GovernanceIntroduction

Business continuity planning

We have adopted risk management rules aimed at preventing
risks from occurring and at minimizing damage when they dooccur. We have also established under the CSR Committee aRisk Management Committee chaired by the CEO to continuously
oversee the Group’s risk management and to respond to risks
that occur.
The Risk Management Committee has a Risk Monitoring
Subcommittee and a BCP Preparatory Subcommittee to selectand evaluate risks and to monitor risk reduction efforts, as well asto advance Group-wide business continuity planning. A Hotline
Contact has also been established within the Committee todevelop whistleblowing channels and respond to whistleblower
reports.
The Risk Management Committee reports these initiatives
at the CSR Committee’s semiannual meetings, and the CSR
Committee reports them to the Board of Directors. The Risk
Management Committee can directly report important events
such as whistleblower reports to the Board of Directors asnecessary, assuring that risk information is properly conveyed
to the management.

The Risk Management Committee’s BCP Preparatory Subcommittee
was established to advance business continuity planning to preparefor earthquakes and other natural disasters, which represent highrisk events for our Group. This team develops our BCP and the basic
policies and initial action flows for disaster response, in coordination
with manufacturing department and factories.

Our BCP approach

Basic BCP policy

Risk Monitoring
Subcommittee

BCP Preparatory
Subcommittee

Hotline Contact

Evacuation procedures

Disaster prevention/mitigation measures

ETF organization
Initial action flow

Recovery/continuation ofbusiness operations
Created for each worksiteand major operationBCP
Local ETF organization
Recovery action flow

Our basic policy on crisis response

DataIn line with the basic human resource policy of respecting people,
we will place top priority on the safety of our employees andtheir families.
As part of our commitment to realizing a safe and sustainable
society, we will establish measures and systems for continuing
to meet customer needs during crises by maintaining oursupply of safe, reliable products and services, at the expectedlevel of quality.
We recognize the importance of carrying out crisis preparation/
training on a regular basis, and will develop strategies andorganizations for this and crisis countermeasures.

IDEC Report 2023

ETF actions

Governance

BCP action
coordinators

BCP

Initial action planAll employees

Foundation For ValueCreation

Emergency actions
Immediate post-disasteractions

CSR Committee

Emergency taskforce (ETF) members

priority after safety is to ensure that our products can continued to bedelivered to customers following a disaster. These plans are designed
to limit shipment stoppages to no more than one week.
Other ongoing actions include creating manuals outlining step-bystep procedures for the entire flow of emergency response actions, andmaintaining disaster-resilient communications infrastructure, systems
for checking the welfare of our employees and supplier staff, and stocksof emergency supplies.

Business Strategy

Business continuity planning involves maintaining a BCP to ensure thatbusiness operations can continue to function in the event of a disaster orother emergency. The IDEC Group goes a step further by also defining theinitial actions to be taken in a disaster prior to the BCP implementation
phase, and by routinely developing disaster countermeasures. In linewith our basic human resource policy of cherishing our people, we haveestablished a basic policy for crisis response that places top priority on
the safety of our employees and their families at all times.
In the BCPs formulated for each manufacturing site, the second

Normal times

Risk Management Committee

In addition, we map out the initial actions to be taken by each
emergency task force member in a disaster, and create manuals
and checklists for guiding those actions. We also routinely review
our disaster countermeasures, and use the corporate intranet
to communicate information for raising the disaster prevention
awareness of all employees.

Value Creation Story

Risk management system and operation

In order to limit damage in the event of a disaster, we will routinely implement
measures for preventing furnishings from overturning and parts/products
from falling, such as joining cabinets together and installing retainer bars.

Risk Management64

GovernanceWe carry out the following actions to prevent bribery and otherforms of corruption, and to ensure compliance.
 e have established and disseminated the IDEC Group Code
Wof Conduct to clarify basic guidelines for the conduct ofbusiness activities.
 e have signed the UN Global Compact, which calls for corruption
Wprevention. We have made it our policy to prevent corruption
by prohibiting all forms of bribery, corruption, robbery, andembezzlement, and we clearly declare and make known ourprohibition of such acts.
 e have conducted compliance training to deepen employees’W
understanding of the IDEC Group Code of Conduct and policies.
 ur internal audits examine whether Group companies complyOwith laws, regulations, and rules.

Major responses tohigh-risk events in FY2023
No

Number of internal reports
FY2021

FY2022

FY2023586Consultation andreporting

IDEC Report 2023

1Damage to IDEC’s
sites in Kansai
region sites by anearthquake with aseismic intensity oflower 6 or higher

Response
notification

IDEC Hotline

6

Occurrence of aserious productaccident that could
affect the humanbodyInstituted system for monitoring
complaints/failure reports from themarket to enable early detection of andresponse to major complaint-generating
issuesEvaluated risks in new productdevelopment and implemented
measures to prevent issues during
production

19

Leakage ofcritical corporate
information, thirdparty confidential
information, andpersonal informationIdentified types of critical internal
information and formulated rules for
managing each type
Increased our knowledge of how toprevent information leaks

Lawyer firm
Collaboration

Internal contact venue(e-mail/mail)Risk Management Committee
Hotline Contact

Receipt notification
External contact venue(Web/phone)
External contractors

Global Hotline(Web)Investigation, response,and corrective action

Response notification

togti n c eor of fip
R ee a dhth

Reporting to the groupcompany

ReportingeDirection, reporting, andcollaboration
Overseas group companies
Hotline Contact
Investigation, response,and corrective action

Data

Consultation andreporting

Instruction andreporting

Board of Directors

Response
reportingResponse
notification

Consulters and informants(overseas group companies)

Actions ormulated business continuity plan
Fand improved manufacturing site’s
emergency response capabilities
Reduced risk by taking out anappropriate insurance policy
Developed an emergency contact
network and a means of checking
employee safety

GovernanceConsultation andreporting

https://us.idec.com/governance/complianceInternal Directors

Internal reporting system diagram

Consulters and informants(head office and group companies
in Japan)

Risk event

Follow this link for more informationon our anti-corruption commitments.

Foundation For ValueCreation hen a report has been received through our hotline, the RiskW
Management Committee sends the report to the Board ofDirectors, which reports on risk monitoring activities twice a year
through the CSR Committee and is supervised by the Board ofDirectors.

The Risk Monitoring Committee regularly identifies and evaluatesrisks based on the assumed risk events that may negatively impact
the IDEC Group’s continued business expansion and corporate
value enhancement. Concerning each risk event, an evaluationquestionnaire is conducted using the “probability of occurrence,”“magnitude of damage” and “impact” as measures, and theresults are plotted on the risk map relative to the assessment.
The risk events evaluated include climate change risks that theEnvironmental Strategy Committee has judged to be significant
issues. Also, risk events that have a high probability of occurrence
are considered high-risk events. Each department responsible fora particular high-risk event is assigned a risk reduction target, andgauges its progress toward the target on a semiannual basis.

Business Strategy

The IDEC Hotline has been established as a contact venue
that allows users to select external and internal contact andanonymously or with real names in accordance with the users’situation. We have established internal reporting and operation
rules to protect the confidentiality of consultation and reporting,and to prohibit unfavorable treatment of users.
When a report is made, the Hotline Contact establishedwithin the Risk Management Committee will promptly respondto the report, and work at resolving the problem and preventingrecurrence. The report is also promptly communicated to the topmanagement, and regularly reported to the Board of Directors soas to share risk information. In a case wherein the management
may be involved, a system exists to ensure independence andto liaise with an outside lawyer firm.
In order for the system to function globally, we are preparing
for establishing the “Global Hotline” in sequence, which enables
overseas group company employees to report directly to thehead office contact venue.

Risk map and identification ofhigh-risk events

Value Creation Story

Corruption prevention

Introduction

Internal reporting system* Item numbers correspond to risk event numbers on the following page.
* See the following page for explanations of the risk map and high-risk events.

Risk Management65

GovernanceRisk category

External factor risks

1 2b 6

143Impact

720
21358910351615

Damage to our Kansai region sites by an earthquake witha seismic intensity of lower 6 or higher

422 14b194Businessstrategy risks

Conflict or terrorist attack in the local area of IDEC sites

Assessed as a high-risk event, as in FY2022—2bThe business impact of local conflicts, anti-Japanese demonstrations, and otherdisturbances was recognized as a risk event and added as a risk derivative to 2New

3

Occurrence of cluster infections at our sites

Impact was assessed as lower due to changes such as implementation of infection
prevention measures and change of awareness on viral infection

4

Product specification change caused by external factors(part obsolescence, procurement difficulty)

Assessed as high-risk because its impact and probability of occurrence were deemedhigher based on our having faced a product specification change due to difficulty inprocuring electronic parts

5

Difficulty to procure parts, leading to long delays indelivery times

Assessed as high-risk because its impact and probability of occurrence were deemed higher
based on our having faced a delivery delay due to difficulty in procuring electronic parts

6

Occurrence of a serious product accident that could
affect the human body

Assessed as a high-risk event with considerable impact, as in FY2022

7

Fraudulent representation of quality through falsification ofproduct performances and data

Assessed as having a slightly lower probability of occurrence due to implementation ofrisk-mitigating measures

8Distribution of products containing prohibited substances

Assessed as having a higher risk versus FY2022 in light of the potential impact onstandards of the risk that parts procured contain prohibited substances

9

Strategic investment risk (financial impact of M&A,corporate alliances, and other strategic investments)

Assessed as being at a level similar to FY2022

10

Occurrence of a severe or more industrial accident

Probability of occurrence was lowered slightly by actions taken by the Health & Safety
Committee

Resources andinfrastructure
risks

11

Sabotage, strike-related business outage

Probability of occurrence increased versus FY2022 due to inclusion of Group companies

12

More than half a day of infrastructure outages caused bysystem and network failure, etc.

Probability of occurrence

Cyberattack was redefined as a separate, derivative risk and the impact of outages due toother reasons was deemed to be lower

12b Long-term network outage due to cyberattack
13

Internal factor
risks

14

Assessed as having greater impact due to the likelihood of longer outagesNew

Suspension of sales and claims for damages due toinfringement of other companies’ intellectual property rights

Assessed as being at a level similar to FY2022—

Inaction on human rights issues (child/slave labor, etc.)

Assessed as having considerable impact because inaction could lead to boycotts andreputational risks in a global business environment where human rights awareness is growing—

14b Decline in employee morale due to harassment

Compliancerisks

Tax penalty due to improper handling of accounting andtax affairs

Assessed as having higher risk due to inclusion of Group companies

16

Large-amount embezzlement, malpractice, and bribery
by employees

Assessed as being at a level similar to FY2022

17

Insider trading by senior executives

Assessed as having slightly higher probability of occurrence due to potential effect ofbusiness performance18

On-site inspection by the Fair Trade Commission due toviolations of the Anti-Monopoly Act and the Subcontract Act

Assessed as being at a level similar to FY2022

19

Leakage of critical corporate information, third-party
confidential information, and personal information

Assessed as having higher risk due to inclusion of Group companies

20

Business suspension due to improper license and approval

Assessed as having greater impact, including with regard to certification, etc.

—21

Difficulty to collect sales receivables, loan loss

Assessed as being at a level similar to FY2022

22

Asset impairment risk

Assessed as higher versus FY2022 due to factors such as business performance, inventory, etc.

1

Increase in raw material costs

Assessed as high-risk because it could have a direct impact on production/procurement
costs and lead to higher costs due to difficulty in procuring parts—~

2

Changes in customer behavior

Assessed as not posing significant risk on a short to medium-term basis—

3

Technology gap with competitors

Lags in eco-friendly technology were assessed as leading to future business risks—

Trends in carbon pricing

Assessed as having a growing impact from regulation driven by rising global movement toreduce CO2 emissions—

Temperature fluctuations

While temperature fluctuations could lead to various risks such as natural disasters, thiswas assessed as having a lower probability in the short and medium-term—Transition risks

4
Physical risk

IDEC Report 2023—

Data

Climate changerisks

Now seen as a risk following our review of risk event definitions

15

GovernanceAccountingand financialrisks—

Foundation For ValueCreation* Climate change risks reflect events that the Environmental Strategy
Committee assessed as high-risk.
P.48*Risks are evaluated on a short to medium-term basis. Long-term climate
risks have been re-evaluated on a short to medium-term basis.
* Risks inside the red box are judged to be high-risk events.

—Business Strategy

2112—Impact on our overseas staff and site operations due tointerstate affairs or public disorder

1811Although this risk can be slightly reduced with business continuity planning, it wasassessed as a high-risk event because the probability of occurrence was judged higher
than in FY2022 based on Nankai Trough earthquake forecasting

2112b

171

FY2023 riskasessments

FY2023 risk assessments

Value Creation Story

2Risk event

5Introduction

Risk map

NoRisk Management66