Risk Management
Approach to Risk Management
In its wide-ranging business activities, the Marubeni Group undertakes multifaceted qualitative and quantitative risk management at the micro and macro levels. At the macro level, we promote integrated risk management based on quantitative methods. At the micro level, we have strengthened our control for individual projects by requiring scenario analyses, strictly adhering to established numerical benchmarks and reinforcing monitoring systems for each project. With respect to qualitative risks, we have adopted a preventative approach by improving our internal control system and bolstering our compliance structure. With respect to trade compliance, we have also established the Trade Compliance Management Department in an attempt to strengthen checking functions and enhance business functions.
Risk Management System
The following system has been put in place to manage potential major risks to the business.
For important individual proposals, such as those for investment or financing, draft proposals are first circulated and discussed by the Investment and Credit Committee and by the Corporate Management Committee, before the President makes decisions. Following implementation, each sales division manages the risk exposure and, for important cases, periodic status is reported to the Investment and Credit Committee and to the Board of Directors.
In addition, as a means of risk diversification, we manage a portfolio which minimizes the risk to the company as a whole.
Internal Control
In general, an internal control system has a number of objectives, including ensuring that operations are performed efficiently, ensuring statements of accounts are prepared correctly for reporting the financial results to stakeholders, and ensuring compliance with the law. Based on these objectives, Marubeni has defined internal control as the prevention of contingent losses by establishing and operating internal systems.
Based on the Corporation Law and the Ordinance for Enforcement of the Corporation Law, Marubeni has created a basic policy on the system designed to ensure the appropriateness of Marubeni Group operations. Responding to changes in society and with the aim of realizing a more appropriate and efficient system, in April 2008, Marubeni reviewed its Basic Policy on Internal Control, and added the following four principles:
1. To avoid any and all contact with corporate racketeers and other antisocial forces
2. To prevent the loss or improper release of information
3. To formulate a business continuity plan
4. To establish the Internal Control Committee and the Disclosure Committee
Internal Controls over Financial Reporting
Marubeni's top management recognized from early on the importance of internal control. In March 2004, their clear determination resulted in the start of the MARICO PROJECT (MARubeni Internal COntrol System PROJECT) to ensure the reliability of financial reporting. Consistent with the methodology outlined in the Sarbanes-Oxley Act (SOX Act) of the United States, the MARICO PROJECT documented the flow of business practices into a visible form, and identified risks relating to financial reporting. The documentation process was completed in Fiscal 2004, and in Fiscal 2005, we confirmed that "the internal controls of the whole Marubeni Group were designed and operating effectively," thereby completing our Group's internal control system. Pursuant to the Financial Instruments and Exchange Act, listed companies were required from April 2008 to have in place a system for reporting on their internal control over financial reporting. Choosing to act before this, Marubeni has taken proactive and voluntary steps to achieve effective internal control to enhance our corporate value base. We submited the Marubeni Group's Fiscal 2008 internal control report together with our annual securities report in June 2009.
Establishment of the Internal Control Committee
In April 2008, Marubeni established the Internal Control Committee. In doing so we incorporated into our core function both the MARICO PROJECT, which we had promoted since 2004, and the activities for strengthening internal controls related to general operations (basic policy on internal control under the Corporation Law), which we had promoted since 2006. We are aiming to strengthen comprehensively our controls at a higher level.
In Fiscal 2008, the Committee held discussions on the aims of the Committee activities and on how compliance with the Corporation Law and Financial Instruments and Exchange Law was progressing. It also established the Internal Control Committee Rules, and issued an interim report.
Business Continuity Plan (for business continuity in the event of a major disaster)
In Fiscal 2008, Marubeni formulated the Business Continuity Plan (for business continuity in the event of a major disaster). The plan clearly explains Marubeni's BCP operations and management system, as well as the main points and flows of its responses in the event of a disaster, including envisaged disasters, preparatory measures, initial responses and recovery responses. Based on this plan, we will advance IT infrastructure improvements, internal awareness campaigns and the formulation of BCPs at group companies.
Fair Trading
The Marubeni Group's management principle is to conduct fair and upright corporate activities in accordance with the spirit grounded in the Company Creed of "Fairness, Innovation and Harmony." The Marubeni Group's Compliance Manual also contains sections on "Compliance with Antimonopoly Law and Related Laws and Regulations" and "Prohibition of Unfair Competition."
Response to Antisocial Forces
We resolutely renounce antisocial forces and groups that threaten the order and security of society, and we avoid any contact with them. The Compliance Manual contains detailed provisions regarding bans on money laundering and bans on using the influence of antisocial forces.
Information Security
In November 2001, the Marubeni Group established the "Marubeni Information Security Policy," and to promote safe business activities exclusive of information security risks, we have implemented safety measures and protection for information assets on the basis of the policy. In January 2005, we established the "IT Security Management Rule" and the "IT Security Standard" to indicate the importance of information security. These were designed to counter such risks as unauthorized access, loss, destruction, alteration and leaks of information assets, as well as to maintain the effective use and credibility of those assets. Moreover, with respect to the specific management of information assets, we have established the "Detailed Rules for the Management of Documents and other Records" and the "IT Usage Rules," and have publicized them widely.
These efforts are also being enhanced at group companies. We have promoted group companies to formulate and apply their own rules tailored to the characteristics of their respective businesses, with reference to Marubeni's rules and regulations.
Furthermore, in response to Japan's internal control reporting system, which began in Fiscal 2008, in addition to formulating the "Guidelines for IT General Control," which are regarded as the standards for strengthening control at Marubeni and key group companies, we have also made continuous revisions and improvements to them.
