Risk Management

Hitachi conducts business activities in a wide range of fields in markets around the world.
To prevent a variety of risk factors from having adverse effects on business continuity, the Hitachi Groupis taking steps to strengthen risk management, such as utilizing a system with overall responsibility forcompliance for the Hitachi Group.

Reinforcement of Risk Management System

Preventing Bribery and Corrupt Practices

The entire Hitachi Group is reinforcing its risk management system to

To deal with global bribery and corruption risks, in fiscal 2013 weaddress increasingly globalized and complex risks.

referred to the US Foreign Corrupt Practices Act Resource Guide*1

Under Hitachi, Ltd.’s Head of Risk Management, each businessand other documents to develop various corruption risk scenarios.

operation assigns an executive as its risk management officer to

These were used as the basis for a survey conducted at Hitachi Groupmanage risks mainly concerned with compliance, export control,

companies outside Japan. By analyzing the survey results, we identified

disasters, and crime, and to respond adequately in coordination

several companies at risk from corruption. We are monitoring andamong the entire Group. Furthermore, Hitachi has started to build aworking with those companies with the goal of reducing corruption

comprehensive risk management system that contains standards andworldwide.

procedures for evaluating any risks that may affect business.
Risk Management System
Risk Management Group• Compliance*1 T he US Foreign Corrupt Practices Act consists of antibribery provisions regarding foreign
government officials and transparent accounting provisions within the Securities ExchangeAct. Enforced by the Department of Justice, it prohibits bribes to foreign government
officials. Transparent accounting, enforced by the Securities and Exchange Commission,requires companies to show transactions fairly and accurately in their accounting records
and to maintain effective internal control over accounting.

• Export Control

Preventing Violations of Fair Competition Laws

• Crisis Management and BCP

Hitachi engages in business based on the principles of conformance• Internal Audits, etc.

with the law and business ethics and fair and disciplined competition.
However, Hitachi, Ltd. was found to have impaired the fairness of apublic bid in fiscal 2002 and was penalized in September 2006,
October 2008, and March 2009 for violating the Japanese Antimo-Standards and systems for evaluating business and other risks

nopoly Law. In November 2012, a subsidiary dealing in automotive
components was penalized by the Japan Fair Trade Commission forviolating the Antimonopoly Law. In September 2013, the same
company was prosecuted by the US Department of Justice for violating

Comprehensive risk management system at the management level

American antitrust laws, resulting in a plea bargain.
We are working to prevent further violations and to broaden
awareness of compliance issues, including publicizing messages from

Compliance Reporting System
Hitachi has instituted a Group-wide whistleblowing system to prevent
illegal and unethical behavior, to promptly address infractions, and toenhance our ability to self-regulate. In this system, reports go directly
to the Compliance Department at Hitachi or to an outside attorney.
This system can be used not only by Hitachi employees but also by
former employees, temporary staff, and suppliers.
In addition, we have implemented the Channel to the Board of
Directors system to allow employees to directly report problems
anonymously to Hitachi directors. The facts related to all reports aresubject to thorough investigation and checking, and people who haveidentified themselves in the reports are informed of the investigation
results. We make every effort to appropriately deal with situations,
including taking remedial action where necessary.

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top executives, developing company regulations, conducting regularaudits, and providing education and training to employees based on acompliance manual. In fiscal 2014, we held group education sessions
on the Antimonopoly Law for all Hitachi sales managers, with 957
taking part.
Through these initiatives we will continue working to improve andenhance our compliance framework.

Hitachi, Ltd. | Annual Report 2015Export Control

On top of these efforts, since fiscal 1998, Hitachi, Ltd. has held

For basic export control policies, we adopt the Hitachi Standards ofannual earthquake simulation drills at key operations in Japan. In

Corporate Conduct,*2 which state: “We shall help maintain interna-March 2015, Hitachi High-Technologies Corporation in the Naka area

tional peace and security through compliance with trade-related lawsof Ibaraki Prefecture held a drill simulating a potential large-scaleand regulations.” We established the Corporate Regulations concerning

earthquake. Directed by the head of the Naka area, managers in

Security Export Control based on this policy in 1987. We carry out

charge of their divisions confirmed the action plans in emergency

strict export control practices according to laws and regulations,situations based on BCPs.

screening all goods and technologies intended for export for such

In fiscal 2013, Hitachi appointed personnel in charge of risk-response

factors as destination countries and regions as well as intended end

policies at its main overseas bases and around 300 companies prepared

use and end users. We provide guidance and educational support toBCPs with the goal of completing them for key operations by the end

Hitachi Group companies to ensure that all Group companies followof fiscal 2013. These BCPs are aimed at strengthening our ability tothe same export control policies. In fiscal 2014, we held workshops

respond to business risks, including large disasters, novel strains offor Group companies in the United States, Europe, and China andinfluenza, political instability, and social disruption, as well as acts ofother Asian countries providing practical training on export control.

terrorism. Moving forward, we intend to further expand the scope ofE-learning programs on export control basics and US re-export

our BCPs.

controls were introduced and taken by around 22,000 employees at*3 BCP: Business Continuity Plan

106 Group companies worldwide.
*2 Hitachi Standards of Corporate Conduct: Created by Hitachi, Ltd. to ensure full awarenessof Hitachi’s mission and role and to enable Hitachi to continue to grow as a truly global
enterprise.

Creating BCPs*3 in Key Operations Worldwide
Given the close relation of our business to social infrastructure, we areenhancing our BCPs to ensure that the impact of risks does not disrupt
our business and thereby significantly affect society. In December
2006, we issued the Hitachi Group Guidelines for Developing BusinessContinuity Plans in Japanese. In fiscal 2010 these were translated into
English and Chinese for distribution to all Hitachi Group companies
worldwide to ensure our response readiness for large disasters andother risks.
When the Great East Japan Earthquake struck in March 2011, ourBCPs enabled quick responses and swift decision making. However,issues emerged including identification of secondary and othersuppliers, cloud storage and multiplexing of production information,and the need to secure alternate transportation and fuel sources.
Based on the lessons learned from this disaster, in October 2011
we released and distributed new BCP guidelines for departmental
implementation to further improve our BCPs. Hitachi Group operationsin Japan completed their preparation and review of BCPs, based on
applicability to their operations, by the end of fiscal 2011. BCPs forlarge earthquakes and novel strains of influenza have been preparedfor 49 Hitachi, Ltd. business sites and 96 Group companies.

Improving Safety for Employees Sent
to Dangerous Regions
Responding to the hostage incident in Algeria in January 2013,*4
President Hiroaki Nakanishi reinforced his policy in February 2013 ofensuring the safety of employees sent outside Japan. Survey missionsof in-house and outside experts are now sent beforehand to areas at
high risk of war, terrorism, and other threats. Even after employees aredispatched to such areas, we conduct additional local surveys every
six months as a means of confirming the effectiveness of our safetypolicies. In fiscal 2014, survey missions were sent to several countries
in Africa and the Middle East. In addition, we have introduced a rangeof safety measures in the light of recent terrorist incidents involving
Japanese and other nationals, including providing timely alerts toemployees. These and other steps underscore our commitment toensuring the safety of our employees working around the globe.
Hitachi is also contributing to safety measures at other Japanese
corporations operating outside Japan. To help enhance collaboration
between the private and public sectors in this area, Hitachi executives
participated in the Council for Public-Private Cooperation for Overseas
Safety organized by Japan’s Ministry of Foreign Affairs, and in June2014 Hitachi took part in a public-private kidnap incident preparatory
training exercise.
*4 Incident in January 2013 in which an armed terrorist group attacked a natural gas refining
plant in Algeria. There were more than 30 victims, including 10 Japanese.

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