1. Periodic risk management (priority risk mitigation activities)

As part of the sixth three-year set of Priority Risks (fiscal 2023–2025), the Group has established two Priority Risk areas: crisis response risks based on the possibility of war, and product supply disruption risks.
The status of initiatives to address each risk area is as follows.

Crisis response risks based on the possibility of war

This risk area was adopted to ensure employee safety in the countries and regions where Toray Group operates, while facilitating rapid decision-making and action to ensure business operation continuity when such regions are affected by war. The General Administration, Legal & Risk Management Division is responsible for promoting initiatives in this risk area.
In fiscal 2024, based on the risk assessments conducted in fiscal 2023 across the countries and regions where Toray Group operates, response plans were formulated both locally and at the head office in Japan, tailored to contingency scenarios for specific emergencies.
In fiscal 2025, crisis response drills are scheduled to be conducted in accordance with these plans.

Product supply disruption risks

To mitigate the risk of interruptions in raw materials caused by supply disruptions from suppliers due to various factors such as economic fluctuations, natural disasters, or cyberattacks, this risk area was adopted with the aim of strengthening the continuity of product supply. Activities are being carried out under the leadership of the Purchasing and Logistics Division as the responsible department.
In fiscal 2023, the Group began identifying raw materials with high procurement risk. In cooperation with each business division, the Purchasing and Logistics Division has been promoting risk mitigation activities such as diversification of procurement sources and stockpiling.

2. Follow-up on internal control implementation by group companies

In line with the Basic Policy on Internal Control System outlined in Toray’s Basic Policy on Corporate Governance, Toray Industries regularly provides guidance on risk management systems to its group companies worldwide and verifies their operational status.
In fiscal 2024, Toray Industries asked 132 group companies worldwide selected based on their capital ratios, business scale, and other factors, to conduct self-assessments of their specific risk management activities. The Company then confirmed and followed up on the results.
In fiscal 2025, the Company will continue to follow up with companies identified as needing improvement on the progress made.

1. 1 Self-assessments and results follow-ups are now being carried out for all group companies every year, with the level of these assessments being gradually raised over a three-year period. For the first stage conducted in fiscal 2023, self-assessments and follow-ups were completed to determine whether rules and frameworks for risk management are in place at each group company, and a 35% achievement level was reached. In fiscal 2024, self-assessments and results follow-ups were completed regarding specific risk management activities at group companies. This marked a 70% achievement level for the second stage. Self-assessments and follow-ups regarding the level of improvement in the plan-do-check-act (PDCA) cycle are planned for the third stage in fiscal 2025.

3. Crisis management for operations outside Japan

Under its Risk Management Committee, Toray Industries has established an Overseas Crisis Management Committee at its headquarters, as well as Local Crisis Management Committees at various group sites worldwide.
As part of its regular activities, the Overseas Crisis Management Committee continuously collects risk-related information from sites worldwide, shares it within the Toray Group, manages overseas travel, and provides risk education to traveling employees. Meanwhile, the Local Crisis Management Committees carry out risk mitigation activities specific to the conditions in their respective locations.
The Overseas and Local Crisis Management Committees are strengthening their cooperation by jointly utilizing a system for confirming the safety of personnel during an emergency.

4. Activities to raise employee awareness

To raise risk management awareness among employees, Toray Group conducts risk management training that includes crisis response every year. The training is provided to new employees, newly appointed managers, and department heads. This training was also provided in fiscal 2024.

In the event of a crisis, Toray Industries responds by swiftly establishing a company-wide quick response system (Company-Wide Emergency Headquarters) based on its Risk Management Regulations.
Since the 2011 Great East Japan Earthquake, Toray has conducted an annual exercise for setting up the Company-Wide Emergency Headquarters, as part of preparations for a large-scale earthquake in Japan.
When the Noto Peninsula Earthquake struck in January 2024, the Company-Wide Emergency Headquarters was set up on the same day. It acted quickly to confirm the safety of personnel, assess the damage, and initiate recovery and support efforts.

Economic Security Risk Initiatives

Toray Group established a specialized department in April 2021 to address economic security risks in response to increasing geopolitical risks. This department collects information on economic security policies in various countries. It also executes a comprehensive review of the Group’s business activities, including supply chains, investment, technology, human resources, and data from the perspective of economic security risks, and provides management support for risk countermeasures.
Two key aims of these activities are the strengthening of supply chain resilience and the prevention of critical technology leakage.
To enhance supply chain resilience, the Group has established Supply Chain Management Rules on Economic Security and is adopting a third-party screening system to reduce the risk of inadvertently conducting transactions with sanctioned or restricted entities. In addition, for items dependent on other countries and become chokepoints in the supply chain, follow-up on procurement planning is being conducted.
To prevent sensitive technology leakage, the Critical Technologies Management Rules on Economic Security have been established to clarify the technologies that must be protected by Toray Group. Furthermore, rules to ensure research security have been developed to mitigate the risk of technology leaks from joint research and development partners.

Toray has established the Toray Group Information Security Steering Committee to centrally manage and improve information security across the entire Group. Under this committee, risk mitigation activities are promoted based on the Toray Group Information Security Basic Policy.
In fiscal 2023, each group company conducted a self-assessment concerning its progress in meeting Toray Group information security standards. In cases where the standards have not been met, the companies concerned created improvement plans and continued to promote risk mitigation activities. Under the CSR Roadmap 2025, Toray Group information security standard achievement rate has been set as a KPI, and progress is monitored by the Toray Group Information Security Steering Committee.
As of the end of fiscal 2024, 60 of the 111 target group companies had met the security standards. However, due to factors such as the time required for some group companies to meet the standards, the achievement rate was 54%, falling short of the 70% target. In fiscal 2025, Toray Group will aim for a 100% achievement rate among the target companies and will promote group-wide risk reduction by strengthening the support framework provided by Toray Industries.