Risk Management and Internal Audit

Status of Risk Management System

To prevent risks that may have a significant impact on management, the status of business execution is regularly reported to the Board of Directors and the Executive Officers' Meeting, while the Internal Audit Office reviews and monitors business processes.

Through the Compliance Committee, the Company continuously implements a wide range of initiatives to ensure compliance with applicable laws, regulations, and internal rules. The Company has also established an internal whistleblowing system to prevent misconduct and facilitate its early detection. In addition, the fair administration of rewards and disciplinary measures contributes to maintaining sound corporate management.

Status of Audits

The Company's Audit and Supervisory Committee consists of three members: Director Yoshio Kondo, a full-time Audit and Supervisory Committee Member, Outside Director Akira Mito, and Outside Director Yoshiharu Sagami, both of whom serve as Audit and Supervisory Committee Members. This structure ensures the independence and fairness of the Company's audit function.

Director Yoshio Kondo joined the Company in 1980 and has extensive experience in corporate administration, including serving as the head of administrative divisions and as president of an overseas subsidiary. He has been appointed as an Audit and Supervisory Committee Member because his extensive experience and expertise enable him to provide effective oversight of the Company's management.

Outside Director Akira Mito contributes his professional knowledge and experience as a certified tax accountant, while Outside Director Yoshiharu Sagami contributes his professional knowledge and experience as a certified public accountant. The Company believes that both individuals provide valuable independent oversight of management.

(1) Status of Audits by the Audit and Supervisory Committee

The Audit and Supervisory Committee deliberates on matters including the formulation of audit plans, preparation of audit reports, appointment of the Chairperson of the Committee, appointment of the full-time Audit and Supervisory Committee Member, evaluation of the Accounting Auditor, decisions regarding its appointment, dismissal or reappointment, consent to the Accounting Auditor's remuneration, exchange of opinions with the Accounting Auditor, information sharing with the Internal Audit Office, and the sharing and discussion of audit results for the Company's Group companies.

The full-time Audit and Supervisory Committee Member attends important meetings and expresses opinions where appropriate, reviews important approval documents and contracts, receives reports from Directors and senior management on the execution of duties and operational status, examines financial statements and accounting records, cooperates with the Accounting Auditor through attendance at financial statement audits and internal control audits, collaborates with the Internal Audit Office, attends physical inventory inspections, and conducts on-site audits of the Company's Group companies.

(2) Status of Internal Audits

The Internal Audit Office, which reports directly to the President and consists of three dedicated members, conducts internal audits of the entire Group, including subsidiaries, in accordance with the audit policy and audit plan. These audits focus on the effectiveness and efficiency of operations, the reliability of financial reporting (J-SOX evaluation), compliance with laws and regulations, and asset protection. The findings and recommendations for improvement are documented in audit reports and regularly submitted to the President and the Board of Directors.

The Internal Audit Office, in cooperation with Audit and Supervisory Committee Members, conducts on-site inspections of domestic offices and overseas affiliated companies, and also exchanges opinions and information with the Accounting Auditor to enhance the effectiveness of their respective audit activities.