Reinforcing Risk Management
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.
Murata Manufacturing Co., Ltd. has established a Risk Management Committee as a subordinate body of the CSR Management Committee, which is chaired by the 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.
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|
|2||Risk of product price competition|
|3||Risks relating to the stability of procurement|
|4||Risk of reliance on specific suppliers or products|
|5||Risks in the development of new technologies and products|
|6||Risks in the development of business in overseas markets|
|7||Risks relating to M&A, business tie-ups, and strategic investment|
|8||Customer credit risks|
|9||Currency exchange fluctuation risks|
|10||Risks relating to financing|
|11||Risks relating to public regulations and compliance|
|12||Risks relating to quality problems|
|13||Environmental regulation risks|
|14||Risks caused by climate change|
|15||Risks relating to information security|
|16||Risks relating to intellectual property|
|17||Risks relating to tax matters|
|18||Risks relating to recruiting and retaining human resources|
|19||Risk of suspension of business operations due to disaster, epidemic, etc.|
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.