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Risk Management

Basic Policy for Risk Management

Sumitomo Electric has established the Risk Management Committee, which is chaired by the President, and promotes the measures that mitigate various risks associated with our business activities such as risks related to safety, disaster, quality and environment. The Risk Management Office serves as the organizer. If risks come to the surface, the crisis management system will be formed promptly based on the Basic Policy of Risk Management.

Basic Policy of Risk Management
  • Giving top priority to ensuring quality and safety, as a product and service provider
  • Maintaining favorable relations with stakeholders, including customers, shareholders, local communities and employees
  • Ensuring that compliance with laws and regulations and adherence to corporate ethics constitute the basis of the Sumitomo Electric Group's management
  • Honoring the Sumitomo Business Spirit, the Sumitomo Electric Group Corporate Principles, and the Sumitomo Electric Group Charter of Corporate Behavior

Risk Management System

Risk Management System

Risk Management Activities

In accordance with the risk categories below, Sumitomo Electric takes inventory of risks in each unit and affiliate every year and promotes planning and implementation of measures to address significant risks and insufficiently controlled risks. Thus, Sumitomo Electric is following risk management procedures consistently to raise the group-wide risk management level.

Risks to our Group are classified as follows in our risk reduction initiatives.

Risk Categories
Major category Middle category Minor category
Externally generated risk Non-financial risk
  • Disaster risk, crime risk
  • Political and country risks, etc.
Financial risk
  • Credit risk
  • Market risk; e.g. interest rate, exchange rate and material prices
  • Liquidity risk, etc.
Internally generated risk Strategic risk
  • Competitive strategy risk, etc.
Operational risk
  • Product quality and safety risks
  • Occupational hazards, facility accident and safety risks
  • Environmental risk
  • Compliance risk
  • Violation risk
  • Labor, human rights and personal information risks
  • Financial information credibility and asset protection risks
  • Information and communication system risks
  • Intellectual property rights risk
  • Reputation risk, etc.

Business Continuity

As part of the Company's risk management efforts, Sumitomo Electric developed Business Continuity Plans (BCPs) in fiscal 2008 to ensure that our important and core businesses can be continued even in the event of a disaster, such as an earthquake, and that we can swiftly resume operations should our operations be interrupted. Since then, we have improved the plans on a regular basis. The BCPs actually played a certain role in responding to the situation caused by the Great East Japan Earthquake, which occurred in March 2011. Nevertheless, the plans were insufficient in some aspects because the earthquake caused massive damage on an unprecedented scale, which far outstripped the damage assumed in them. In the future, we will improve the BCPs based on the lessons from our response to the Great East Japan Earthquake, and also promote practical drills and training programs to confirm the effectiveness of the plans. We will also continue to set up a system to cope with various risks, including a BCP to be ready for outbreaks of infection diseases, such as the pandemic influenza virus.

Emergency Drills

Emergency Drills
Emergency Drills

Sumitomo Electric carries out Group joint emergency drills twice a year (two sessions: day and night), on the assumption that a large-scale earthquake had occurred, to enhance the ability to address emergency situations.
In production facilities, inspection of areas where hazardous materials are used, and simulation of emergency measures are also carried out in addition to the emergency drills. Additionally, Sumitomo Electric carries out drills of information communication and sharing information with aims of acquiring disaster information swiftly in a disaster situation, organizing the information, and reporting accurately and promptly the situations to executives, and sharing disaster information among Sumitomo Electric and Group companies.
Through these drills, we verify the effectiveness of our emergency response plans and improve the contents of the plans to raise the reliability of the BCPs.

Our Response to the Great East Japan Earthquake

The Great East Japan Earthquake, which caused massive damage to Tohoku, Kanto and other areas of Japan, had certain impact on the Sumitomo Electric Group. We dealt with the earthquake disaster based on our experience of overcoming the crisis caused by the Great Hanshin-Awaji Earthquake with the great efforts of concerned persons.

Advance Preparation --Business Continuity Plans (BCPs)--

Sumitomo Electric has enhanced its preparedness for disasters, such as large-scale earthquakes, through fire prevention measures based on the experience from the Great Hanshin-Awaji Earthquake. In fiscal 2008, in addition to traditional disaster prevention measures, we developed Business Continuity Plans (BCPs) in each business unit to ensure that our businesses can be continued even in the event of a disaster and that we can swiftly resume operations should our operations be interrupted. The plans have been improved continuously.

Sumitomo Electric Group Basic Policy for Business Continuity

① Ensuring the safety of human life

We will give top priority to ensuring the safety of human life of customers, employees, suppliers, residents in local communities and other stakeholders.

② Stable supply of products and services

We will stably supply products and services required by societies to fulfill our responsibility as a supplier.

③ Respect for compliance and corporate social responsibility

We will fulfill our corporate social responsibility by respecting compliance and by acting in accordance with the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior.

Initial Reaction

Sumitomo Electric set up the Group-wide crisis headquarters (Osaka Head Office) immediately after the occurrence of the earthquake. We secured an internal communication method using the dedicated line for disaster countermeasures, and connected the sites of Sumitomo Electric and its Group companies via teleconference systems to share and exchange information.

  • In the initial reaction, we confirmed the safety of employees and their families in accordance with the basic policy.
  • In the sites hit by a big tremor, we managed to secure the safety of ourselves and evacuated to designated refugee areas smoothly as we did in the regular emergency drills.

Information on the State of Damage

  • While tsunami caused devastating damage as a result of the earthquake, our Group was not affected directly by tsunami.
  • We also confirmed that no employees of our Group died from the earthquake although the family members of some employees suffered from the damage unfortunately.
  • Among our Group's production sites, the earthquake caused huge damage to the buildings and facilities of the Electronic Wire Division and other affiliates in Kanuma and Kiyohara Industrial Park (both in Tochigi Prefecture), where the tremors registered an intensity of 6-plus on the Japanese scale of 7.

Restoration Efforts

  • The Sumitomo Electric Group made a concerted effort to restore the affected sites. Specific actions included collection of information on the damage and estimation of cost for the restoration plan. The staff of the equipment design and equipment maintenance sections working at our affiliates in western Japan visited the affected areas to give support.
  • Despite the difficult conditions such as rolling blackouts and shortage of everyday goods, most of the sites were ready for the resumption of production activities by the end of April 2011 thanks to the dedicated efforts of our employees for restoration.

Reconstruction Assistance

  • Support for the Fukushima Daiichi Nuclear Power Station
    The Sumitomo Electric Group's employees worked for the restoration of the communication circuit linking the Fukushima Daiichi Nuclear Power Station with the Tokyo Electric Power Company on March 18, 2011.
  • Support for the reconstruction of infrastructure in the affected areas
    The core businesses of our Group include the manufacturing of transmission cables, communication cables and related products, which support social infrastructure, and we believe that the delivery of such products is our social mission.
    We received certificates of application from NTT DOCOMO, INC. and KDDI CORPORATION in July 2011, for our Group's cooperation for the delivery. We are continuously doing our very best to help reconstruct the affected areas by supplying our products as stably as possible.
  • Response to power shortage
    To respond to power shortage during the summer time, we introduced a shift of power consumption from daytime to night by adjusting the hours of operation. Holidays and summer vacation ware moved in a way to cut electricity use.
    We are also making best energy saving efforts in offices.

Other

  • Donations
    In addition of 200 million yen donated by Sumitomo Electric mainly to the Japan Red Cross, the Company Directors donated 5.5 million yen. Approximately 22 million yen in total, comprising the money collected from Sumitomo Electric employees and an amount equal to the collected money provided by the Company in its matching gift system, was also donated. Group and affiliated company employees at various Company-related locations made donations of around 3.9 million yen in total as well.
  • Relief supplies
    To support the affected areas, the Sumitomo Electric Group sent survival food and batteries from its emergency stocks to the areas via public agencies.
  • Physical support
    We encourage our employees to use the volunteer holiday system, and also recommend that employees personally participate in volunteer activities in the affected areas.

Information Protection

Personal Information Protection

With regard to information on individuals such as customers, business contacts and employees involved in the course of business, the Company declares that it will observe laws and regulations relating to personal information protection and other codes, and will establish voluntary rules and frameworks. This is stipulated in our Personal Information Protection Policy, which was implemented in April 2005. To effect the above declaration, the Company also set forth the Personal Information Protection Rules. Through employee education programs and other means, the Company works to develop and improve the in-house system for personal information management.

* Please see the following page for our Privacy Policy.Personal Information Protection Policy

Strengthening of Our Information Security Management System

In terms of information security, Sumitomo Electric considers in-house information systems, as well as all information handled by such systems, to be important assets. In October 2003 the Company formulated the Information Security Policy, which declares that the Company will appropriately protect and manage such assets. The Company also strives to continuously improve the information security management system, by establishing security measure standards for a total of 28 items, including information leakage countermeasures and risk management measures.
Furthermore, the Company has implemented training/education programs for all employees, including officers, to enhance their security awareness. In fiscal 2005, the Company began to provide support to Group companies in creating their own Information Security Policies, so as to establish a Group-wide information security management system.

Information Security Policy
Sumitomo Electric considers computers, networks, and other information systems, as well as information handled by information systems (hereinafter referred to as “Information Assets”), to be important assets that help us grow as a global enterprise in the 21st century and declares that the Company will protect and manage these assets.
The Information Security Policy is a document that describes control measures to protect our Information Assets from manipulation, destruction, or leakage caused by the use of the Information Systems irrespective of whether it is intentional or accidental. The users of our Information Assets must recognize the importance of information security and comply with this Information Security Policy. Our managers must also express their support for this Information Security Policy.
  1. Information Assets shall be defined as information systems and information handled by information systems.
  2. Information systems shall be defined as computers and networks.
  3. Computers shall be defined as all-purpose electronic computers consisting of hardware and software (groups of information necessary to activate computers such as programs and configuration information), servers, personal computers, mobile information devices (PDAs, cellular phones, etc.), and peripheral equipment and storage devices (magnetic discs, etc.).
  4. Networks shall be defined as communication networks and communication devices (hardware and software) to interconnect computers.
  5. Information handled by information systems shall be defined as electronic data flowing through networks, electronic data electromagnetically recorded on computers other than software, and electronic data electromagnetically recorded on removable recording media (e.g., compact discs).
Established in October 2003

The company also provides education on information security for all employees every year to ensure observance of the rules. Our conventional efforts to strengthen information security include encryption of the hard drive of laptop computers, supply of safe and secure file transfer service and restriction on data storage in portable electronic media. These efforts were further enhanced to reduce information leakage risk by, for example, prohibiting data storage in USB thumb drives and external hard drives other than the specified models with encryption technology and by preventing the activation of file-swapping software and other prohibited software.

Security Trade Control

Sumitomo Electric has set forth internal rules on security trade control to ensure compliance with export control regulations aimed at international security, and established an export control system headed by a representative director.
Our export activities are conducted after proper screening of individual business transactions and obtainment of necessary export licenses such as comprehensive export license.
Our employees and persons concerned are provided with position-based training, as well as periodical training, which deals with the latest cases, and training at the time of their appointment to the position, so that they are aware of their responsibility for security trade control and obtain necessary knowledge.
We also conduct audits in the Company and its affiliates in Japan and overseas constantly to monitor proper export activities.

Intellectual Property Protection

Sumitomo Electric seeks protection of the company's own technology by proper management of technical know-how, as well as acquisition of the intellectual property rights (IPRs) such as patent rights or design rights. At the same time, we pay scrupulous attention and respect to the IPRs of other companies.
To this end, we have developed a rule on handling of intellectual property, and provided the intellectual property department with functions to support business units or R&D units including those in our subsidiaries such as discovery of inventions, investigation of prior arts and IPRs of other companies, formulation of strategy and response from the perspective of intellectual property-related laws and regulations. In order to improve IPR consciousness throughout the Group, we hold a Group-wide Intellectual Property Right Convention every year to commend the strategic applications that are highly expected to contribute to our business performance as well as the cases that have effectively utilized IPRs to greatly improve business results. We also organize in-house training programs that match the experience and level of proficiency of each employee, and publish the company magazine“ IP news” five times a year.
Moreover, we promote 1) analysis of the rights owned by Sumitomo Electric and other companies, 2) IPRs application based on the business plan or safeguarding know-how against disclosure and 3) countermeasure to IPRs of other companies, through concerted efforts among respective divisions, R&D units and the intellectual property department at“ IP strategy meetings” or“ IP committees” of each division. In recognition of these efforts to develop an intellectual property management system aimed at establishing and executing our intellectual property strategy, we received FY2013 Intellectual Property Achievement Award.

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