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Our company has a board of directors and a board of corporate auditors.
In October 2001, we instituted a scheme of corporate officers. This expedites decision-making and reinforces the supervisory and monitoring capabilities of the board of directors.
The board of directors is composed of eight members, two of whom are from outside the company. In addition to regular monthly meetings, provisional meetings are held as necessary, and we conduct flexible decision-making.
To clarify the management responsibilities of the board members, we reduced their tenure to one year effective June 2004. Except for the outside board members, six members of the board of directors hold duals posts, which included president, senior vice president (4), and vice president (1). There are also 11 other corporate officers.
In the decision making process, which is centered on the board of directors, in order to ensure fair and appropriate management decisions, important items are discussed in advance at meetings such as the Corporate Officers Meeting.
The board of corporate auditors has two standing members and two outside members. As a general rule, the board of corporate auditors meets once every other month.
Ernst & Young ShinNihon was selected as the independent public accountant. Auditors, the independent public accountant, and internal auditing division (CSR and Internal Auditing Division) work in close connection with each other, which includes exchanging information regarding management activities and internal audits. |
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| Strengthening the internal audit system |
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In April 2006, the Internal Auditing Division was integrated with the CSR Promotion Division to create CSR and Internal Auditing Division.
This integration made it possible to conduct comprehensive risk management (integrated management from preventing risks to handling and eliminating risk when they arise), which is difficult under traditional system that separates auditing and execution functions, combining the two has strengthened the internal audit system. |
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| Constructing the internal control system |
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| Pursuant to Paragraph 5, Article 362 of the Corporation Law of Japan, we have our board of directors determine basic policy on construction of the system for internal control, and construct the system in line with this policy. |
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| Basic policy on construction of the internal control system |
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| Pursuant to Paragraph 5, Article 362 of the Corporation Law of Japan, we have determined our basic policy on construction of the system stipulated in Item 6, Paragraph 4 of the same Article as well as paragraphs 1 and 3, Article 100 of the enforcement regulations of the Corporation Law of Japan (i.e., the internal control system), as shown below. We shall assure the propriety of our activities in line with this basic policy, and regularly review the policy with a view to improvement and augmentation in response to changes in the socioeconomic situation and other surrounding circumstances. |
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| 1. |
System to assure that the execution of duties by the board of directors and employees is in conformance with laws and the articles of association |
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System for the preservation and management of information on execution of duties by the board of directors |
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Rules and other systemic elements related to management of loss risk |
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System to assure efficient execution of duties by the board of directors |
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System to assure the propriety of work in the corporate group comprised of the company as well as its parent and subsidiaries |
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In the event that auditors seek instatement of an employee to assist their work: system concerning said employee and items related to his or her independence from the directors |
| 7. |
System for submission of reports by the directors and employees to auditors, and submission of other reports to auditors |
| 8. |
System to assure the efficient execution of inspections by auditors |
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| SOX Act |
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| We have established a mechanism to promote our response to the Japanese version of the SOX Act (SOX Law) and are working to strengthen internal controls. In FY2006, we undertook efforts to thoroughly educate employees throughout the company of the law through SOX Act training at 17 divisions, including all 13 offices. However, based on the results of our own test, various deficiencies were found in our efforts, and we have worked to resolve the problems and more thoroughly educate employees about the law. |
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| Creating checks by separating office work operations |
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| In April 2006, the processing of orders, sales, and deposits at locations such as branch offices and sales offices was removed from the sales location. By concentrating the work at the Business Support Center, we were able to create a system of mutual checks. In February 2007, in order to further strengthen internal controls, the Business Support Center was renamed the Business Compliance Center (referred to below as the BC Center), and the mission of the center clarified. |
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| Risk management efforts |
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| We are engaged in risk management based on the following basic policies; |
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Increase risk management transparency and expand the risk management system |
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Provide measures to follow up and reduce existing risks |
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Identify new risks and provide measures to prevent them |
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Decide supervision departments to manage recognized risks and debate collateral measures (such as insurance) |
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Conduct periodic risk assessments |
| The above make it possible to avoid management crisis. |
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| Review of the risk management system |
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In 2002, we launched risk management efforts and established the Crisis Management Committee.
Under the previous system, there were differences in the escalation method and responding division, which made it extremely difficult to gain a comprehensive understanding of what types of risk there were. The system was changed so that the CSR and Internal Auditing Division conducted comprehensive management, which ranges from gaining an understanding of what risks were present to implementing measures and getting problems under control and resolving them. This has made it possible to realize rapid and highly-integrated risk management. In addition, in FY2006, the risk management table was substantially updated in order to increase the efficiency of risk management and respond to changes in the company. This revision made it possible to increase the number of risks managed to 193 items in 4 broad categories and 21 subcategories, from the previous 97 items in 9 broad categories and 15 subcategories, and to conduct more detailed risk management. |
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| Examples of risk in FY2006 |
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We consider information security risks a particularly important risk, and focus management on it. However, the following types of risks surfaced in FY2006. We analyzed the reasons the risk materialized, implemented countermeasures, and are striving to make sure the problems do not occur again.
■Loss of equipment
■Infection of computer viruses
■Loss of electronic information
■Dysfunction of equipment |
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Governance/Accountability |
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