuity Plan for Infectious Disease Outbreaks."
Moving forward, we will continue to develop a system that enables us to promptly implement infection control measures, such as stockpiling infection control supplies and educating our executives, employees, subcontractors and suppliers on how to respond when infections occur, in preparation for future infectious disease outbreaks.
Information Security Measure
In the construction industry, it is imperative to share information with numerous stakeholders, including clients and collaborative entities like specialized contractors, during the construction process. Recognizing this, the Taisei Group has articulated the “Management of Information and Intellectual Property Rights” in its Action Guidelines for Taisei Personnel and the Taisei Group as a Whole. We have taken various steps towards information security and have formulated both the Policy on the Protection of Personal Information and the Code of Conduct for the Use of Social Media.
At Taisei Corporation, we have consolidated a set of core rules for managing electronic information into a booklet. This serves as a foundation for the education and guidance we provide to all our executives, employees, and business partners. In addition, we are actively enhancing the information security measures at our overseas branches and project sites, and we are particularly focused on bolstering safeguards against potential information leaks that could arise from telecommuting (working from home).
Moreover, to proactively prevent and lessen intellectual property risks—like rights infringements or technology outflows that could profoundly impact our business operations—we rigorously enforce risk management across all our business activities.
In light of the escalating threat of cyber-attacks, we remain vigilant. Central to this effort is our Taisei-Security Incident Response Team (SIRT), established in 2013. Collaborating with external agencies through the Nippon CSIRT Association, we continuously gather the most recent intelligence on cyber threats. Armed with this information, we strategize and implement advanced defensive measures, aiming to preemptively ward off potential attacks.