In the course of its diversified business activities, Marubeni conducts risk management activities which address risk from a variety of perspectives: macro and micro, as well as qualitative and quantitative. Increased volatility in exchange rates, natural resource prices, and other parameters have continued unabated. Under these conditions, the Company is promoting integrated risk management, measuring the maximum level of risk on a consolidated basis and limiting it to within the scope of total equity. By conducting thorough screening and follow-up for individual projects and further enhancing internal control systems, the Company has established a structure that minimizes losses due to unforeseen events.
Marubeni operates in a diversified range of industries and regions. Therefore, the Company has established an integrated risk management system which not only focuses on the micro level of the individual risk factors, but also takes a macro view of the various factors that affect the entire Marubeni Group. Integrated risk management takes a broad overview of the assets for the entire Group, gauging risk based on the exposure of these assets to each specific risk factor—country risk, industry risk, credit risk for each client, and so on. These risks form the basis for calculating Value at Risk (VaR), which takes into account dispersion effects and correlations to calculate maximum risk. VaR is used as a primary benchmark for our portfolio management.
Integrated risk management looks at various risk factors in a comprehensive way to enable managers to understand risk as a single monetary value. By using computer simulations that reflect the latest information, Marubeni has made it possible to grasp the degree of risk in more detail than ever before. We calculate PATRAC*1 based on risk assets—a value based on the maximum decline in the value of Group assets as quantified by the Company. PATRAC indicates profit after tax following adjustment for risk. Marubeni has adopted PATRAC as an important management indicator, using it as a method of screening proposals requiring approval. Each Portfolio Unit*2 constantly takes steps to adjust its portfolio in a flexible manner, seeking to improve PATRAC in order to achieve maximum returns for a given level of risk, enabling Marubeni to achieve steady and balanced earnings growth.
For important individual proposals, such as those relating to investment or ﬁnancing, drafts are ﬁrst circulated and discussed by the Investment and Credit Committee and the Corporate Management Committee before the President makes a decision. The Board of Directors is also involved in decision-making on issues of substantial importance. Following implementation, each business department manages its own risk exposure and, for important cases, periodic status reports are made to the Investment and Credit Committee, Corporate Management Committee, and the Board of Directors.
In addition, a corporate planning and strategy department was placed under the direct control of the Group CEO, the highest authority with regard to all business groups, thereby establishing a risk management system that has been optimized to the business models of each business group.
Marubeni has formulated a Business Continuity Plans (BCP) to prepare for large-scale earthquakes, epidemics of new strains of infectious diseases, and situations in which the Tokyo Head Office loses its ability to function. In addition to BCPs for the Tokyo Head Ofﬁce, Marubeni has also prepared individual BCPs for ofﬁces both in and outside Japan that are essential to the continuation of corporate activities. These plans are updated regularly to ensure they remain relevant.
When a massive earthquake hit Japan in March 2011, an emergency headquarters under the direction of the President was established in accordance with the initial response guidelines stipulated in the BCPs. Information on the safety of employees, the status of our infrastructure, and damage to facilities was quickly collected and necessary measures were taken in a timely manner.
Marubeni established the Marubeni Information Security Policy in November 2001 to protect information assets and ensure the safe conduct of business activities. In January 2005, Marubeni established the IT Security Management Rules, IT Security Standards, and IT Usage Rules as in-house regulations, as well as other internal rules. The goals are to ensure awareness of the risks of unauthorized access, loss, destruction, alteration, and leaks of information assets, to take the necessary security measures, and to maintain the effective use and credibility of information assets. The importance of information security is emphasized throughout the company so that all employees are well informed.
For the Group companies, we created the Marubeni Group IT Governance Rules in April 2013, based on the above in-house regulations and other internal rules. The unification of the information security rules within the Group will contribute to stronger security.
Additionally, Marubeni has established the Guidelines for IT General Control as a standard for strengthening control at Marubeni and key Group companies, in response to the FY2008 launch of the internal control reporting system based on the Financial Instruments and Exchange Act. These guidelines are continuously reviewed and improved.