Risk Management System

Risk Management

Logistics business including shipping business is exposed to various risks in their operations.

In order to strengthen the group's risk resilience, we, "K" LINE Group, have established a risk and crisis management system for materiality based on our vision and values.

We have established a risk and crisis management system so that we can recognize and prepare for various risks in management and fulfill our corporate social responsibility even if risks materialize.

Of the major risks listed below, risks associated with vessel operations, disaster risks, compliance risks, and other management-related risks are classified into four categories and corresponding committees have been established.

In addition, the Risk and Crisis Management Committee was established to unify these four committees and to control and promote overall risk management.

The CEO serves as the chairman of all these committees and they are regularly held.

Risk Management System

See"Business Risk" for information regarding "Business Risk".

 

See "Corporate Governance Structure" for information regarding "Corporate Governance Structure".

Risk Management Process

In order to ensure thorough risk management in the "K" LINE Group, we identify risks in the  Group and are responding to these risks by building information management and monitoring the state of the risks.

At the beginning of every fiscal year, with reassessing existing risks and issues, we are going to determine which risks or issues we should address. PDCA cycle is turned on by periodical assessment followed by making countermeasures.

Business Continuity Plans for Large-Scale Disasters and New Infectious Diseases:
"K" LINE Group has established a Business Continuity Plan to simulate the malfunction caused by natural disasters (Earthquakes and floods in the Tokyo metropolitan area) and infectious diseases including new influenza. With respect for human life as the top priority, we continue to carry out important operations, such as transferring operations to our domestic and overseas offices and telecommuting, as part of the social infrastructure that supports lifelines. Also, to avoid the loss of data in a disaster, we have set up a system in which backup data can be stored remotely.
In particular, in the event of an earthquake occurring directly beneath the Tokyo metropolitan area, we conduct regular evacuation drills and strengthen BCPs based on simulations of the scale and damage of the earthquake in advance, and are making company-wide efforts to improve disaster resilience.
In response to the spread of the new coronavirus infection, we are expanding our telecommuting system and thoroughly implementing measures to prevent infection in offices (Installation of splash prevention panels, internal guidelines for the prevention of Three Cs, etc.). To ensure the safety of crew members onboard and crew members, we are taking measures on the crew side, such as controlling their physical condition before boarding the ship, conducting pre-boarding isolation by the company's order, and conducting PCR tests, as well as securing and supplying necessary supplies (Protective clothing, face guard, mask, disinfectant, etc.).

Formulating a Pandemic Influenza Response Operation Plan:
Our Company is a designated public institution specified in the Act on Special Measures for Preparedness and Response against Pandemic Influenza and New Infectious Diseases (Act No.31 of 2012). The Act requests designated public institutions to take appropriate measures to prevent disruption to the operation of the business, and to continue the business even in an event of the pandemic influenza outbreak to minimize its effect on the people’s living and national economy.
The Act also requests designated public institutions to formulate a pandemic influenza preparedness and response operation plan for their business, to report the plan to the Prime Minister of Japan, and to publish the outline of the plan.
In accordance with this provision of the Act, our Company has formulated a “Pandemic Influenza Response Operation Plan”. The outline is shown below.

Information Security:
"K" LINE Group is taking measures to ensure and improve information security in order to provide safe and secure marine transportation and logistics services as a logistics infrastructure supporting global economic activities.
Cyber-attacks have become extremely diverse in recent years, and local responses and product introductions alone are not sufficient for complete protection, and there are increasing cases where information leaks due to unauthorized access and system outages due to virus infections have a significant impact on corporate activities.
As information security measures, we are working to strengthen its "Response" "Restoration" to prevent attacks and to quickly "Detection" the occurrence of abnormalities in the event of a security incident and to minimize the impact by multilayering security measures without depending on 1 measure.
In addition, we have implemented information security measures from the following 3 perspectives: "Information Management" which aims to protect information; "Cybersecurity" which focuses on the defense of system networks against cyber attacks; and "Physical Security" which prevents unauthorized access to facilities such as office terminals.
As for our efforts for marine cyber risk management, in particular, we have acquired Cyber Security Management System (CSMS) certification from Nippon Kaiji Kyokai for Our Group's ship management companies and our vessels, and are proceeding with the acquisition of certification for other vessels. "Safety" is the core competence of "K" LINE Group's maritime transport business. We will provide safer and more optimal transportation services by strengthening our response to cyber risks.
We also provide security education to raise awareness of information security among Group officers and employees.

Environmental Protection and Climate Change:
"K" LINE Group is keenly aware of the importance of sustainability as a lifeline infrastructure that supports human life and the economy and has formulated “K” LINE Environmental Vision 2050 in response to risks and opportunities related to environmental protection and climate change.
We formulated the “K” Line Environmental Vision 2050 in March 2015, we set forth specific milestones to reach by 2019, the 100th anniversary of our founding, and we have achieved many of them.
We used our scenario analysis based on two scenarios of "The Future We Aim For (Below 2°C Warming Scenario) and "The Future We Prepare For Just In Case (4°C Warming Scenario)" to formulate the strategies needed to reach our future targets and to ensure we are prepared for any eventuality.

▶ Please refer to the following for scenario analysis of climate change. (Link to Environmental Vision 2050)
https://www.kline.co.jp/en/csr/environment/management/main/00/teaserItems1/0/linkList/0/link/K-LINE_E-vision_en_2020_v2.pdf

Based on the above business plans and strategies, we are implementing various environmental preservation initiatives, including the introduction of Seawing, an automatic kite system that uses natural energy.

▶ Please refer to the following for Our Group's environmental activities. Link to Environmental Preservation Initiatives
https://www.kline.co.jp/en/csr/environment/efforts.html

Concept of Risk-Return and Business Portfolio Rebuilding

Aiming to realize business portfolio rebuilding through maintaining and expanding stable-income businesses, strengthening the competitiveness of market-exposed businesses, expanding investments in strategic growth area, announced "Advanced Business Management" focusing on the following two points.

1. Total Business Risk Management:

Control the estimated maximum losses within consolidated shareholders’ equity and pursue both stability and growth by the proper size of investments.
Measure business risk as estimated maximum loss for each business utilizing statistical methods such as Monte Carlo simulations. 

■Risks to be managed by total business risk management

  • Total Business risk management targets "risk of loss" that would lead to capital impairment
  • The risks not subject to total business risk management shall be controlled by each business unit, and enterprise risk management shall be managed by the Risk and Crisis Management Committee and its subordinate organizations.
     

2. New Performance Indicators:
Introduction of investment and business performance indicators that emphasize business risk/return ("K" VaCS/"K" RIC) and realize an optimal business portfolio by utilizing them.