Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Risk Management

In accordance with the Kansai Electric Power Group Risk
Management Rules established in April 2006, risks that havethe potential to affect the achievement of organizational
goals are to be recognized and identified. Then, anassessment is to be made, followed by implementing
necessary measures to deal with the risks. The impact of riskon the Group is being managed at an appropriate level
through this series of processes.

■ Risk management system

ReportInternal Control Board
Chairperson: Chief Compliance Officer• Major risks are extracted to grasp how they are being managed company-wide. Major risks (next section)

portReInst
imp ruction
rove s fo
men rt• The gravity of the major risks is evaluated based on their degrees of impact andpossibilities of occurrence, placed on a risk map to understand and manage
the risk management status from a higher perspective.

Improvement

MonitoringAPCD

Extraction andevaluation of risks

Departments with specialized expertise on each risk areaAreas of risk

Advice,guidance

ReportImplementationof measures

Internalaudit

Cross-organizational risk management
departments

Operating divisions
All business headquarters, Kansai Transmission
and Distribution, Inc., all subsidiaries, etc.

• Basically, each operating division manages
risks autonomously.

Risk map (next section)

rtpo

Kansai Electric Power Group Integrated Report 2023

Executive MeetingRe* See page 112 for a general picture of our compliance promotion system.

Board of Directors
Report as necessaryforions truct enInst provem
imRisks associated with the Group’s business activities are to bemanaged autonomously by each operating division.
With the position of “Internal Control and Compliance
Officer” newly set up, each operating division is promoting
autonomous risk management in the division in collaboration
with front-line workplaces, etc., and through risk management
plans and evaluation of results.
Management of risks considered to have crossorganizational importance, such as information security,business management at subsidiaries, human capital base,market risk, financial report reliability, environment, energy
policy, disasters, compliance (including laws and regulations
in a competitive environment), and appropriateness ofprocurement, is enhanced by the supervision of departmentswith specialized expertise in each area of such risks thatprovide advice and guidance to the operating divisions on an
as-needed basis.
The Compliance Promotion Headquarters supports these
efforts and centrally promotes compliance, risk management,etc. for the entire group.*

also reports its risk evaluation results to the Executive Meeting
and, as necessary, the Board of Directors. If necessary, it
improves the structure and system of risk management.
Furthermore, the Office of Internal Auditing conducts
internal auditing on the maintenance and operation of the risk
management system, and we are working to make
improvements based on audit results. In fiscal 2023, we will
clarify issues in our internal control systems, including risk
management, based also on the opinions of external experts,
and consider concrete ways to make improvements.

Moreover, an Internal Control Board has been establishedto put risks under central management. The Chairperson ofthe Board, who also serves as the Chief Compliance Officer, isappointed as the Risk Management Officer of the Group, andthe Board strives to manage risks associated with the Group’sbusiness activities at an appropriate level through this system.
The Internal Control Board oversees risk management
plans by, for instance, coordinating cooperation between
corporate divisions and operating divisions that haveexpertise to ensure group-wide risk management. The Board

Office of Internal Auditing■

Our fundamental approach to riskmanagement• Information security• Business management of subsidiaries• Human capital base
• Market risk
• Reliability of financial reports• Environment• Energy policy• Disasters• Compliance (Including laws and regulations in acompetitive environment)• Appropriateness of procurement

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Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Risk Management

Revised downward considering the fact that no risks
occurred in the most recent fiscal years.
Major risks
Organizational
goals/Classification

ESG

Major risks

Gravity
FY 2022 FY 2023

《1》Climate change

High《2》Environmental issues(violation of environmental
laws and regulations, etc.)

Medium Medium《3》Release of radioactivematerials

HugeHuge《4》Human capital baseHighMedium

HighHigh

High《6》Information security

HighHigh《7》Stagnation of innovation

Medium Medium
HighHigh

Major risks

Gravity
FY 2022 FY 2023

《9》Market risk
(fluctuations in marketconditions)

HighHigh

Energy《10》Decrease in profits
from energy business

High

High

Transmission &Distribution《11》Decrease in profits
from powertransmission anddistribution businessMediumLow

Information &Telecommunications《12》Decrease in profits
from information andtelecommunications
business

MediumLow

Life/Business
Solution《13》Decrease in profits
from life/businesssolution businessMediumLow

Business environment《5》Natural disasters, changes ininternational situations, etc.

《8》Governance / Compliance

Organizational goals/
Classification

Undershooting of profit targets

We identify major risks that could greatly affect our Group’sbusiness activities, ascertaining and evaluating how they arebeing managed company-wide. These major risks are
systematically sorted out not only for our Group’s sustainablegrowth but also with the aim of achieving our financial targets
and ESG goals, to contribute to the sustainable developmentof society by solving global social issues covered under SDGs.
The gravity of the major risks is evaluated based on theirdegrees of impact and possibilities of occurrence, classifiedand organized on a risk map to clarify, manage, and evaluate
how the risks are being handled from a higher perspective,
and instructions for improvement are given to operating
divisions, as necessary, based on the evaluation results.
For details of and countermeasures for major risks that
could affect the Group’s business results and financial
position, please refer to the “Operational risks” section of oursecurities report for the fiscal year ended March 31, 2023 andfinancial results for the three months ended June 30, 2023
(only available in Japanese).
<Reason for changes in Gravity>《4》	Human capital base: Following the consolidation of theaforementioned major risks, reevaluation was made on
this occasion with the risk event defined as an obstacle
to stable securement of diverse and talented humancapital. As a result, the gravity was revised downward.
《11》	Decrease in profits from power transmission and《13》	Decrease in profits from life/business solution business:

Achievement of financial targets■ Risk management status

distribution business: Revised downward considering
mitigation of the risk with the approval of our application
for the new wheeling pricing system.
《12》	Decrease in profits from information andtelecommunications business: Revised downward
considering the fact that no risks occurred in the mostrecent fiscal years.

Kansai Electric Power Group Integrated Report 2023118

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Risk Management■ Investment risk management

Risk map
Huge<Investment evaluation system>
Regarding investment in the domestic renewable energy
business, international and our group businesses, and new
businesses, in addition to the investment appropriatenessevaluations, we have established and operated a series ofmanagement processes including post-investment
monitoring, as well as consideration and implementation ofdisinvestment/replanning measures. The internal meeting
structure (Investment Evaluation Committee), which consistsof executives in charge of business promotion and corporate
divisions, deliberates and examines such processes based on
their specialized knowledge. In these ways, we support
appropriate decision-making for individual projects and taketimely measures when risks manifest to manage investment
risks suitably. We regularly report these states of management
to the Executive Meeting, and we reform frameworks andmethods for evaluation and management as necessary.

《3》Release ofradioactivematerials• Raises doubts aboutbusiness continuity

HighExerts major impact on
corporate management
and takes time to recover• “High” in monetary value• Extended power outage• Permanent disruption/
Not being able to return
to work/Death• News coverage andresponse across thecountry《1》Climate change《5》Natural disasters,changes in internationalsituations, etc.
《6》Information security《8》G overnance / Compliance《9》Market risk (fluctuationsin market conditions)《10》Decrease in profits fromenergy business《4》Human capital
base

Degree of impact

MediumExerts a certain degree ofimpact on corporate
management• “Medium” in monetaryvalue• Medium-scale power
outage• Serious injury•N ews coverage andresponse in the Kansai area《11》Decrease in profits frompower transmission anddistribution business《12》Decrease in profits
from information andtelecommunications
business《13》Decrease in profits fromlife/business solution
business

Low
Exerts small impact on
corporate management• “Low” in monetary value• Small-scale power outage• Minor injury• News coverage andresponse in specific areas

Minimum• Extremely unlikely tomaterialize

Gravity
Low

Low

Medium• Less than once/10 years • O nce or more/10 years • Unlikely to materialize
Less than once/3 years•Pwithin 10 years ossibly materialize within
10 years

Probability of occurrence
MediumHighHuge

Red font: Perspective of achieving financial targets
Black font: Perspective of ESG

Kansai Electric Power Group Integrated Report 2023

《2》Environmental issues(violation of environmental
laws and regulations, etc.)《7》Stagnation of innovationHigh•O nce or more/3 years•P ossibly materialize within
3 years

Maximum•O nce or more/year•H as already materialized andis likely to continue<Investment appropriateness evaluations>
When implementing investments, along with conformity tocompany-wide policies for investment goals and objectives,with the assurance of profitability as a prerequisite, we areevaluating the appropriateness of each project based on
sufficiently examining risks.
<Monitoring>
After making investments, we regularly conduct monitoringof individual projects to confirm their states of achieving
investment objectives and profitability. We demand theimplementation of necessary countermeasures whenprofitability decreases or other issues arise.

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Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management PlanBusiness Overview

Foundation to Support Value Creation

Financial and Corporate Information

Risk Management<Investigations on disinvestment and replanning>
For projects that have greatly worsened profitability or thathave decreased retention value, based on comprehensive
consideration of risks and other conditions, we promptly
investigate and deliberate disinvestment and replanning as
we strive to appropriately deal with risks.

■ Supply chain management
Kansai Electric Power Group Basic Procurement Policy
In January 2021, the Kansai Electric Power Group announced
the Kansai Electric Power Group Basic Procurement Policy(hereinafter, the “Policy”) to endeavor to carry out sustainable,transparent, and responsible procurement in all businessactivities.
In accordance with the Kansai Electric Power Group Codeof Conduct and the Policy, we will endeavor to carry out
sustainable, transparent, and responsible procurement
activities in all business activities. Our procurement activities
are supported by our suppliers, who we view as valuable
partners, and we will place importance on communication as
we move forward with procurement initiatives.
The Sourcing and Procurement Division holds in-house
discussions on the Policy and provides new employee
training, for the purpose of disseminating and implementingthe Policy.
We make use of supplier registration and otheropportunities to explain the Policy to our suppliers and ask fortheir cooperation in fact-finding surveys, etc. to monitor how
sustainability-related tasks are addressed.

Kansai Electric Power Group Integrated Report 2023

1. Practice and ensure strict compliance.
With the practice and ensuring of strict compliance positioned as thefoundation to all procurement activities, we shall thoroughly observe
all relevant laws, regulations, and morals thereof.
We shall also give due consideration to the strict management
and protection of personal and confidential information, as well asintellectual property.

4. Establish strong partnerships.
We shall establish strong partnerships with our suppliers bydeepening bilateral communication and working together to makeimprovements. We shall also strive to build relationships toward
mutual development through collaboration to optimize the entire
supply chain, from material procurement, manufacturing, andlogistics through to maintenance.

2. Carry out transparent and responsible procurement activities.
We shall carry out highly transparent and responsible procurement
activities. We shall not participate in bribery or other corrupt conduct
with the goal of obtaining profits unfairly nor shall we provide
convenience only to specific individuals or companies. Furthermore,
we shall have no relationship with antisocial forces or organizations.
We shall expand our business through new transactions withcompanies at home and abroad. When selecting suppliers, selection
shall be conducted in a fair and equitable manner according to thesupplier selection criteria outlined below, taking into consideration
economic and social rationality.

5. Ensure safety.
By making the assurance of safety the top priority in all activities, weshall thoroughly implement measures to prevent occupationalaccidents and occupational diseases, and to ensure public safety.

Criteria for selecting suppliers:
We shall select suppliers by considering factors including
thorough compliance implementation; respect for humanrights; safety; quality; level of technical expertise; attention toenvironmental considerations; business conditions; willingness
to maintain a relationship of trust; price; adherence to delivery/
construction schedules; adherence to maintenance andmanagement standards; provision of after-sales service; andadequacy of response to accidents and defects.

7. A
 lways consider the environment and contribute to localcommunities.
We shall promote procurement of materials with low environmental
impacts to help build a decarbonized, recycling-oriented society. We
shall also contribute to the development of local communities incooperation with our suppliers.

3. Respect human rights.
With respect for human rights, we shall not be involved in any
forms of discrimination or inhumane treatment (forced labor, childlabor, etc.). We shall also respect workers’ rights (freedom ofassociation, collective bargaining rights, payment of appropriatewages, etc.).

6. P
 romote cost reduction and quality improvement efforts.
We shall promote sustainable low-cost procurement efforts by reducing
costs through technological innovation and new ideas, as well as bystrengthening cooperation with our suppliers. Moreover, for the sakeof our customers, we shall work to maintain and improve the quality
and technical expertise of the products and services we provide.

8. Achieve continuous and stable procurement.
Together with our suppliers, we shall seek to ensure continuous andstable procurement by improving our methods of placing orders andother means. Moreover, in preparation for the occurrence ofaccidents and natural disasters, as well as the spread of infectious
diseases, we shall thoroughly implement crisis management in asystematic manner. In such emergency events, we shall endeavor topromptly arrange necessary materials and equipment.

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Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Risk Management
Procurement activities in line with the Declaration
on Partnership Building
In October 2020, we announced our Declaration on Partnership
Building.
In order to implement procurement activities in line withthis declaration, we inform both internal and external parties ofthe details of the declaration and sincerely respond to requests
and consultations from our suppliers, thereby endeavoring tobuild a relationship of co-existence and co-prosperity.

■ Information security initiatives

Vice President] and deploy Information Security Managers topromote specific efforts in each workplace.
In addition, our group companies are undertaking
independent efforts based on the Kansai Electric PowerGroup Information Security Guidelines. With this and otherguidance and support from our Company, we are raising thesecurity level of the entire Group.
Director responsible: M akoto Araki [Kansai Electric Power CISO
(Executive Vice President)]
Deliberative body: Executive Meeting
Management office: Cyber Security Administration Group,
Office of IT Strategy(Information Security Management Office)Basic policy
The Company believes that one key duty is to advance
information security efforts to ensure the safe and stablesupply of power and to protect customer information in ourpossession. In particular, amid increasing cyber attacks aroundthe world and the targeting of important infrastructure
operators, information security management is being
promoted by strengthening cyber security measures basedon the relevant laws, regulations, and guidelines related tocyber security management along with in-house rules. At thesame time, our in-house rules and systems are revised on acontinual basis as a countermeasure against improper
handling of personal information. As for the promotion of
economic security, necessary measures will be taken as soon
as the details related to the system are finalized.

Information security promotion system for theentire Group

President
CISO, Chief Information Security Officer (Executive Vice President)

Information Security Management Office
Organizational
measures

Personnelmeasures

Physicalmeasures

Technicalmeasures

Development ofa responsibility
system andin-house rules

Implementationof training/practice

Entrance and exit
management
Document
control

Login authentication
Access management
Encryption

Head of each division, etc.

Information Security Promotion Officer

Information Security Manager

Information Security Manager

Employees

Employees

Kansai Electric PowerGroup Companies

Efforts for cyber security measures
By quickly recognizing threats such as security incidents andvulnerabilities that occur outside the Company, as well as issues
with our Information Technology (IT) systems used in our daily
work and all Operational Technology (OT) systems related to theprovision of a stable power supply, we are continuously
implementing necessary security measures.
Specifically, security levels are evaluated for IT and OT systems
based on a global standard framework, necessary measures aretaken, and monitoring is carried out 24 hours a day, 365 days ayear at dedicated IT and OT monitoring centers. In addition to anemergency response system established in preparation forincidents, we are continuing to provide drills for how to respondto cyber attacks as well as relevant training for employees.
We are gathering information about cyber attacks that occur
outside the Company and the latest security information
through, for example, the activities of the Japan Electricity
Information Sharing and Analysis Center (JE-ISAC*), which is anorganization that undertakes the sharing and analysis of cyberattack information among electric power businesses. Moreover,countermeasures are reviewed as needed.

* An organization where business operators share and analyze information fromthe perspective of cyber security in order to ensure the stability of the supply ofelectricity in Japan.

In our corporate information security promotion system, we
have a Chief Information Security Officer (CISO) [Executive
24/7/365 monitoring at our monitoring center

Kansai Electric Power Group Integrated Report 2023

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