Description of Activities

1. Periodic risk management (priority risk mitigation activities)

1. (1) Toray Industries, Inc. exhaustively identifies group-wide risks (climate change, natural disasters, legal violations, scandals, etc.) and then pinpoints significant risks to address in a group-wide system. It does this by taking each risk identified and conducting quantitative analysis and assessment in a process of mapping based on the possibility of occurrence, degree of impact on the Company’s management, and indicators of whether sufficient measures are already in place as well as qualitative analysis based on interviews with each department. Ultimately, priority risks are determined after consulting with the Risk Management Committee, which is chaired by the general manager of the Corporate Strategic Planning Division.
2. (2) Priority risks are addressed with risk mitigation activities following the PDCA cycle over a three-year period.
3. (3) In the fifth three-year set of priority risks (fiscal 2021–2023), information security, global socially responsible procurement, and business continuity risks from water hazard risks were selected.
4. (4) Toray Industries assigns a department responsible for each priority risk and integrates group-wide activities using a three-year road map for risk mitigation activities as well as an annual activity plan.
5. (5) In addition, the results of the annual activities for Toray Group overall are reported to the Risk Management Committee every year, and progress is monitored. Toray Industries discusses and establishes an annual activity plan for the next fiscal year that addresses the monitoring results and any new risks that have materialized due to changes in the environment.

2. Routine risk management (monitoring trends in and outside Japan, identifying, assessing and monitoring risks)

Toray Industries routinely monitors domestic and overseas trends and identifies risks that could have a major impact on Toray Group’s management. When such risks are identified, the Company promptly develops a company-wide system to address them and takes the necessary group-wide countermeasures.

3. Response in the event of a crisis

Based on the Risk Management Regulations, a company-wide quick response system (Company-Wide Emergency Headquarters) is formed to respond to the crisis that has occurred.

Business and Other Risks

Toray Group has identified the following business and other risks, as noted in its annual securities reports.

1. Risks related to environmental issues such as climate change, water shortages, and resource depletion
2. Risks related to internal controls
3. Risks related to product demand, market trends, and business plans
4. Risks related to procurement of raw materials and fuel
5. Risks related to information security and cyber threats
6. Risks related to the COVID-19 infection
7. Risks related to global business development
8. Risks related to natural disasters and accidents
9. Risks related to foreign currency, interest rate and securities market fluctuations
10. Risks related to lawsuits

Investigating a Survey Process Prioritizing High-risk Issues

The Toray Group CSR Procurement Policies were established as the Group's CSR policies related to procurement. Meanwhile, the Toray Group CSR Procurement Guidelines were implemented as activity guidelines for the entire supply chain, with which suppliers need to comply. In addition, a CSR Procurement Survey is regularly conducted targeting major suppliers to confirm that CSR initiatives are being implemented throughout the supply chain. After evaluating and analyzing the survey responses, Toray asks suppliers with low scores to make improvements and follows up with such measures as facility visits.
Moreover, in order to mitigate CSR procurement risk for the entire Group, starting in fiscal 2021, Toray has been investigating the adoption of a new priority risk identification process. This process involves identifying important CSR procurement risk types corresponding to specific countries, regions, and industries, and then picking out suppliers that require risk investigation, auditing, and/or mitigation measure implementation.
In fiscal 2021, Toray identified past cases of CSR risks that have materialized in supply chains worldwide. To do this, it used multiple databases created by an external consultant that has conducted global surveys and evaluations of ESG and corporate behavior risks. Toray also used information from these tools that help companies identify all types of risks, including those relating to operations and supply chains. Furthermore, using these CSR risk cases, Toray analyzed the potential degree of impact on stakeholders and Toray Group. It then prioritized the CSR risks and decided to focus on the three issues of human rights and labor, safety and health, and environmental preservation. Similarly, Toray investigated risk levels by country and region in order to identify specific suppliers to be surveyed.

Toray will continue to create supplier survey procedures and questionnaires, and to conduct trials, as it continues with investigation toward the establishment of a new survey process.

In order to foster employee awareness of risk management, Toray Group has set a KPI in its CSR Roadmap 2022 of the number of Group companies implementing risk management education. In fiscal 2021, the Group conducted risk management education for its new employees, newly appointed managers, and general managers. To prevent the spread of COVID-19, some training sessions were held remotely.