Risk Management

In April 2007, we modified our systems to strengthen promotion of risk management and compliance across the NEC Group.
To date, divisions have been assigned to assess and manage different types of risk separately. Based on the existing risk management activities, the new structure aims to manage risks for the entire NEC Group systematically through the establishment of the Risk Control and Compliance Division. From April 2007, the aforementioned Compliance Committee, renamed the Risk Control and Compliance Committee, has been made responsible for overseeing analysis, deliberation and execution of risk management within each part of the NEC Group.

In line with the requirements of the Company Law in Japan, the Board of Directors of NEC Corporation adopted the Basic Policy on Internal Control System in April 2006. In accordance with this policy, the modified risk management framework mentioned above was also incorporated into NEC’s Rules of Basic Risk Management.
Details of our compliance-related activities during fiscal 2007 are provided on the Corporate Ethics and Compliance page. NEC will deepen and reinforce current compliance-related activities while expanding the scope to include all consolidated subsidiaries.

As part of our risk management initiatives, we are currently involved in drafting a business continuity plan in Japan, as described below.

Drafting a Business Continuity Plan (BCP)

We have analyzed the potential impact of a large, magnitude-seven earthquake on shared, company-wide management foundation (buildings, power, personnel gathering, IT infrastructure, etc.) and have conducted measures to make our business sites as resistant to earthquake damage as possible. These measures have included making buildings earthquake resistant while prioritizing the safety of everyone working or visiting the sites.
We reviewed the disaster prevention plan we previously had in place from the perspective of business continuity and drafted 1) new disaster response plans for each business site, which lay out emergency recovery initiatives for them, and 2) a central business continuity plan, which establishes procedures for gathering company-wide information, controlling the recovery, and logistical support. The plan also provides for community initiatives, including the concluding of agreements with local governments to provide parts of our facilities for use as emergency evacuation centers.
Additionally, in the second half of fiscal 2007 we formulated business continuity plans for several model businesses in advance. The plans cover the value chain, which is the series of processes by which products are delivered to customers (specifically, ordering, development, manufacturing and shipping). We intend to begin to create plans for the entire company in fiscal 2008.