Risk Management

The NGK Group regards uncertainties that could affect the achievement of the NGK Group Vision as risks. It seeks to control these risks by identifying them appropriately and preventing them before they occur. It has also established approaches for each type of risk to minimize losses if they do occur.

The NGK Group has established a Risk Management Committee chaired by the President and comprehensively manages material risk issues in line with its risk management process under the supervision of the Board of Directors. Committee members manage risk responses in their respective areas by directing and supporting each business group and division. Each business group and division develops and implements countermeasures, continuously monitors whether risks are materializing, and reports the results to the committee.
The Board of Directors oversees risk management activities and confirms the effectiveness of the framework by receiving reports from the committee at least once a year. This risk management framework operates independently of the Audit & Supervisory Board.
If a disaster, accident, or other risk event occurs, NGK responds in accordance with the Basic Rules of Crisis Management under the responsibility of the heads of the departments and committees specified in those rules. For especially serious risks, a countermeasures meeting is convened through consultation between the head of the relevant committee and the executive officer in charge of sustainability promotion, and the Company responds under the direction of the President.

Risk Management Framework Chart

The Board of Directors regards uncertainties that could affect the achievement of the NGK Group Vision as risks. As its policy on risk management, the Board has established the Concept of Risk Management and sets out approaches for each type of risk. Based on this concept, the Risk Management Committee implements the following initiatives with reference to the COSO-ERM Framework^*.

Material risks are identified and reviewed once a year. Risks surrounding the business are identified through both a top-down review by management and a bottom-up review by each department. NGK then reassesses those risks by confirming changes in impact and likelihood and whether any new risks have emerged. The Risk Management Committee manages risks across the Group on a cross-functional basis and reports them to the Board of Directors. Risks whose importance increases due to sudden changes in the business environment are added as needed to the matters handled by the Risk Management Committee so that NGK can respond flexibly. For risks arising from external factors that are difficult for the Company to control directly, management discusses the relevant themes in order to develop concrete scenarios regarding what could occur if such risks materialize and how they could affect the business and management. By establishing these risk management systems and methods, NGK aims to strengthen the overall resilience and sustainability of its management.

Material Risk Management Cycle

The NGK Group regularly monitors and strengthens risk management for its overseas operations in order to minimize legal risks associated with its global business expansion. For Group companies outside Japan, the NGK Group checks, every six months, the status of legal matters such as litigation and the use of outside counsel, as well as the use of the whistleblower system and the status of Security Export Control. The status of use of the whistleblower system and other related matters is reported to and shared with the Compliance Committee. In addition, when overseas group companies seek advice, the Legal Dept. or the Group Compliance Dept. responds as necessary to help avoid risks.

NGK promotes its business continuity plan (BCP) across the Group under the leadership of the BCP Countermeasures Headquarters, which is headed by the President and guided by the principles of respect for human life and cooperation with local communities. To prepare for BCP activation, NGK is implementing a range of measures, including decentralizing production sites, establishing multiple procurement sources, strengthening the disaster resilience of buildings and equipment, and ensuring employee safety. To strengthen crisis response capabilities, NGK conducts scenario-based drills for major disasters, including a Nankai Trough earthquake, and uses the results to verify and improve the effectiveness of its plans. NGK also works to sustain operations by collecting information early and responding promptly to risks of supply chain disruption caused by infectious disease outbreaks, geopolitical factors, and economic security concerns. When the BCP is activated, the BCP Countermeasures Headquarters, headed by the President, works with issue-specific response teams and other relevant bodies to lead recovery efforts.

BCP Framework Chart