An excerpt from Integrated Report 2023
The Platform for Value Creation

Risk Management

Basic Concept
The Kurita Group defines risk as any event that makes its sustainablegrowth and enhancement of the Group’s corporate value uncertain.
To ensure that opportunities for business growth are not missed due
to decision-making that favors risk avoidance, we work to clarify whichrisks should be accepted for the sake of sustainable growth andcorporate value increase while implementing appropriate measures
to reduce losses.

Risk Management System
The executive general manager of the Corporate Control andAdministration Division is responsible for monitoring risks andimplementing risk management in the Kurita Group. The executive
general manager regularly analyzes and evaluates the Group’s risks
and conducts ongoing monitoring based on the Group-wide risk map,and also takes steps to prevent risks from occurring. In the event of arisk materializing that could have a serious impact on Kurita’sbusiness, the executive general manager formulates systems withthose responsible for responding to the risk, obtains approval fromthe president and representative executive officer, and immediately
issues instructions. Those responsible for responding to the risk
promptly take action and report to the president and representative
executive officer and the executive general manager of the Corporate
Control and Administration Division, as well as the Board of Directors
or the Audit Committee, regarding the impact of the risk, progresswith mitigation and measures to prevent reoccurrence. The
chairperson of the Sustainability Committee is responsible for tacklingmaterial risks related to compliance and climate change, while thechairperson of the Headquarters Health and Safety Committee isresponsible for material risks related to health, safety and workrelated accidents. The executive general manager of each division isresponsible for responding to risks directly associated with day-to-day
business operations, and each division identifies and evaluates risks
related to the operations and Group companies it is in charge of.
Also, responding to risks relating to quality, the natural environment,
traffic accidents, information security, export controls, and so on arehandled by the respective departments responsible. The executive
general manager of the Corporate Control and Administration
Division, the chairperson of each committee and the executive
general manager of each division report periodically to the Board ofDirectors on the status of risk management implementation, andreport as necessary to the Board of Directors on the occurrence andimpact of material risks. Furthermore, the Internal Auditing
Department monitors the execution status and improvement statusof risk management measures.

Risk Management System
President and Representative Executive Officer
Approval

Board of Directors

Proposes person
responsible and system

ReportExecutive general manager of the Corporate Control andAdministration Division
ReportSustainability Committee

InstructHeadquarters Health andSafety Committee

Compliance andclimate change risks

ReportDivisions

Cooperate

Cooperate

Health andSafety Committees ofbusiness sites and divisions

Business sites andGroup companies

Health, safety andwork-related accidents

Risks directly related todaily business activities

Monitoring implementation status andimprovement status
Internal Auditing Department

70

Kurita Water Industries Ltd. Integrated Report 2023

Departments in charge
Risks related to quality, the naturalenvironment, traffic accidents,
information security, export
controls, etc.

Identifying Risks and Formulating Response Measures
Risk Management PDCA Cycle

Kurita Group OverviewPlan• Prioritize risks and formulate response
measures• Incorporate into organizational goals
and business plans

DoAction• Monitor progress with risk response
measures in organizational goals
and business plans• Rapidly identify and respond toemerging risks• Review Group-wide risk map• Determine Group-wide material
risks for the next fiscal year

Check

• Monitor risk response efforts• Identify deteriorating or emerging risks

Kurita Group Business Strategy

The Kurita Group uses a Group-wide risk map to identify potential
risks in its business activities and assess risks against monitoring
benchmarks. The Kurita Group also determines material risks for
the Group based on the expected impact of those risks and thelikelihood of them occurring. Material risks are mapped for eachdivision, and divisions devise response measures, incorporate theminto business plans and manage progress, including at Group
companies. Progress is regularly reported to the Board of Directors,
which discusses and formulates material risk and response
measures for the next fiscal year, including responses to emerging
risks caused by changes in the operating environment. For the fiscal
year ending March 31, 2024, we have decided to designate asadditional risks those that require close monitoring, namely, therisks associated with continuing or withdrawing from business
operations in conflict regions and the risk of decrease in productivity
and loss of business opportunities due to decline in employee
engagement, and to strengthen related response measures.

Groupwide Risk Map

Operatingenvironment risk

 ontraction in existing markets due to customers reducing factory operating rates and reining in capital
Cinvestment
Decline in prices for products and services due to intensifying competitionDecline in profitability and slowdown in business growth due to spikes in prices for raw materials andenergy costs as well as supply chain disruptions
Decline in yen translation amounts due to changes in exchange rates and other factors
Decline in profits following the introduction and increase of carbon tax on CO2 emitted by the Kurita
Group’s facilities and products, etc.

 urita Group Business
KStrategyP.14-35
The Kurita Group’sBusinesses
P.36-47
Climate Change
P.66-67

Country risk

 isk of loss of business opportunities and inability to recover investments due to changes in regulatory
Rframeworks and abrupt political and economic changes in Kurita’s markets
Increase in human rights infringements and reputational damage resulting from business continuation orwithdrawal in conflict regions

 he Kurita Group’sTBusinesses

P.36-47

Disaster risk

 uman losses and loss of business opportunities caused by pandemics
HHuman losses and loss of business opportunities caused by natural disasters including those caused byclimate change

BCMClimate Change

P.72-73
P.66-67

Strategic risk

 ailure to attain goals in medium-term management plan due to delays with organizational reforms,Fbusiness restructuringSlow pace of business expansion caused by delays with launching new businesses, executing growth strategy
Delays with developing businesses matched to customer needs and characteristics of each country/region
Failure to remain competitive in water treatment market due to delays with introducing IT and building
digital businesses

 urita Group Business
KStrategyP.14-35
The Kurita Group’sBusinesses
P.36-47

Business risk

 ailure to provide competitive products, services or business models in a timely mannerFClaims for damages and additional costs due to defects or deficiencies in products or services
Loss of competitiveness due to outflow of technical expertiseSlowdown or lack of progress with improving the profitability of overseas businesses driving the Kurita
Group’s growth
Accidents/injuries in the Group’s businesses he Kurita Group’sTBusinesses
P.36-47
Information Security
Management
P.73

Financial risk

 oss of public trust caused by inadequate internal controls related to financial reportingLDeterioration in profitability or cash flow due to poor management of Group companies
Write-down of goodwill caused by weak earnings at acquired companies

 inancial and Capital StrategyF
P.26-29
Basic Policies for Constructing
an Internal Control System —Personnel/laborrisk

 ealth issues caused by long working hours
HDecline in ability to adapt to changes in operating environment due to insufficient diversity initiatives
Decrease in productivity and loss of business opportunities due to decline in employee engagement

 uman Resources StrategyH
P.48-55

Legal andcompliance risk

 oss of public trust due to legal or compliance violations and information breaches
LInfringement of intellectual property rights

Compliance
P.68-69
Intellectual Property StrategyP.58-59• The above table is not an exhaustive list of the Kurita Group’s risks.
• Please click on the link below for more details about risk factors related to the Group’s business conditions, financial accounts and other items in the Annual Securities
Report that could have a material impact on investor decisions.

Corporate & Financial Information

Report section/information
related to response measures

The Platform for Value Creation

Main risksThe Kurita Group’s Businesses

Risk category

Business Risks and Other Risk Factors https://ir.kurita.co.jp/en/corporate_governance/risk_factors/index.html

Kurita Water Industries Ltd. Integrated Report 2023

71

The Platform for Value Creation

Risk Management

Business Continuity Management (BCM)
Approach and System for BCM Activities

The Kurita Group has taken steps to prepare for sudden unexpected
events such as a major earthquake or natural disaster, a pandemic or
geopolitical risks, with the focus on ensuring both employee safetyand business continuity. This includes establishing an order ofoperational priorities and criteria for decision making and action forwhen such an event occurs, and putting in place response policies,procedures, systems, and other measures. During normal times,meanwhile, we engage in management activities such as formulating,maintaining, and updating emergency plans, securing budgets andresources, implementing countermeasures, conducting educationand training, and carrying out inspections.

In the Kurita Group’s Policy on BCM, formulated in 2018, the basic
policy is to give first priority in an emergency to ensuring employee
safety, and only then to direct efforts to speedy recovery of business
operations and assistance for local communities. To support officers
and employees to take appropriate decisions and action in such asituation, the Company has also prepared a system of documentation
comprising the Kurita Group’s Policy on BCM, the BCM Group
Guidelines, which complements the policy, and BCM Documents
based on the framework of the international standard for BCM, ISO22301. The Company started implementing the system in the fiscalyear ended March 31, 2023.

BCM Basic Policy
Highest Priority onEnsuring Human SafetyRapid Recovery ofBusiness Operations

Community Support

We will place the highest priority on ensuring
the peace of mind and safety of officers,
employees and their family members.

We will endeavor to quickly restore operations
at the company’s own facilities, completedprojects, construction projects, etc. This will
facilitate stable delivery of products andservices and allow us to support customers’
recovery efforts.

At the same time as working to prevent
secondary disaster damage at our own sites,
we will support reconstruction in the localcommunity.

BCM Document System

Kurita Group’sPolicy on BCM

BCM Group Guidelines

BCM Documents
Documents based on the international standard ISO 22301

72

Kurita Water Industries Ltd. Integrated Report 2023

• Basic Policy• Emergency Response Plan

• Crisis Management Plan

• Business Continuity Plan

• Business Recovery Plan

• Operation and Management Plan

BCM Promotion System

Initiatives to Strengthen BCM Activities

in response to security issues, securing budgets, putting in placeinformation systems for the event of an incident, and introducing
security tools. In parallel, we will provide regular information security
training to Kurita Group employees. In the fiscal year ending March
31, 2024, we will additionally set up a security monitoring system thatoperates 24 hours a day 365 days a year on a global and multilingual
platform, establish a computer security incident response Team(CSIRT) to respond to incidents occurring in Japan, and also reinforce
the security environment of the operational technology (OT) which isused to monitor and control not only IT systems but also water
treatment facilities and other installations.
Going forward, with the increase in the incidence andsophistication of cyber-attacks expected to continue, we are working
to put in place an information security system that will allow us tocontinue with uninterrupted value delivery to customers.

The Platform for Value Creation

The increasing trend in information security incidents has heightened
the importance of countermeasures for business operators. The Kurita
Group is responding through a globally based security approach withmeasures including review of security levels, introduction of security
tools, and reinforcement of its security response team.
The Kurita Group Digital Management Policy has been upgradedfrom the previous policy covering system development, maintenanceand operation to an information security management policy that
also takes account digital related activities required to drive reformof corporate business activities. In the fiscal year ending March 31,2024, with the aim of putting in place a management structure for
our IT system that is resilient to risks from natural disasters andcyber-attacks, we formulated a dedicated business continuity planfor the IT system.
We will continue to roll out a range of measures, undertaking
regular assessment of IT risk, implementing organizational upgrades

The Kurita Group’s Businesses

Information Security Management

Kurita Group Business Strategy

The Group’s BCM activities to date have mainly focused on initiatives
for ensuring employee safety and disaster countermeasures atmanufacturing sites. However, we have also been working to
restructure and strengthen our BCM functions based on theinternational standard ISO 22301 framework and have established anew approach to the order of priorities for business continuity andassociated action items.
We have additionally taken steps to increase the quality and speedof communication in our initial response to an incident by redefining
what information on disaster impact status needs to be gathered tosupport the establishment of a Disaster Response Headquarters andby reorganizing the associated reporting structure.
To ensure employee safety and to strengthen initial response
capabilities, we carried out a disaster response drill based on thescenario of an incident occurring while employees are working from
home, which was rolled out to all employees through online

streaming. As well as working to raise the level of disaster knowledge
and awareness among individual employees, we regularly conduct
exercises where we practice confirming the safety of each employee
in the event of a major earthquake or storm, or flood damage to drill
employees in rapid initial response procedures.
To support business continuity, we surveyed customers involved
with social infrastructure and customers to whom we supply ultrapure
water to identify their expectations regarding the restoration of Kurita
Group operations after an event, and expanded the provision of an“event response model” for each customer, which specifies a verticallyintegrated response procedure for sales, engineering, Groupcompanies, and partner companies and the necessary resources.
Going forward, we will work to embed the utilization of the BCM
Documents and increase their effectiveness by promoting internal
awareness of the documents and conducting education and training
by staff grade and job type. We will also expand initiatives bydefining the deployment scope of the event response model foreach customer. Furthermore, to improve business continuity
functions throughout the supply chain, we will strengthen initiatives
for rapid recovery of our own manufacturing sites and coordination
with partner companies.
Overseas, we shared BCM Documents formulated in Japan with ourGroup companies and formulated BCM Documents to address theinherent risks and business characteristics of each country and region
by conducting local surveys. Going forward, we will work to respondto the increasingly diverse range of global risks and to put in place a
global reporting system for use in an emergency.

Kurita Group Overview

We have established an organization that integrates the Kurita
Group’s business continuity functions within the Corporate Controland Administrative Division, whose executive general manager has
been appointed as officer in charge of BCM. The new organization willroll out BCM activities based on an ISO22301-compliant management
system to Group companies in Japan and overseas, progressively
strengthening initiatives designed to ensure both employee safety
and business continuity.

Corporate & Financial Information

Kurita Water Industries Ltd. Integrated Report 202373