Risk Management & Compliance

• Risk Management and Compliance Structure
• Compliance
• Risk Management

Risk Management and Compliance Structure

In accordance with the Management Philosophy, in order to ensure the Group complies with laws and regulations, practices its business activities ethically, and operates in harmony with society, the HDS Group has established the Charter of Corporate Behavior that sets out the principles everyone working at the Group is required to obey.
Moreover, the Group has established the Code of Conduct, which is a guide for putting the Charter of Corporate Behavior into practice, and Crisis Management—Code of Conduct in the Event of Crisis, which specifies steps to be taken in the event of a crisis. Thus, the Company has put in place risk management systems for risks related to management and execution and to deal with any crisis in a secure and responsible manner.
The Company has appointed an Executive Officer responsible for compliance and put in place a system to promote maintenance and improvement of compliance systems and enable swift response.

Compliance

Fundamental Stance for Business Activities

The Group's fundamental stance for business activities is stated below:

1. 1) We strive to enhance customer satisfaction and pursue profit through business activities grounded in fair and legal competition.
2. 2) In executing business activities, everyone working at the Group recognizes the need to fulfill corporate social responsibility and observes laws and regulations and respects trade customs, social norms, and business ethics.
3. 3) We respect the rights that our employees possess as individuals and endeavor to facilitate our employees' fulfillment of their cultural aspirations.
4. 4) We do our utmost to achieve coexistence and co-prosperity with anyone involved with the Group.

Compliance Education

Whistleblowing System

Prevention of Insider Trading

In order to prevent insider trading, the Company clearly specifies procedures for buying/selling the Company's stock and provides education on insider trading control to everyone working at the Group.
When an employee wishes to buy/sell the Company's stock, he/she is required to do so by the specified method within the specified period in accordance with the Company's Rules on Insider Trading Control.

Monitoring of Compliance Status

The Internal Control and Audit Office, for which the Executive Officer responsible for compliance is responsible, periodically inspects and audits the compliance status, and also maintains and improves compliance systems.
President's Management Review in which the President directly reviews the situation of operation execution by each Executive Officer twice a year includes a mechanism for the President to check the compliance status as well as maintenance and improvement of compliance systems.

Risk Management

Policies for Risk Management and Preparations for Crises

The Group defines "risks" as unfavorable events that may occur in the course of usual business activities and "crises" as events that may have a significant adverse impact on the Group's management and operations.
In executing business, we strive to implement risk management and crisis response in a safe and responsible manner. We continuously endeavor to minimize damage of risks or crises if they are to occur. If a risk or a crisis concerning the operations of the Group occurs, we appoint the highest priority to saving lives and preventing bodily injuries, and minimalizing adverse impact on the Group comes second.
The Charter of Corporate Behavior states the Group's policies on risk management and preparation for crises and the Code of Conduct specifies specific action guidelines.
It is stipulated that all actions by officers and employees of the Group shall be in accordance with Crisis Management—Code of Conduct in the Event of Crisis in the event of a crisis.

Information Security

In order to ensure compliance with laws, regulations, and other rules concerning information security, the Group provides such education designed to raise their awareness of the importance of information security to everyone working at the Group.
The Group checks the compliance status once a year mainly by using a questionnaire survey.

Business Continuity Plan (BCP)

In order to deal with any crisis in a secure and responsible manner in the event of an emergency, such as a large-scale disaster, the Group has systems in place in accordance with Crisis Management—Code of Conduct in the Event of Crisis.
In order to minimalize the impact on business and to fulfill our responsibility of supplying products and services to customers, our affiliates in the U.S.,Germany and Korea are also strengthening their production systems. The Group is deploying a tripolar production structure where operations in Japan,the U.S.,Germany,and Korea collaborate.

• *A business continuity plan (BCP) is a roadmap that a company follows in order to continue operations in an emergency, such as a large-scale natural disaster. A BCP specifies activities that should be implemented to ensure preparedness for an emergency and procedures for continuing operations in the event of an emergency, in order to minimize damage to business assets and enable the company to continue its key operations.