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 and appropriately based on the Basic Policy of Risk Management.

Basic Policy of Risk Management

Risk management is performed based on the significance of the risks determined in consideration of the following issues:

  • Impact on business performance, maintenance of quality and safety

  • Social responsibility to ensure stable supply

  • Maintenance of favorable relations with stakeholders such as customers, suppliers, shareholders/investors, local communities and employees

  • Continuous compliance with laws and corporate ethics

  • Statements in the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior

Risk Management System

Risk Management System
Risk Management System

Identifying and Addressing Major Risks

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 formulates business continuity plans (BCPs) to ensure that our business activities can be continued even in the event of an emergency, such as an earthquake, influenza pandemic and fire, and that we can resume operations at the earliest possible time. Furthermore, we promote business continuity management (BCM) to keep the BCPs updated and provide employees with practical training, thereby preparing them to respond to emergencies.

Emergency Drills

The Sumitomo Electric Group enhances disaster awareness of employees by implementing joint emergency drills twice a year (in the daytime and at night). These are evacuation drills, including confirming the safety of employees and simulating the initial response to emergency situations. Besides these drills, we are expanding the communications equipment available (introducing satellite mobile phones and digital walkie-talkies), reviewing measures to prevent disasters and preparing for situations in which it is difficult for employees to return home.

Information Security

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, including information leakage countermeasures and risk management measures.

Information Security Policy

As a part of the Sumitomo Electric Industries Group, based on its management concept, we aim to be a company that is trusted at all times, and shall make following efforts for information security in order to contribute in making a safe and secure society and environment.

  1. Provide excellent products and services with sufficient consideration for information security and respond the customer’s requests

  2. Securely protect information received from customers and business partners

  3. Securely protect company’s information assets required in manufacturing and office work

  4. Strive for constant growth by nourishing information security human resource and conducting continuous employees training

Revised in October 2016

Strengthening of Our Information Security Management System

Moreover, conscious that we have a social responsibility to maintain a high level of security in our products, in October 2016 we launched the “SEI-CSIRT Office” as a means of further strengthening information security management to encompass our products and production equipment.
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. And our efforts are not limited to administrative operations. To improve security in our production equipment, we limit the devices that can be connected to equipment and have stepped up measures to combat viruses, while in the area of products and services, we are tackling vulnerabilities, developing secure products, and so on.

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 Group-related personnel 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 export activities, and share information between different divisions within the Company and between affiliates through various committees to reduce the risks in the security trade control activities of the entire group.

Respect for and Use of Intellectual Property Rights

We consider the technology created through our unique R&D activities as the most important intellectual property (IP) for the sustainable development of our business. While committed to appropriate confidentiality management of proprietary technical know-how and internal data, we strive to acquire and use IP rights such as patent rights and design rights. At the same time, we respect the IP rights and trade secrets of others and strive to handle them with scrupulous attention.
To set up a structure for the commitment, we have developed a rule on the handling of IP and trade secrets and established an organization in the Intellectual Property Department to provide business units and R&D units in the Sumitomo Electric Group with the necessary support, such as management of inventions, investigation of prior arts and IP rights of other companies, promotion of technology standardization activities, and formulation of strategy and response from the perspective of IP-related laws and regulations. Furthermore, at IP strategy meetings, strategic IP committee members of business units and development units plan and implement activities, verify the progress and results and make corrections and revisions. The activities are promoted through concerted efforts among respective divisions, R&D units and the Intellectual Property Department.
To promote and improve the IP activities, we operate an invention reward program, organize IP training sessions that match the experience and level of proficiency of each employee, and publish related in-house newsletters. We also hold an “Intellectual Property Right and Standardization Convention” every year to commend excellent IP activities and share knowledge.
Through these activities, we are working to enhance the value of the Group’s IP, create business opportunities, and reduce IP risks.