Organizational Risk Management Structure
Heads of divisions of the Daigas Group and affiliates are in charge of managing crisis-related losses by conducting risk-management inspections on a regular basis. Utilizing the Gas Group Risk Management System (G-RIMS), which systematizes self-checkups of risk management, and other systems, each division and affiliate checks if there are any risks and if risk control has been conducted properly regarding each risk item, and implements follow-up and other measures if necessary.
To manage risks common to all Group companies, including safety and security risks, as well as the risks of disasters and accidents, we have clearly appointed responsible organizations to support each basic organization or related company. We thus perform Group-wide risk management. To be prepared for emergencies, we have established the Rules for Disaster Control and the Business Continuity Plan (BCP).
Regular Reviews and Monitoring
Operating G-RIMS, our own self-assessment system
G-RIMS was introduced by the Daigas Group in 2006 to manage business risks in its daily operations. Under the system, a manager in charge of risk control at each organization and affiliated company checks the implementation of risk-prevention and early-detection measures, devised based on around 50 risk items. The manager is also tasked with identifying risks to be addressed and assessing their potential seriousness before drawing up and implementing response plans and follow-up measures while operating the PDCA (plan-do-check-act) cycle.
G-RIMS (Gas Group Risk Management System) Check List
1. Management environment
- ・Dissemination of corporate philosophy
- ・Decision making and follow-up process
- ・Poor maintenance of regulations
- ・Failure to report business information that should be reported
- ・Effectiveness of self-audits
2. Human rights, harassment
- ・Violation of human rights (workers, local residents, consumers, etc.)
- ・Harassment (sexual harassment, maternity harassment, power harassment)
3. Personnel affairs, labor affairs
- ・Inappropriate labor management and incompliance with labor-related laws and regulations
- ・Securing human resources
- ・Developing human resources
- ・Inappropriate employment contracts with non-regular employees
4. Accident prevention, workplace safety
- ・Slack conduct regarding accident prevention and workplace safety
- ・Vehicles for business use
5. Response to relevant laws
- ・Violation of relevant laws
6. Illegal transactions
- ・Violation of the antitrust act
- ・Violation of the subcontract act
- ・Rejection of consumption tax pass-through
- ・Violation of the labeling act
7. Inappropriate relationships
- ・Cozy relationships, bribery, etc. with public servants; cozy relationships with clients and suppliers
8. Anti-social forces
- ・Refusal to have a relationship with anti-social forces
9. Insider trading
- ・Practice of insider trading, provision of insider information
- ・Illegal receipt of subsidies
11. Management of seals
- ・Illegal use of seals
12. Purchase, expense-related spending
- ・Inappropriate procedures and illegal practices concerning purchase and expense-related spending (accounting spending)
13. Illegal practices concerning money transfer
- ・Illegal use of bank accounts
- ・Embezzlement of cash
- ・Embezzlement of sales proceeds
- ・Illegal spending
- ・The same person taking a spending-related post for a long time
14. Accounting, tax-related procedures
- ・Errors, illegal practices and delays concerning accounting and tax-related procedures
15. Credit control, loan control
- ・Irrecoverable loans, delays in loan collection
- ・Acceptance and execution of guaranteed debts
16. Scandals involving suppliers
- ・Compliance problems emerged at corporate clients concerning human rights, labor practices, environment and corruption.
17. Whistle blowing system (Compliance Desk)
- ・Insufficient dissemination of a whistleblowing system
- ・Operational defects of a whistleblowing system
- ・Violation of environment-related laws
19. Products, services
- ・Quality of products and services (complaints, defects, recall, product liability, consumer protection, etc.)
20. Business continuity in emergency
- ・Suspension of business activities in the event of emergencies such as natural disasters
21. Intellectual property
- ・Insufficient protection of intellectual property rights owned by Osaka Gas
- ・Infringement of intellectual property rights owned by third companies
- ・Legal disputes such as lawsuits
23. Information disclosure
- ・Inappropriate information disclosure procedures and the subsequent erosion of public trust in Osaka Gas
24. Information control in general
- ・Leakage, loss and illegal use of information
25. Computer network-related (computer networks, business apps related to computer networks, information used via such networks and apps)
- ・Illegal use of information, illegal alteration of information and information leakage, all arising from the lack of security measures
26. Personal information concerning customers and corporate clients (including customer information)
- ・Leakage, loss and illegal use of personal information concerning customers
27. Personal information concerning employees
- ・Leakage, loss and illegal use of personal information concerning employees
28. “My Number” system (individual identification number and specified personal information)
- ・Leakage, loss and illegal use of “My Number” identification numbers
29. Funds, derivatives
- ・Problematic fund management and fund procurement
- ・Problematic fund control
- ・Speculative derivative transactions
30. Electronic banking
- ・Illegal and erroneous money transfers using the electronic banking system
Status of Internal Control
The Company’s Board of Directors developed an internal control system which includes systems necessary to ensure that the execution of duties by Directors complies with laws and regulations and the Articles of Incorporation, and other systems prescribed by the applicable Ordinance of the Ministry of Justice as systems necessary to ensure the properness of the Company’s operations. The Company confirms the operating status of the internal control systems on a periodic basis by receiving reports mainly from the heads of organizations regarding a list of items to be confirmed. At the meeting of the Board of Directors held on April 27, 2020, it was reported that the internal control systems were operating in a proper manner.
Overview of operational status of the internal control system
(i) Matters concerning compliance
The CSR Committee has been promoting CSR activities through the Compliance Subcommittee, the Environment Subcommittee, Social Contribution Subcommittee, Information Security Subcommittee and Risk Management Subcommittee during the fiscal year under review. Educational materials, including a guide to the Daigas Group Code of Business Conduct, are posted on the intranet at all times to familiarize Directors and employees of the Group with said Code to promote and ensure its understanding thereof.
Osaka Gas Chemicals Co., Ltd. received a cease-and-desist order and a surcharge payment order based on the Antimonopoly Act from the Japan Fair Trade Commission concerning bidding for activated carbon used in water purification facilities and the like. Following the order, the company has formulated applicable regulations, carried out employee training, and conducted audits in order to prevent similar incidents. The Daigas Group will devote Group-wide efforts to complying with the applicable laws and regulations.
In addition, to promote further understanding and effective use of the consulting and reporting system for employees as an internal reporting system, a poster presentation is made to publicize the reporting system, and detailed explanations on the system and the concept of compliance is provided via the intranet or other means.
On April 1, 2020, the CSR Committee was renamed the ESG Committee. In addition, the Compliance Subcommittee and the Risk Management Subcommittee have been integrated into a Compliance and Risk Management Subcommittee.
(ii) Matters concerning risk management
In 2019, we conducted a Company-wide general disaster readiness drill comprising disaster response drills and BCP drills, and provided emergency collaboration education and drills designed to foster collaboration between gas piping companies and gas retailers.
In response to the spread of the COVID-19 pandemic in Japan and around the world, we have established a Countermeasure Headquarters to monitor the progress of countermeasures at our Group and implement infection control measures as needed.
To strengthen our Group’s cybersecurity measures, we have established a Cybersecurity Committee and enhanced countermeasures against attacks from outside our Group’s network.
(iii) Matters concerning the management of businesses in the Group
The affiliated companies to be managed by the core companies or the management support organizations are designated and their managerial tasks are monitored by receiving reports on important issues from the affiliated companies.In addition, day-to-day management of those affiliated companies is performed by using the G-RIMS and/or conducting audits.
The Company's Auditing Department, which conducts internal audits, implements planned internal audits of the Company's organizations and the affiliated companies and provides follow-up audits after a certain period of time.
(iv) Matters concerning the effectiveness of audits by Audit & Supervisory Board Members
Full-time Audit & Supervisory Board Members have periodic exchanges of opinion with the Representative Director and Chairman, the Representative Director and President and the accounting auditor, in which Outside Audit & Supervisory Board Members also participate as necessary. Partly through the opportunity to exchange opinions with the accounting auditor, Audit & Supervisory Board Members evaluate the qualifications, expertise and independence of the accounting auditor. Full-time Audit & Supervisory Board Members attend important meetings such as the Management Meeting, the CSR Promotion Meeting, the Investment Evaluation Committee, etc., and read approval documents and other important documents. Through a Board of Directors' resolution on the internal control systems, they also clarify important matters to be reported to Audit & Supervisory Board Members and disseminate information thereof. Four assistants to Audit & Supervisory Board Members are in place to engage solely in assisting Audit & Supervisory Board Members in the performance of their duties.
On April 1, 2020, the CSR Promotion Council was renamed the ESG Council.