Risk Management

Compliance
Anti-corruption Initiatives

Risk Management Basic Policy
1. W
 e place top priority on the safety of the lives of officers and employees of the Nissan
Chemical Group.
2. W
 e consider risk management as an important management issue, and engage in the activities from a company-wide perspective.
3. A
 ll officers and employees of the Group shall be sufficiently aware of risk management,
strive to improve their abilities, and endeavor to prevent the occurrence of loss risk.
4. We promptly share the information on risk throughout the Group.
5. W
 e make efforts to respond promptly and accurately to the occurrence of loss risk and tominimize losses.

Nissan Chemical Group Anti-Corruption Policy
1. Definitions“Corruption” means the abuse of entrusted official authority for personal or company gain, including bribery.
“Bribery” means that, when company conducts its businesses,- any of its officers or employees provides improper benefits to a third party for the purpose of inducing a third party to conduct fraudulent or illegal acts, or upon request from a third party, or- any of its officers or employees demands or receives improper benefits from a third party.
2. Commitment to Anti-Corruption
The Nissan Chemical Group has zero tolerance for corruption of any kind.
It shall not engage in any form of corruption relating to public officials, governmental agencies and any other clients (“BusinessPartners”).
It shall also continuously ask the Business Partners not to engage in any corruption.
3. Compliance with respect to Anti-Corruption
The Nissan Chemical Group shall comply with and require the Business Partners to comply with domestic and internationallaws and regulations concerning the prohibition of bribery and corruption, such as the Unfair Competition Prevention Act, theU.S. Foreign Corrupt Practices Act and the Anti-Unfair Competition Law of the Peopleʼs Republic of China (commercial briberyrules). It shall also keep and maintain accurate financial records relating to business transactions involving itself.
4. Remediation
In the event that the Nissan Chemical Group violates this Policy in the course of its business activities, it shall make efforts toremedy and correct the said violation through appropriate means and fully cooperate with investigations by the relevant authorities.
WebCompliancehttps://www.nissanchem.co.jp/eng/profile/compliance.html
Promotion of Fair-Tradinghttps://www.nissanchem.co.jp/eng/csr_info/communication/employee/acp.html●Measures for promoting compliance (FY2022)
General ComplianceDirector and management level compliance training, newly-appointed managers compliancetraining, new employee training

Anti-monopoly Act and Act
against Delay in Payment of
Subcontract Proceeds, Etc. to
Subcontractors

Training related to the Anti-monopoly Act and Act against Delay in Payment of Subcontract
Proceeds, Etc. to Subcontractors; Internal audit related to the Act against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors

Information Management

Information management training; Internal audit related to information management and My
Number Act related management

Insider Trading Regulation

SystemThe Risk Management & Compliance Office under the Corporate
Planning Department has been established as a specialized organization to promote continuous improvement in all of our risk
management activities.
In addition, the Risk Management & Compliance Committee,
which is held twice a year, has been established as an organization to enhance the effectiveness of risk management, and tomaintain and promote compliance. The committee is chaired by
the Chief Risk Management Officer (CRO), who is appointed at
the Board of Directors, and is composed of the Risk & Compliance Managers of each division/department, plant/laboratory,
and domestic consolidated subsidiary appointed by the CRO.
The Risk & Compliance Managers periodically conduct risk
identification and assessment, formulate countermeasure plans,conduct self-assessment for status of implementation of thecountermeasure plan and subject, formulate improvement plan,and regularly perform education and training at each division/

Security Export Control

Foreign Exchange Law related training

Consultation Hotline

Continuous dissemination of related information via the in-house newsletter and posters

Others

We clarified risks taking into account the business characteristics of each division and the surrounding businesses, including
global political, economic and social conditions. Subsequently,
risk assessment was conducted from the viewpoint of probability and impact on the business. By following the assessment, arisk map was created and Group Major Risks were identified.
The contents of major risks were deliberated at the Risk Management & Compliance committee and approved at the Board ofDirectors.

Risk Management &Compliance Committee
CRO

Training for insider trading prevention
Training for the prevention of corruption and Combating Bribery of Foreign Public Officials

Overall Risk Assessment Process

Board of Directors

Risk & Compliance Manager
Anti-bribery

department, plant/laboratory and domestic consolidated subsidiary.
The important matters related to risk management andcountermeasure plans, etc. are approved at the Board of Directors after discussion at the committee.

Risk Management & Compliance Office,Corporate Planning Department(Secretariat office)(Each division/department,plant/laboratory, anddomestic consolidated subsidiary)

ReportTraining for newly-appointed board members, training for board members, and contract-related
training

Nissan Chemical Corporation

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Nissan Chemical Corporation

Sustainability Promotion Committee
Climate Change Committee
Environment & Safety Committee
Quality Assurance Committee

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Sustainability

ti-corruption advocated by the 10 principles of the United Nations
Global Compact (UNGC), in April 2018, we joined the UNGC, and in2019, we formulated anti-corruption policies covering our company, affiliated companies and their subsidiaries in April 2018. Furthermore, we have established a system to prevent complianceviolation or resolve the problem early on, including the Consultation Hotline as an internal reporting system based on the Whistleblower Protection Act.

Our Group strives to ensure the transparency of transactions. In
our compliance manuals, we have specified matters to be observed: Comply with antitrust laws, Conduct fair transactions
with suppliers and comply with the “Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors”, Prevent
unfair competition, Prohibit excessive entertainment and gifts,and Prohibit bribery of foreign officials, etc. With regard to an-We are promoting risk management under the supervision of the Chief Risk Management Officer (CRO) with the aim ofcontributing to the achievement of our management strategic goals through recognizing the various risks involved in theNissan Chemical Group, preventing the occurrence of loss risk and minimizing the impact of their occurrence.

Risk Management●Overall Risk Assessment Process
Creation of risk list (tentative) andrisk-related questionnaire■ Create risk-related questionnaire based on the list
created

Identification of Group Major Risks

Implementation of survey

Aggregation/Analysis of survey results■ Conduct risk-related survey targeting Risk &Compliance Managers at each division/department,
plant/laboratory, domestic consolidated subsidiary,and affiliate■ Aggregate the survey results and assess the Groupʼsrisks based on degree of impact and probability ofoccurrence

Creation of overall Group risk map■ Select Group Major Risks based on the risk map andcurrent conditions of the Group■ Create an overall Group risk map based on theresults of executive interviews■ Deliberate regarding Group Major Risks at the Risk
Management & Compliance Committee and approvethem at the Board of Directors

Summary of Risk

Countermeasures against Risk

Delay/Discontinuance of Product andTechnology Development Advent of
Innovative Technology

Risk of the failure of payback of invested capital to R&D
Risk of losing competitive power of our products

Failure of Business Portfolio Strategy

Risk of decline in business performance due to thefailure of the business portfolio strategy

Expanding/reviewing existingbusinesses and products evaluating
periodically the degree ofachievements of strategies establishedin the mid-term business plan for new
businesses and products, and making
correction

Difficulty in Procurement of Specific
Raw Material

Risk of being unable to supply the product to customer
due to the discontinuance of specific raw material

Taking countermeasures to stabilize
procurements based on the nature of
the businesses

Fire/Explosion

Risk of suspension of business activities and the deathor injury of many employees, and being sued byneighborhood resident for the damage by fire/explosion at plant

Establishing and operating a safetyand disaster prevention management
systemQuality Defect/Recall
Quality Falsification

Risk of reimbursement for large expenses bycustomers and discontinuance of transactions when aproduct liability-related accident or examination data
fraudulent occurs involving a product containing
materials provided by our company

Preventing troubles/misconducts
about quality through thoroughgovernanceInfringements of Intellectual Property
RightsRisk of being subjected to a large amount of damages
and product injunction claims from other company due
to infringement on other company’s patent

Making continuous improvements of“IP verification process” to reduce therisk of infringing on other companies’
patents, and promoting education withand prevailing the process

Occupational Accident

Risk of being subjected to a damage claim due toserious accidental deaths and injuries involving
employees

Establishing and promoting an
occupational safety management
systemViolation of Laws
Revision/Tightening of Laws/
Regulations
Revocation of Governmental
Approvals, Licenses, or Registrations/
Procedural Mistakes
Revocation/Lapse of License/
Qualification due to IncompleteRenewal Procedures

Risk of administrative disposition or sanction, such assuspension of business or payment of surcharges, due
to violation of laws or regulations, and, along with this,risk of unwilling discontinuance of sales of product, orunwilling change in business or capital investment
plan

Optimizing the operation ofmanagements of legal regulations andenhancing education to improve all
employees’ mind and knowledge

Torrential Rain/Flood
Earthquake/Tsunami
Typhoon/Storm Surge

Risk of damage of facilities, death or injury of many
employees, and suspension of business activities due
to a massive earthquake or a large typhoon

Reviewing and strengthening
countermeasures to enable earlyrecovery/business continuity

Risk of shut-down of operations for a long period oftime, and losing credibility of customer and society
because of leak of customer’s or the Company’s
confidential information by cyber attack

Considering and promoting
countermeasures from the prospectiveof “prevention”, “damageminimization” and “education”

Executive interview■ Have an interview with each executive about theirviews on the Groupʼs risks from a management
perspectiveSevere●Risk MapRisk Category
Key Process Risk
Supportive Process Risk
External Environmental Risk
Management Process Risk

Group Major Risk
Fire/Explosion

Impact on the businessGroup Major Risk

Earthquake/
TsunamiQuality Defect/
RecallQuality
Falsification

Violation of Laws

Revocation of Governmental
Approvals, Licenses, orRegistrations/
Procedural Mistakes

Infringements ofIntellectual
Property Rights

Delay/Discontinuanceof Product andTechnology Development

Insufficient
Consideration for
CSR at Suppliers

Difficulty in
Procurement ofSpecific Raw MaterialDamage orFailure of Facilityand Machinery

Cyber Attack/Information Leakage

Revision/Tightening of Laws/
Regulations

Advent ofInnovativeTechnology

Torrential Rain/
FloodFailure ofBusiness Portfolio
Strategy

Insufficient Governance of Overseas
Subsidiaries and Offices

Risk of losing credibility due to detection of fraud atoverseas subsidiary and office caused by inadequate
control

Establishing rules and systems tostrengthen governance of thecorporate group

Insufficient Consideration for CSR at
Suppliers

Risk of deterioration of reputation and decline inbusiness performance due to environmental
destruction and violations of social ethics by suppliers
where we procure raw materials

Making CSR evaluations of andfeedbacks to suppliers and supporting
their improvements

Failure to Achieve the Target of
Reducing GHG Emissions

Risk of deterioration of reputation from ourstakeholders due to delay in efforts to reduce GHG
emissions

Establishing a company-wideorganization, promoting initiatives andmanaging the progress

Delay in Human Resource
Development (Cultivation of Diverse
Human Resources)

Risk of personnel shortage which occurs in eachdivision due to delay in the human resource
development

Enhancing programs to strengthen
recruiting and education for realizing
the ideal organizational state/humanresource image

Outbreak of infection/
Disease in a Group

Risk of being affected to the business continuity due toa large number of employees contracting the disease
and their inability to work

Continuously promoting
countermeasures to prevent being
infected and the spread of the infection

Outbreak ofinfection/
Disease in a Group

Labor Dispute/
StrikeDiscrimination/
Harassment inthe Workplace

Revocation/Lapse ofLicense/Qualification
due to Incomplete
Renewal Procedures

Bribery

Drain-out of
Human Resources

Typhoon/
Storm Surge

Failure toAchieve theTarget of Reducing
GHG Emissions

Inadequate
Response toCustomerCyber Attack/Information Leakage

Probability

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OccupationalAccident

Delay in
Human ResourceDevelopment

Market Change

Insufficient Governanceof Overseas
Subsidiaries andOfficesHigh

Risk Management
Web https://www.nissanchem.co.jp/eng/csr_info/risk_management/policy.html

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Sustainability■ Create risk list (tentative) after identifying potential
risks faced by the Nissan Chemical Group●Group Major Risks and Countermeasures