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Risk Management and Business Continuity Policy
The following is defined to implement the objectives and policies such as " Company Mission" and "Basic Management Policy" and to promote risk management and business continuity management within ROHM Group.
Risk Management
- ・Promote group-wide global risk management.
- ・Identify and assess critical risks and take measures to minimize losses.
- ・Regularly review the status of evaluation and response to critical risks and share them with the management team.
- ・In the event of an incident, promptly gather and report information, and transition to a business continuity and recovery plan as appropriate.
Business Continuity
- ・Place the highest priority on ensuring the safety and confirming the safety of employees and related persons, and strive to prevent secondary disasters such as fire and environmental pollution.
- ・To maintain the supply chain, we will work for prompt restoration of production and business.
- ・Fulfill our social responsibilities as a company.
- ・The entire company will work together to promote business continuity management and recovery activities under the direction of the management team.
- ・Periodically review the business continuity plan in response to changes in the business environment and strive for continuous improvement of the business continuity management system.
Company-wide Risk Management Promotional System
In the course of our business activities, various risks may affect our financial position and business performance. The ROHM Group is working to strengthen its company-wide risk management (Enterprise Risk Management) to avoid or minimize the impact of such risks. Under the Board of directors and the EHSS General Committee*, which oversees the company-wide management system, the Risk Management and BCM Committee (meets four times a year) is organized. The committee identifies important risks that may occur in the Group, evaluates them on a risk map in terms of their frequency of occurrence and impact on the business, and manages and promotes countermeasures, The Group manages and promotes countermeasures. In addition, in conjunction with each management system, the status of company-wide risk management activities and risk assessment/management indicators are reported to the EHSS General Committee once a half year, and important risks to be disclosed outside the company are reported to and approved by the board of directors.
The Risk Management and BCM Committee is chaired by the general manager of the Corporate Strategy Division, who is also a corporate officer, and the committee and its secretariat are independent of the business units.
EHSS (Environment, Health and Safety, Sustainability) General Committee: This committee oversees the eight lower management systems (Environment, Occupational Health and Safety, Labor and Ethics, Information, Supply Chain, Quality, Risk Management BCM) and ensures that the PDCA cycle for each is properly implemented. The committee is chaired by an internal director or executive officer. The committee is chaired by an internal Board member or corporate officer.
Internal and External Audits
The Risk Management/BCM Committee conducts annual internal checks within the PDCA cycle of the management system to confirm its effectiveness.
In addition, the Internal Audit Department, an independent organization under the direct control of the President, conducts internal audits of business and compliance risks in the Group, and summarizes key details in an assurance map, which is shared and coordinated with each management system through the Risk Management/BCM Committee.
The quarterly meetings of the Risk Management/BCM Committee are attended not only by representative members of each management system, but also by Board members, including outside directors,
full-time audit and supervisory committee members, and the head of the internal audit department, to monitor and supervise whether risk management is working effectively. The outside directors have experience in risk management and internal control at financial companies and provide advice and supervise ROHM's risk management based on their professional expertise.
Each management system is subject to periodic external audits, including the RBA Validated Audit Process and ISO audits, to confirm the effectiveness of the management structure, including risk management, from an external perspective.
Risk Management Indicators and Reporting Structure
The Risk Management and BCM Committee analyzes and evaluates the impact and frequency of key risks in management, business, compliance, sustainability, and other areas, and compiles them into a risk map. In addition, in order to effectively monitor company-wide risk management, we have established Key Risk Indicators for all financial and non-financial risks, which measure the signs of potential risks and the progress of countermeasures. By establishing quantitative indicators as much as possible through sensitivity analysis and other means, we can visualize the signs of risk occurrence, its impact, and the status of response, and promptly reflect them in management.
In the event of a risk event, we have established and are promoting a culture and structure to promptly notify the appropriate parties and management (Board members) within the company, and to respond to the event through an internal emergency reporting system and communication tools prepared in advance, regardless of the country or location. In the event of an incident, the system is designed to ensure that it is reported through the internal emergency reporting system communication tool prepared in advance, regardless of the country or location.
For compliance risks, we have established a supplier hotline for employees and an internal hotline for quality risks.
Risk Management System
Activity Cycle for Risk Management
PLAN
Identification of Critical Risks
- The "Risk Management/BCM Committee" assumes a variety of risks surrounding the company.
- The "Risk Management and BCM Committee" assumes various risks surrounding the company, and identifies important risks in the group through each management system and department.
Determination of Lead Management System and Department
- Clarify the management system and department that will be in charge of risk prevention and in case of occurrence.
DO
Risk Response
- Management system/department in charge analyzes and evaluates risks and decides on a response policy.
- Response based on the response policy.
CHECK
Confirmation and Evaluation of Risk Management Systems
- The "Risk Management and BCM Committee" confirms and evaluates the status of the risk management system of the lead management system and departments.
ACTION
Correction of Risk Management System
- If there is a high likelihood of risk occurrence, corrective action is taken as necessary under the direction of the lead management system/department.
Awareness-raising
- Provide risk information, etc., to ROHM Group.
Reviews
- Report to the EHSS General Committee.
Medium-Term Targets and Achievements
ROHM has identified “Risk Management” as a priority issue for achieving the medium-term management plan launched in 2021, and has set it's 2025 target. We will continue to work toward the sustainable growth of society and ROHM Group.
| Risk Management | ||||
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| 【Background and Challenges for Activities】 Amid the diversification of risks surrounding companies in conjunction with economic globalization and changes in society, appropriately managing various internal and external uncertainties related to business is indispensable for the execution of management strategies and business objectives. Even if we suffer damage from a large-scale natural disaster, accident, infectious disease, or other epidemic, etc., it is an important responsibility as a company to ensure that critical operations are not interrupted, and that recovery and resumption of operations are carried out in the shortest possible time in the unlikely event of interruption. ROHM Group considers "risk management" to be an important management issue for the business foundation, and considers events that may interfere with operations and business performance as "risks" and minimizes the occurrence of such events, and takes measures to ensure business continuity and recovery smoothly even when events occur. |
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| Theme | Targets (Target Year: FY2025) |
Targets for FY2023 | FY2023 Results | Targets for FY2024 |
| Strengthening risk management and BCM systems | Strengthen BCM structure through company-wide risk management |
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【Related Activities】
Risk Management
Business Risks
The following are the major risks that we recognize as having the potential to significantly impact the financial position, operating results, and cash flow of the ROHM Group. For each risk, we evaluate the impact and frequency of occurrence on a scale of "large", "moderate", or "small". The impact is evaluated based on internal indicators from the perspective of finance, business interruption, reputation/image, or safety/lives. However, the following is not an exhaustive list of all risks, and there is a possibility that the Group may be affected by risks other than those listed in the future.Matters in the text regarding the future are based on the ROHM Group's judgments as of the end of June 2023.
The following is not an exhaustive list of all risks, and ROHM Group may be affected in the future by risks other than those listed.
| 1. Risks Related to Business Strategy and Market Fluctuations | Frequency of Occurrence: Moderate | Impact: Large | |
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| Contents | ROHM Group focuses on markets with higher growth potential and on markets and technologies in which ROHM Group can demonstrate its strengths, such as automotive, industrial equipment, and overseas markets as key markets, and power, analog, and general-purpose devices as key products. In these priority fields, global competition is likely to intensify, and ROHM Group may be involved in price competition that exceeds the limits of cost reductions and fierce development competition. Also, various changes in social needs and the policies and regulations of various countries may cause a slowdown in market growth or a contraction of the market. For example, a slowdown in the growth of the electric vehicle (EV) market could be a risk for ROHM, which manufactures power devices that are increasingly used in these vehicles. There is a risk that ROHM Group's financial position, business performance, and cash flow may be adversely affected by these market trends and changes in the competitive environment. |
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| Main Measures | In response to these risks, ROHM is reviewing its product lineup to strengthen its proposal-based sales structure to anticipate customer needs. In addition, ROHM Group is enhancing its competitiveness by promoting the development capabilities of new products and technologies, focusing on technological capabilities in areas where ROHM Group has strengths. Specifically, ROHM's Product Marketing Engineer (PME) conducts global surveys of market performance and functionality requirements to refine product planning. Field Application Engineers (FAEs), who are well versed in technical information such as customer development trends, are in charge of proposing optimal solutions sought by customers and providing meticulous technical support, and both PMEs and FAEs are working to strengthen global solution capabilities. Especially in the automobile market, where the environment is changing rapidly these days, we have organized the "Global Automotive Sales Expansion Project" in the System Solution Engineering Division, which is in charge of global FAE activities, in order to detect changes in a timely manner. This project is designed to reflect market trends in our business strategies by expanding sales to complete vehicle manufacturers and their suppliers around the world. Also, the FAE Division's Technical Centers, which have been established in eight locations outside of Japan, are being expanded in terms of personnel and facilities, mainly in Europe, the U.S., and China. In addition to the automobile industry, the "Industrial Equipment Long Tail Project," which aims to strengthen support for the industrial equipment market, is also becoming more active to reduce the risk of being biased toward a particular market. |
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| 2.M&A Risks | Frequency of Occurrence: Moderate | Impact: Large | |
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| Contents | ROHM Group believes that it is necessary to consider and implement mergers and acquisitions worldwide with the aim of increasing corporate value, expanding existing businesses with a view to future business prospects, entering new fields based on existing technologies, and acquiring new technologies and securing promising human resources. On the other hand, inadequate verification of governance and management structures, business systems, and synergy hypotheses, which should be verified through due diligence prior to the acquisition, could result in the estimated acquisition value exceeding the actual value, resulting in a situation where losses are incurred. Even after an acquisition, if post-merger integration (PMI) is not properly conducted, unexpected events or significant changes in market trends may cause the acquired business to not perform as expected, possibly resulting in losses. |
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| Main Measures | In M&A, we search for potential acquisition candidates in advance in line with our own business strategy. At the execution stage, we form a dedicated in-house project team and appoint outside advisors to conduct sufficient research and consideration, incorporating third-party perspectives, and ensure the appropriateness of the decision-making process through multi-stage deliberations. In order to ensure effective post-acquisition PMI, we formulate and execute plans that incorporate a PMI perspective from the acquisition execution stage, monitor the achievement of acquisition business targets, and respond in a timely manner by reviewing strategies in response to changes in the business environment and other factors. |
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| 3. Exchange Risks | Frequency of occurrence: Moderate | Impact: Large | |
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| Contents | ROHM Group has development, manufacturing, and sales sites around the world, generating revenues and expenses as well as assets and liabilities in multiple currencies. The translation of company currencies into financial statements and the translation of yen into consolidated financial statements of each location fluctuates depending on the exchange rate, which affects the business performance and financial position of ROHM Group. In addition, ROHM Group conducts production activities in Japan, Asia, and Europe, and sales activities in the global market. As a result, the currencies used for transactions at our production and sales sites differ, and we are constantly affected by fluctuations in exchange rates. Generally speaking, a strong Japanese yen has a negative impact on business performance, while a weak Japanese yen has a positive impact. |
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| Main Measures | To reduce the risk of exchange rate fluctuations, ROHM enters into a certain amount of forward exchange contracts for trade receivables denominated in foreign currencies. | ||
| 4. Tax Risks | Frequency of Occurrence: Moderate | Impact: Moderate | |
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| Contents | ROHM Group has R&D centers, manufacturing, and sales locations around the world, and there is a risk of additional taxes being imposed by tax authorities in various countries, double taxation due to transfer pricing taxation, and damage to the company's reputation due to these occurrences. | ||
| Main Measures | ROHM Group Tax Policy has been established, and the Head Office, group companies, and related departments work together to comply with the tax-related laws and regulations of each country and region and to pay appropriate taxes. When we recognize tax risks, we seek advice from outside experts as necessary, and strive to build reliability and maintain good relationships with tax authorities in each country and region. In response to transfer pricing taxation, we calculate arm's length prices by allocating profits according to the functions, risks, and assets of each company, and strive to ensure that international transactions are conducted in an appropriate manner. | ||
| 5. Financial Market Fluctuation Risk | Frequency of Occurrence: Moderate | Impact: Moderate | |
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| Contents | ROHM Group may experience a decrease in financial assets or an increase in procurement costs due to various risks of fluctuations in the financial markets. | ||
| Main Measures | Deposits, which are our main financial assets, are in principle placed with highly rated financial institutions, and we also hold highly safe financial instruments, including bonds and other securities. In procuring funds, the Company strives to reduce procurement costs, and procures funds by borrowing from banks and issuing bonds in accordance with financial market conditions. | ||
| 6. Risks Related to Natural Disasters and Infectious Diseases | Frequency of Occurrence: Small | Impact: Large | |
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| Contents | The ROHM Group conducts development, manufacturing, and sales activities not only in Japan but also in other parts of the world. The occurrence of natural disasters such as earthquakes and floods, or a drop in utilization rates due to the spread of infectious diseases, could damage production and sales offices in such regions. In addition, these risks may occur simultaneously in multiple regions, which may have a significant impact not only on ROHM Group, but also on the entire supply chain, including customers and suppliers. | ||
| Main Measures | The ROHM Group has taken measures to diversify risks, such as locating prouction lines at multiple locations around the world. In addition, each location operates under a risk management and business continuity policy. In particular, major domestic and overseas locations with manufacturing functions cooperate with external specialized organizations to conduct risk assessments in terms of natural disasters, infectious diseases, safety, and operational, economic, and political risks, and identify, analyze, and evaluate the top risks for each plant. Based on these assessments, we have organized countermeasures committees and other groups to formulate business continuity plans, conduct drills based on these plans, and take various other initiatives to prepare for contingencies. In addition, with regard to infectious diseases, the safety of employees, customers, and suppliers is our top priority. To continuously reduce the risk of infection, we have implemented various measures, including the implementation of flexible work styles such as telecommuting and the introduction and promotion of the use of IT tools that enable such flexible work styles. In order to maintain supply to customers, we are taking long-term measures to reduce possible risks, such as transferring some models to other ROHM Group R&D centers and OSAT(*) in order to cope with reduced or suspended operations, and developing flexible and prouction lines and labor-saving lines. *OSAT(Outsourced Semiconductor Assembly and Test) Manufacturer that undertakes assembly and testing, which are back-end processes in the semiconductor manufacturing. |
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| 7. Risks Related to Climate Change | Frequency of Occurrence: Moderate | Impact: Large | |
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| Contents | Global climate change may affect our business activities by causing damage from unprecedented extreme weather events, incurring unanticipated costs associated with the introduction of a carbon tax and responding to stakeholder requests, and diminishing our brand value as risks become more apparent. | ||
| Main Measures | In April 2021, the ROHM Group formulated "The ROHM Group Environmental Vision 2050" to address environmental issues, and has been promoting initiatives with the goals of "climate change countermeasures," "realization of a resource recycling-oriented society," and "harmonization of natural cycles and business activities. With regard to climate change measures, the ROHM Group is working to reduce GHG (greenhouse gas emissions) through continuous energy saving measures and the introduction of renewable energy, including solar power generation, and is promoting climate change measures throughout the Group. In September 2021, we revised our "2030 Mid-Term Environmental Targets" to achieve a decarbonized society. At the same time, we endorsed the recommendations of the Task Force on Climate-related Financial Information Disclosure (hereinafter referred to as "TCFD") and have been disclosing information in line with TCFD recommendations. In April 2022, we also joined "RE100," an international corporate initiative that aims to ensure that 100% of the electricity used in our operations is from renewable energy. |
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| 8. Geopolitical Risks | Frequency of Occurrence: Moderate | Impact: Large | |
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| Contents | International relations in various countries and regions are becoming increasingly uncertain due to such factors as the long term Russian and Ukrainian problems, rising military tensions in the Taiwan Strait, the South China Sea, and the Middle East, and bilateral relations between the U.S. and China. For the ROHM Group, which operates globally, geopolitical risks not only have a direct impact on our production and sales activities, such as business withdrawal or shutdown, but may also affect the entire supply chain, including material procurement and transactions with customers. In addition, countries and regions around the world are promoting protectionist policies and expanding restrictions on exports and other activities related to semiconductors, which are used in products in all industries and are regarded as important goods for economic security. If the ROHM Group fails to respond appropriately, it may not only lose its business competitiveness, but also face administrative penalties and legal sanctions that may adversely affect its business activities and business performance. Furthermore, in addition to cutting-edge semiconductors, the possibility that ROHM's semiconductor products will be affected by regulations and support from various countries in the field of mature products known as "legacy semiconductors" is increasing. |
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| Main Measures | In December 2023, the ROHM Group established the "Economic Security Office" as a specialized department to respond to rising global geopolitical risks, and the department and the Risk Management and BCM Committee play a central role in gathering information, monitoring, and implementing countermeasures for geopolitical risks that may affect management. The Company has also established a regional business base to identify and manage risks in each region. Each regional business location is also working to identify risks and formulate and promote risk management measures and business continuity plans to ensure the safety of employees and minimize the impact on business. In addition, with regard to export regulations for Semiconductor-related products, the Export Control Specialist Subcommittee, consisting of relevant departments throughout the company, implements appropriate security export control in cooperation with attorneys. |
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| 9. Compliance Risks | Frequency of Occurrence: Small | Impact: Large | |
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| Contents | ROHM Group conducts development, manufacturing, and sales activities not only in Japan but also in other parts of the world, and must comply with the competition laws, anti-corruption laws, personal information protection laws, and other laws and regulations applicable in each region of the world. Violations of these laws and regulations may have a serious adverse effect on the ROHM Group's business and business performance due to payment of surcharges, interruption of business activities, damage to the brand image, and other factors. |
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| Main Measures | In the ROHM Group, the Compliance Committee, under the umbrella of the EHSS Generalization Committee, takes the lead in establishing and operating an ethics management system to manage the risk of compliance violations in the ROHM Group and to prevent such violations by implementing the following major The ROHM Group has implemented the following measures as major ones to manage the risk of compliance violations and prevent such violations. 1) Establishment and operation of internal regulations The ROHM Group has established and is operating various internal regulations to ensure compliance with laws and regulations. In addition, the ROHM Group has designated a department in charge of each area of laws and regulations, and regularly collects and investigates information on the enactment and revision of laws and regulations, and reviews these internal regulations as appropriate, thereby preventing legal violations. In addition, the ROHM Group has developed the "ROHM Group Code of Conduct," which clarifies the basic ethical rules to be observed in the course of daily business activities, for the entire ROHM Group to prevent not only legal violations but also ethical violations. 2) Education and awareness-raising activities The ROHM Group conducts compliance education for all directors and employees, legal seminars for directors, and compliance education by job level once a year, as well as education by individual laws and regulations as necessary, as measures to raise compliance awareness among directors and employees of the ROHM Group. 3) Establishment and operation of whistleblowing system In order to ensure the effectiveness of the compliance structure, the ROHM Group has established a compliance hotline, which is operated by an external law firm, as an internal whistleblowing system, and accepts reports and consultations regarding compliance violations from all domestic ROHM Group employees. In addition to the compliance hotline at each overseas ROHM Group company, a global compliance hotline has also been established at each overseas ROHM Group company to allow employees to report any misconduct or potential misconduct by directors of the company to ROHM. |
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| 10. Intellectual Property Risks | Frequency of Occurrence: Moderate | Impact: Large | |
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| Contents | The ROHM Group develops various new technologies and know-how to manufacture products that are differentiated from those of other companies, and manufactures and sells its products worldwide based on these proprietary technologies. Therefore, it is essential for the ROHM Group to protect its intellectual property rights and avoid disputes with other companies. | ||
| Main Measures | The technologies and know-how used by the ROHM Group are protected by intellectual property rights, etc. to enhance business competitiveness while protecting its own technologies, and are strictly controlled through internal investigations and checks during product development to prevent infringement of intellectual property rights held by other companies. | ||
| 11. Environmental Regulatory Risks | Frequency of Occurrence: Moderate | Impact: Moderate | |
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| Contents | In all areas where the ROHM Group conducts its business, it complies with all laws and regulations to ensure the environment, health, and safety, as well as to investigate exhaust emissions, wastewater, use and handling of hazardous substances, management of chemical substances contained in products, waste disposal, soil and groundwater pollution, and so forth. However, business performance may be affected in the event that we are held legally liable for some unforeseen event or situation that could not be foreseen in advance. | ||
| Main Measures | ROHM Group has established and is operating a group-wide environmental management system that conforms to ISO 14001, the international standard for environmental management systems, and is promoting continuous environmental improvements aimed at environmental conservation, including reductions in environmental impact. In its initiatives, the "Environmental Conservation Committee" established at ROHM takes the lead in managing the environmental impact caused by production, activities and services at each location in accordance with laws and regulations, and horizontally disseminating improvements identified through internal audits at each location to all group companies. | ||
| 12. Risks Related to Securing Human Capital | Frequency of occurrence: Moderate | Impact: Moderate | |
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| Contents |
The ROHM Group has expanded its business by accumulating design technology, manufacturing technology, quality assurance technology, and solution proposal capabilities. In recent years, securing human capital to support its business activities has become increasingly important. In Japan, we are facing changes in the employment environment and a shrinking working-age population due to the declining birthrate and aging population, and competition for highly specialized human capital is intensifying, especially at production plants in the Kyushu region, ROHM's focus business area. Developing and securing highly specialized human capital on a long-term basis will be an issue in the future, and improving employee engagement and productivity will be essential. To this end, it is necessary to provide an attractive workplace environment in which each individual can maximize his or her abilities. |
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| Main Measures |
In order to secure human capital to support its business activities, the ROHM Group is actively recruiting people from diverse backgrounds to secure human capital. In addition to approximately 300 new graduates in Japan, we are hiring nearly 200 career professionals. ROHM is also promoting a structure that enables these human capital to draw and realize career paths that make the most of their own individuality so that they can play an active role in the long term. ROHM has established a structure to support careers through the "specialist system," which recognizes employees who contribute to the company with highly specialized skills as leading experts in their fields, and the "job posting system," which encourages employees to transfer to other positions on their own initiative. Furthermore, through the introduction of various systems that allow employees to work flexibly according to their individual lifestyles and life stages, we are striving to increase productivity and create an environment in which employees can continue to work in good health and with peace of mind. Through these initiatives, we believe that employees can realize self-fulfillment by contributing to the company's growth, and furthermore, being recognized for their achievements and contributions will increase engagement and lead to the securing of human capital. |
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| 13. Information Security Risks | Frequency of Occurrence: Moderate | Impact: Large | |
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| Contents |
In the course of its business activities, the ROHM Group possesses and uses confidential information and personal information of its stakeholders as well as that of the ROHM Group. In addition, with the recent expansion of the ROHM Group's business domain, promotion of the use of DX tools, and diversification of work styles (remote work), there are increasing opportunities for directors and employees to utilize this information remotely. On the other hand, information security risks such as cyber-attacks targeting companies, removal and unauthorized use of confidential information by retirees, and technology leaks outside of Japan are increasing every day. In addition, in recent years, from the viewpoint of privacy protection and economic security, countries have revised and strengthened their personal information protection laws and data protection regulations, and are considering security clearance (eligibility assessment) systems, which require companies to have more advanced information management capabilities. Information is the source of corporate management, and in order to gain the trust of stakeholders and achieve sustainable growth of the ROHM Group, it is imperative not only to improve the information literacy of each and every employee, but also to implement multiple and comprehensive technical and physical security measures. Inadequate implementation of these measures could result in serious accidents such as information leaks and unauthorized use, business shutdowns due to system downtime, and legal violations. Such incidents could also have a significant negative impact on the ROHM Group's business, business performance, and financial position, including damage to the Group's brand image, loss of public trust, civil and criminal liability and administrative penalties that could result in substantial costs and suspension of business activities. |
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| Main Measures |
The ROHM Group has established a company-wide information management system (PDCA cycle for information management) for the confidential and personal information of the ROHM Group and stakeholders handled in the course of business activities. The Information Management Committee, which serves as the umbrella organization, regularly monitors the operation of the system, identifies information security risks, and conducts improvement activities. In addition, in accordance with the goals and policies set by the ROHM Group Information Security Policy, the ROHM Group comprehensively ensures information security from four aspects: organizational, human, technical, and physical. First, as "organizational measures," the Group has established company-wide policies and internal rules for information management (information management policy, cyber security management rules, confidential information management rules, privacy policy, personal information protection rules, etc.). In accordance with these rules, each group company determines and implements information management managers and specific information management methods, and periodically evaluates their activities through internal audits in order to standardize and improve information management standards throughout the group. In addition, we are continuously working to acquire and expand the scope of certification for ISO27001, the international standard for information management, and TISAX (Trusted Information Security Assessment Exchange), an information security assessment by the German Association of the Automobile Manufacturers and Traders. We are continuously working to acquire certification and expand the scope of certification. Next, as "personnel measures," the Company strives to maintain and improve the information literacy of its directors and employees by regularly conducting activities such as annual education, training by rank and role, and phishing e-mail training. In addition, as "technical measures," the Company has established a structure for early detection and handling of signs of information leaks due to cyber attacks and internal fraud by monitoring information terminals and collecting access logs 24 hours a day, 365 days a year by an external specialized agency, vulnerability diagnosis and corrective actions, malware countermeasures, and incident response training using hypothetical cases, etc. We have established a structure to detect and respond to signs of information leaks due to cyber attacks and internal frauds at an early stage. As "physical measures," the Company implements multiple access control measures, including entry/exit control to/from ROHM premises and restricted areas using ID cards, surveillance cameras, security gates, etc., zoning of facilities, and access control for various media including confidential information and personal information, to prevent information leaks not only to third parties outside the Company but also to those within the Company who need to know the information for business purposes. This prevents third parties outside the company, as well as need-not-to-know parties within the company, from taking, mixing, or using confidential or personal information in an unauthorized manner. |
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| 14. Human Rights Risks | Frequency of Occurrence: Small | Impact: Moderate | |
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| Contents |
Due to the growing global concern for human rights, we are required to give consideration to human rights not only in our own operations but also throughout our supply chain, from procurement to customers. Inadequate consideration of forced labor, child labor, low wages, and occupational health and safety in workplaces and communities, especially in developing countries, can lead to a loss of social reliability. In addition, as countries and international organizations continue to establish and enforce human rights-related guidelines and laws and regulations, if we do not identify and address risks related to our own human rights, including those in our supply chain, we may not be able to conduct our business globally. |
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| Main Measures |
As a company with global operations, ROHM Group supports, complies with, and respects international principles and norms such as the United Nations Global Compact, based on the recognition that it is important to build a sustainable society where human rights are respected. In addition, we have established the ROHM Group Human Rights Policy and declared our commitment to initiatives to respect human rights and due diligence. Specifically, ROHM has established a hotline for employees and suppliers, and issued a statement on the UK Modern Slavery Act. In order to raise awareness of the hotline and promote a basic understanding of human rights, we are conducting educational activities through e-learning for all employees. In addition, we are promoting such initiatives not only in our own company but also throughout our supply chain. We confirm through audits and questionnaires that there are no problems with the labor conditions and initiatives of our company and our suppliers in accordance with international norms such as the RBA (*) Code of Conduct, and request improvements as necessary. In addition, ROHM Group is committed to preventing human rights violations at its suppliers, such as by requiring suppliers to pledge not to violate not only various laws and regulations but also human rights-related rules and regulations when selling products through sales agents. <International Principles and Norms Supported by ROHM Group> Ten principles of the United Nations Global Compact Universal Declaration of Human Rights International Labor Organization (ILO) Fundamental Principles and Rights at Work United Nations Guiding Principles on Business and Human Rights OECD Guidelines for Multinational Enterprises ISO 26000 Responsible Business Alliance (RBA*) Code of Conduct Guidelines for Respecting Human Rights in Responsible Supply Chains, etc. *RBA The Responsible Business Alliance (RBA) is an alliance that promotes CSR in the supply chain of the electrical and electronic equipment (electronics) industry or industries that use them as major components. It has established codes of conduct in the areas of labor and occupational health and safety, environment, ethics, and management systems. |
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| 15. R&D Activity Risks | Frequency of Occurrence: Small | Impact: Large | |
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| Contents |
Research and development in the field of electronic products is in the midst of fierce global competition, and delays in the development of new products directly lead to a decline in competitiveness and the risk of losing new markets. Specific risks that may cause delays in R&D include stagnation due to the dispersal of human capital or lack of acquisition of suitable human capital, narrowing of vision due to uniformity of human capital, inferior performance due to obsolescence of technology, and suspension of activities due to deviation from regulations or noncompliance. Any of these risks could have a negative impact on future business performance. |
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| Main Measures |
ROHM aims to realize R&D activities that lead to seamless sustainable growth by ensuring the allocation of resources to new fields based on a long term vision, rather than merely focusing resources about five years into the future. We will develop active R&D that anticipates the times and needs by increasing engagement while acquiring diverse human capital, organically collaborating internally and externally, and tirelessly reviewing themes. In addition, we will continue to conduct R&D that avoids incident risks by maintaining a legal and fair R&D structure. With regard to the future, 10 years or more into the future, we are strengthening our external collaborations, including joint research with a number of universities in Japan and abroad. Furthermore, we are implementing Corporate Venture Capital (CVC) as an open innovation initiative. |
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| 16. Product Defect Risks | Frequency of Occurrence: Moderate | Impact: Moderate | |
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| Contents |
ROHM Group's basic corporate philosophy is "we always put quality first," and we conduct production under strict quality control. However, there is no guarantee that all products will be defect-free or that claims for damages will not arise in the future due to defects in products from customers. However, there is no guarantee that all products will be defect-free or that claims for damages will not arise in the future due to product defects. In the unlikely event of a claim for damages, our business performance may be affected. |
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| Main Measures |
In ROHM Group, the quality department of each business division assures design quality, and the quality department of each production division assures manufacturing quality. The Quality Division, which reports directly to the President, is responsible for establishing a company-wide quality assurance system that transcends the boundaries of the business and production divisions, deploying information, and monitoring the operations of each business and production division. In addition, to reduce the risk of quality compliance violations that frequently occur outside the company, a "Quality Audit Office" has been established in the Quality Assurance Department, and each manufacturing site is also promoting activities by a specialized subcommittee. In the development of new products in the Business and Production Divisions, evaluations are conducted at each stage of development study, design review, initial flow, and mass production in order to provide safe and reliable products that satisfy customer requirements in a timely manner. Improvement information is fed back to the source and is deployed in the next stage of design. In addition, the Monozukuri Innovation Department of the Production Division develops assembly and processing equipment in-house, with the goal of "building quality into the equipment. With the goal of "equipment that cannot produce defects," we aim to prevent the production of defects through self-diagnosis of the equipment itself, etc. In the event of a defect caused by a product, we will strive to prevent the production of defects. In the unlikely event of a product-related defect, ROHM products can trace production information (manufacturing date or lot information) from the actual product. From the lot information, the 4M information (Man, Machine, Material, and Method) of all production processes can be confirmed, and the production conditions and quality of each process can be quickly investigated to limit any possible ripple effects. In addition, ROHM Group is building a defect-free management structure based on the following international quality management systems. ISO9001: Quality management system IATF16949: Automobile industry quality management system standard ISO 26262: International standard for functional safety of automotive electronic controls |
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| 17. Risks Related to Production and Procurement Activities | Frequency of Occurrence: Moderate | Impact: Moderate | |
|---|---|---|---|
| Contents | Although ROHM Group employs a vertically integrated business model, the manufacture of electronic components requires a variety of materials, including rare metals. Therefore, restrictions on procurement from certain sources could adversely affect production activities and cost structures. | ||
| Main Measures |
Business divisions are promoting multiple purchasing of materials and other items, as well as appropriate inventory management based on suppliers' BCP status and other factors. In the Procurement Division, in order to promptly confirm the damage and safety status of suppliers and their supply status in the event of an emergency, we are surveying and compiling a database of information on the manufacturing companies and manufacturing locations of procured parts and materials, and expanding the scope of the survey to include secondary suppliers to gain an overall understanding of the BCP status of the supply chain. The scope of the survey has been expanded to include secondary suppliers to gain an overall understanding of the supply chain BCP situation. We are also working with suppliers that handle critical materials to agree in advance on how to respond in the event of an emergency. |
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Business Continuity Management
We have stated that part of our company mission is "to contribute to the advancement and progress of culture through a consistent supply, under all circumstances, of high quality products in large volumes to both the domestic and global markets". As ROHM Group is conducting development, manufacturing and sales activities in various locations around the world, we believe that one key issue for the management of the company is to establish Business Continuity Management (BCM). We have therefore formulated ROHM Group fire and disaster prevention policy for the implementation of activities. A part of this is the implementation of various measures to prepare for emergencies at our production sites in both Japan and overseas. For example, we identify the risks such as disasters and form countermeasure committees to handle them. We also propose Business Continuity Plans (BCP) and conduct training based on them.
Fire and Disaster Prevention Policy
"The policy shall be to prevent and be prepared for disasters by promoting the fire and disaster prevention based on the respect for the international norm, etc., and observance of laws and regulations."
ROHM Group shall provide the safe and secure work environment and be prepared for emergencies, such as a fire, and also seek to prevent any disasters that possibly affect the business continuity through the continuous approach to the fire and disaster prevention.
Main Activity Topics
[ Action for Earthquake Risks ]
1. Introduction of “Building Safety Judgment Support System” to Prepare for a Domestic Earthquake Risk
In fiscal 2020, ROHM installed the "Building Safety Judgment Support System" at major domestic sites in order to protect the safety of employees in the event of an earthquake and to respond appropriately to business continuity risks. Earthquake risk is one of the highest risks when doing business in Japan. This system analyzes the shaking of the building immediately after the earthquake and judges the safety of the building structure in three stages. By utilizing this system, we can judge the safety of buildings in a timely, professional and objective manner, and can proceed with efforts to reduce and prevent earthquake damage.
2. Conducting Earthquake Drills
ROHM Domestic bases have established a BCM countermeasure headquarters to ensure the safety of employees and others in the event of an emergency, and to ensure the continuity and early recovery of core businesses, and conducts periodic assumed drills and video-based training.
In FY2023, BCM task force training was conducted at the ROHM Head Office for the operational team members the BCM countermeasure headquarters and its subordinate organizations, held at two venues that were connected using tools for remote work to coordinate information.
Assuming that not everyone could gather at the same place due to telecommuting or other reasons, we verified the effectiveness and efficiency of methods how to consolidate, organize, and report information on each place where people assemble online and to hold online meetings to make decisions on issues raised at the task force headquarters.
The participants were able to clarify issues related to the roles and activities of each team and group, and reaffirm the procedures for their activities, thereby improving their awareness of and ability to respond to BCM and BCP.
3. Production Building Resistant to Disasters such as Earthquakes
At ROHM Hamamatsu, a seismic isolation structure has been adopted for the production building in anticipation of a Nankai megathrust earthquake or other disasters.
In addition, the SiC building at the ROHM Apollo Chikugo Plant is equipped with a seismic isolation structure that includes the ancillary area, as well as flood prevention measures, gas fire extinguishing equipment, and emergency generators, making it a factory that is prepared for various disasters.
[ Action for Water Risks ]
1. Identification of Water Risks by Using the World Resources Institute's Aqueduct
ROHM Group has used the WRI Aqueduct, a global assessment tool, to identify water risks. The semiconductor industry uses large amounts of water, so securing water is very important for semiconductor manufacturing. In addition, all factories in Japan have the function of the pre-process (wafer process) of semiconductor manufacturing. Therefore, we have set long-term water intake securing and water consumption reduction targets with "drought risk" as a priority issue. In addition, we have been proceeding with a water intake plan that is linked to production plans and environmental targets.
At overseas factories that have post-process functions for assembly and inspection, flood risks are identified as an issue. The 2011 flood in Thailand caused the group's factories to shut down. In addition, the loss of facilities and equipment and the economic loss due to the suspension of production had a great impact both inside and outside the company. To prevent such problems from occurring again, we use WRI Aqueduct as a flood risk assessment tool for each factory. Then, the risk assessment and analysis extracted by the Risk Management and BCM Committee will be conducted. From the perspective of BCP, we are working to reduce the risk of production suspension due to floods by formulating and managing a BCP inventory design that reflects the expected number of suspension days.
2. Conducting Drills Based on Lessons Learned from the Flooding in Thailand
At our manufacturing sites in Thailand, we hold annual BCM countermeasure headquarters training sessions to prepare for the possibility of flooding. Based on the action plan we created based on the experience of the 2011 floods, the participants check the items to be implemented in each phase of the flood scenario, such as in the event of flooding in the upper reaches and in the event of flooding equivalent to 2011, when the flood barriers in the industrial park did not function. We also conduct training on assembling flood barriers, starting up drainage pumps, and operating boats, as well as checking the items we will use in the event of a flood and training on the skills we will need.
3. Flood-proof Production Building
In the production building at the ROHM Group's Malaysia plant, the floor height on the first floor was set at an average of +5.1m above mean sea level, based on lessons learned from the flooding that occurred in 2014. In addition, a structure has been established to prevent long-term shutdowns by securing backup through dual power transmission.The new building, which was completed in 2023, also has various BCM measures in place that meet the same standards.
[ Action for Fires and Other Risks ]
1. Response to Fire Risk in ROHM Group
ROHM Group regards fire risk as one of the top risks and is working to reduce it. In the fire-specific risk survey that started in 2021, we conducted hearings, using also online tools, on the status and activities of fire prevention measures at each group factory and held discussions based on fire cases at other companies to confirm our efforts regarding fire prevention.
In particular, for clean rooms, we have created Fire Prevention Guidelines that describe fire prevention measures for production equipment and ancillary equipment as well as measures to prevent the spread of fire. We are also rolling out risk assessments aimed at preventing fires across the ROHM Group.
We will continue fire prevention measures for the entire group and strengthen awareness of employee safety and business continuity.
2. Formation of Self-defense Fire-fighting Teams, and Fire and Disaster Prevention Drill at ROHM Head Office
ROHM has organized a self-defense fire brigade organization in preparation for disasters, and deploys small power pumps, chemical protective clothing, and rescue equipment and other materials according to the situation of each company. We also conduct practical evacuation drills for fires and earthquakes, drills in clean rooms where hazardous materials are handled, and drills for large-scale earthquake scenario to ensure that we can act quickly and appropriately in the event of a disaster. In FY2023, for the first time in four years, we held a company-wide earthquake evacuation drill, with a total of 1,800 employees participating. We also conduct nighttime evacuation drills every shift, assuming nighttime holidays. From the perspective of BCP, it is stipulated that the self-defense fire brigade will be dispatched and firefighting equipment will be provided in the event of a surrounding fire.
Risk Management・BCM Education
The ROHM Group also focuses on education for the purpose of establishing risk management and BCM structures.In particular, in light of the recent increase in risks related to economic security and geopolitics, ROHM provides education and enlightenment through lectures for corporate officers by outside instructors and monthly reports for directors and corporate officers, including those from outside the company.ROHM also conducts e-learning programs for employees to raise their awareness of fire prevention, disaster prevention, and business continuity at ordinary times.In addition, ROHM Group locations are also conducting video-based fire and disaster prevention education and e-learning programs to raise employees' awareness of how to respond to disasters even during normal times.
Major Education and Training Achievements
| Education and Training | Purpose and Contents | Target | Number of Participants | Attendance Rate |
|---|---|---|---|---|
| Fire and Disaster Prevention E-Learning 2023 | E-learning for employees to raise awareness of fire prevention within the company and further enhance the fire prevention system | ROHM | 3,755 | 99% |
| BCM Awareness E-Learning 2022 | E-learning to reconfirm and educate each employee on how to respond in the event of a major earthquake, etc. | ROHM | 3,809 | 99% |
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