Governance

Reinforcing Risk Management

Basic view

In order to minimize loss by emergence of risks and improve sustainable corporate value of the entire Group by managing various internal and external risks related to business activities, Murata periodically carries out initiatives to classify and evaluate risks and take preventative measures.

Promotion structure

Murata has established the "Risk Management Committee" as a subcommittee of the CSR Management Committee, which is chaired by the President and Representative Director. This committee is chaired by a Vice President and comprises Directors from departments of General Affairs, Personnel & Industrial Relations, Corporate Communications, Intellectual Property, Environmental Affairs, Quality Assurance, Sales, Information Systems, and Legal Affairs. Together, the committee members study ways to address risks company-wide. We have also established the Information Security Subcommittee and BCM* Subcommittee as subordinate organizations to study and take measures to address particular risks.

*BCM (Business Continuity Management)
Management activities are operated on an ongoing basis to formulate, maintain, and renew the BCP (Business Continuity Plan), to allocate budget and resources for business continuity, to take preventative measures, and to conduct, check, and continually improve education and training for permeating initiatives.

Understanding risks

The responsible department for each risk identifies and evaluates risks that Murata actually faces and will possibly face in the near future and formulates treatment measures twice a year. The Risk Management Committee deliberates those contents, and, if necessary, implements additional measures. Each risk is classified in accordance with its frequency and impact so that management understands more important and urgent risks to take appropriate risk treatment measures.

Business and other risks

Risks that may have a material impact on the decisions of investors (as of the day of submission [June 26, 2020] of the Securities Report) include the following.

1 Risk of fluctuation in demand for our products 11 Risks relating to public regulations and compliance
2 Risk of product price competition 12 Risks relating to quality problems
3 Risks relating to the stability of procurement 13 Environmental regulation risks
4 Risk of reliance on specific suppliers or products 14 Risks caused by climate change
5 Risks in the development of new technologies and products 15 Risks relating to information security
6 Risks in the development of business in overseas markets 16 Risks relating to intellectual property
7 Risks relating to M&A, business tie-ups, and strategic investment 17 Risks relating to tax matters
8 Customer credit risks 18 Risks relating to recruiting and retaining human resources
9 Currency exchange fluctuation risks 19 Risk of suspension of business operations due to disaster, epidemic, etc.
10 Risks relating to financing

Business Continuity Plan (BCP)

A major natural disaster has the potential to bring business to a stop for extended periods. Consequently, Murata has devised a business continuity plan (BCP) to ensure that we can fulfill our duty to provide customers with a stable supply of products. We are conducting initiatives to minimize damage and continue business, such as ensuring earthquake resistance and safety for buildings and production facilities, constructing backup frameworks for our communications and information systems, and maintaining supply from inventory.

When procuring materials, we have created a database of material supplier production sites and we are working to quickly implement initial response measures by developing an initial response system. In addition, there is a flow chart of initial response measures based on risk scenarios so that procurement activities are not delayed when risks such as natural disasters materialize. Furthermore, with regard to important materials we are promoting measures such as implementing a multi-vendor system, confirming the BCP implementation status of our vendors, and ensuring sufficient inventory to cover the expected recovery period, if risks materialize, as measures to ensure stable procurement.

In addition, we are working to confirm effectiveness and continually improve initial response measures, improve crisis response capabilities, and find points to be improved regarding BCP by conducting periodic disaster drills and business continuity drills. During fiscal 2020, we carried out training for the purpose of reevaluating our Business Continuity Planning (BCP) on the assumption that the headquarters might suffer earthquake damage.

BCP Training

Initiatives in response to new coronavirus infection (COVID-19)

With the worldwide spread of the new coronavirus infection (COVID-19), Murata has made it a top priority to ensure the health and safety of its employees and business partners, to provide peace of mind for everyone in the community, and to continue to supply Murata products globally as part of its corporate social responsibility in the supply chain. Until now, Murata has devised and implemented various measures to prevent infection, prevent the spread of infection, and ensure business continuity through the Crisis Management Center established at its headquarters. Specifically, we are working to minimize the impact of the new coronavirus infection on employee health and our business operations by implementing measures to prevent employee infections, such as telecommuting, staggered working hours, business travel restrictions, recording employee activity records within the company, setting up barriers in the cafeteria and workplace, requesting employees to refrain from private activities, and developing a business continuity plan (BCP) in the event of an outbreak.