Risk Management and Compliance

| Risk Management Promotion | Promotion of Contingency Planning | Promotion of Risk Crisis Management
| Information Security Efforts | Protection of Intellectual Property Rights | Thorough Legal Compliance |

 Risk Management Promotion
The Kyocera Group is making Group-wide efforts to reinforce its risk management system to cope with global risks that are becoming ever more complicated. The Kyocera Group faces various risks that may affect the credibility or business sustainability of the Kyocera Group, including changes in the market environment, occurrence of natural disasters, incidents and accidents, the impact of climate change, information leakage, deficiencies of labor conditions in the supply chain, and violation of human rights. To cope with these, the Kyocera Group endeavors to reduce and mitigate risks while acting on the Basic Policy on Risk Management put in place for this purpose.

  Basic Policy on Risk Management

1. In accordance with assurance of compliance and the spirit of the Kyocera Philosophy, the Group will consider what is the right conduct as a human being and act based on the value standards.

2. In accordance with the spirit of the Kyocera Philosophy, the Group will accept “the highest priority is to ensure safety of bodies and lives of people,” deal with crisis, and for convergence of crisis, cooperate among employees as a unit to minimize loss, recover the damage, and make efforts to prevent reoccurrences, thereby attempting to remove or mitigate impediments to the interests of each stakeholder (the interested party), including customers, business partners, shareholders/investors, and the community.

3. The Group will attempt to continuously develop its business through implementing risk management.

4. The Group will act with its social mission to stably supply products and services helpful to the progress and development of society.

Risk Management System

The Kyocera Group conducts risk management, with the President as the group chief officer and the General Manager of Corporate General Affairs Human Resources Group as his assistant to supervise the risk management divisions. The Risk Management Committee conducts risk assessment of each department and each site in and out of Japan and formulates, examines, and approves response measures and monitors their progress with respect to risks considered to be particularly high in importance.

In FY2017, the Kyocera Group assigned risk management personnel at each department and domestic site, provided education on major risks such as natural disasters, terrorist responses, and information security and reinforced risk management.

Image: Kyocera Group’s Risk Management System
Kyocera Group’s Risk Management System
Image: Systematic diagram of risk management
Systematic diagram of risk management

 Promotion of Contingency Planning

The Kyocera Group has a Disaster Response Manual established based on the Basic Guidelines for Disaster Response to take appropriate actions in the event that a large-scale natural disaster damages the Kyocera Group, including minimization of personal and physical damage and implementation of swift restoration of business operations.The Disaster Response Manual is established and specifies regulations on collection and distribution of information on disasters and response measures for earthquakes, tsunami, wind, and flood damage.

Image: Basic policy of disaster response
Basic policy of disaster response

Actions against Earthquakes
In an attempt to minimize injury and damage from a major earthquake, the Kyocera Group (Japan) is installing a disaster warning system at all plants and offices. This uses the Earthquake Early Warning System provided by the Japan Meteorological Agency. The Kyocera Group endeavors to minimize earthquake damage through diverse means. These include drills using the Earthquake Early Warning System, disaster prevention training for employees, regular disaster drills held with local fire stations and other organizations.

Considerable damage is expected from a tsunami that could be generated by an earthquake in the Nankai Trough. To counter the potential damage, evacuation areas have been prepared for bases that are likely to sustain damage, based on the expected maximum tsunami height and shortest arrival time. Steps have been taken to ensure employees are fully aware of what they need to do.

One Approach

Holding of General Drill for Large-Scale Earthquakes
The Kyocera Group holds a general drill at all plants and offices assuming that a major earthquake occurred and that a fire has broken out in the building. The Kagoshima Kokubu Plant held a drill for about 1,650 employees based on an assumption that the facility collapsed due to the effects of an earthquake with a seismic intensity of over 6, a fire broke out, and employees were stuck in the elevator Eall under the attendance of the Kirishima city fire department. An emergency earthquake warning was announced in the entire building, the voluntary fire-fighting team of the headquarters and local voluntary fire-fighting team started guiding employees for evacuation, the whereabouts of the employees were checked, victims were rescued, and an initial fire-fighting drill was conducted. In about 28 minutes, all rescue and evacuation activities were completed. The Plant intends to regularly hold these emergency drills to enhance their disaster preparedness.
photo:Evacuation drill assuming a major earthquake photo:Drill of rescuing people from a collapsed building
Evacuation drill assuming a major earthquake Drill of rescuing people from a collapsed building

Business Continuity Plan (BCP) Efforts
The Kyocera Group uses the BCP to reinforce the readiness of business continuity and restoration of operation even in the case of disruption of product and service supply due to a natural disaster.

The Kyocera Group (Japan) formulated BCP against occurrence of a major earthquake and has taken necessary measures including fixation of important equipment, arrangement of repair members, and acquisition of alternative production means. In FY2017, we reinspected the safety measures and response procedures or measures to deal with important members in the event of a major earthquake to cope with changes in the business environment. We also endeavor to maintain appropriate equipment conditions through voluntary inspection. In FY2018, we continue to improve our response capability against emergency situations by continuing response measures to identified risks, holding of drills, and sharing of information among departments.

Our Group companies outside Japan also expand and maintain BCP activities depending on the disaster risks such as the natural disasters or infectious diseases assumed at each area.
photo:Desktop drill assuming an earthquake disaster (Tokyo Office)

Desktop drill assuming
an earthquake disaster
(Tokyo Office)

photo:Training of checking the power system restoration procedure (Toyama Nyuzen Plant)

Training of checking the power system
restoration procedure
(Toyama Nyuzen Plant)

BCP Efforts for the Supply Chain
The Kyocera Group promotes evaluation of alternative items and multiple purchasing sources with respect to the procurement of raw materials and components so as to prevent the stagnation of production activities during a disaster situation.

Kyocera has distributed the Supply Chain CSR Procurement Guideline to all business partners to help them understand our concept of BCP. For business partners who supply us with important raw materials and components, we are carrying out a survey on the progress of their BCP efforts in more detail.
Policy and Systems Related to Purchasing Activities

 Promotion of Risk Crisis Management

The Kyocera Group has in place the Basic Guidelines for Crisis Management to promote risk management measures. Based on these Guidelines, we formulated the Risk Management Manual that stipulates actions to take to ensure safety of employees working at overseas sites in the event of a terrorist attack and various other emergency situations. In FY2017, we revised the Manual and distributed the revised version to Group companies.

 Information Security Efforts
The Kyocera Group makes effective and efficient use of information assets. We have clarified the basic requirements that employees should comply with in the handling of information assets and established an information management system.
Policy and System of Information Security Management
The Kyocera Group has in place the Information Security Management Policy for the entire Kyocera Group as we see management strategies, product development, expertise, technology, organization, personnel information and others as the company’s important assets. Based on the Information Security Management Policy, we set up the Digital Information Security Management Regulations, Personal Information Protection Management Regulations, and Technological Know-how Leak Prevention Guideline for classified information management, intellectual property management, physical security management, visitor control, and human control, thereby ensuring thorough information security management.

The Kyocera Group established a Digital Information Security Committee with the President as its chairman and is implementing various digital security measures including periodic employee education by post or job, restrictions on the external use of information equipment, measures to prevent information assets leaks, thorough management of IT assets, internal audit, and enhancement of information security against cyber attacks. Furthermore, Kyocera Group companies outside Japan have taken actions to reinforce security management depending on the legal system, commercial custom, culture, and business style of each country while complying with the Information Security Management Policy and other related regulations.
Protection of Personal Information
The Kyocera Group regards the personal information obtained from stakeholders through business activities as important private information and strives to protect it thoroughly as a primary social responsibility.

Kyocera has set up rules on protection of specific personal information, clarified usage purposes of personal information and the dedicated contact for inquiries, and provided education on private information to employees handling such information, thereby ensuring thorough management.
Image: Document system of the Disaster Response Manual
Communication system on personal information

 Protection of Intellectual Property Rights
The basic policy of the Kyocera Group is to safeguard the yields of research and development by the Group as intellectual property rights, and to respect the intellectual property rights of others. We assign liaison officers responsible for intellectual property to main offices and manufacturing plants. Their role is to facilitate the processes of obtaining intellectual property rights Emaintaining control of rights and negotiating licenses for intellectual property rights. The Kyocera Group is undertaking activities relating to intellectual property in close cooperation with relevant business units.

Kyocera also regularly holds the Global Intellectual Property Partners Meeting for patent offices and the personnel of Group companies in charge of intellectual property in the U.S.A., Europe, China, Korea, and Japan, which help us obtain patents in those countries. The participants in the Meeting discuss improvement of patent application specifications and response actions to patent acquisition using specific case examples so that Kyocera can improve the Guideline and the system of sharing information.
Photo: Global Intellectual Property Partners Meeting

Global Intellectual Property Partners Meeting

One Approach

Awarded the "Top 100 Global Innovator 2016"
Kyocera was awarded the Top 100 Global Innovators 2016 selected by a worldwide information service company Clarivate Analytics. The award is annually given to companies or research institutes that lead the field in their innovative actions based on analysis of intellectual property and patent data of potential winners by Clarivate Analytics' own standard based on the patent data owned by them. Kyocera was given high evaluation for its "success ratio of patents" and “global performanceEand has been awarded the commendation consecutively for three years.
photo:Kyocera Named a 2016 Top 100 Global Innovato photo:Trophy awarded to KyoceraTrophy awarded to Kyocera
Measures for Dealing with Counterfeit Products
The Kyocera Group is implementing diverse measures in various countries around the world to protect customers from the harm caused by counterfeit products, and to enable product use with peace of mind. Kyocera monitors mail order Web sites and distribution sites around the world looking for counterfeit products. Vendors selling counterfeit products are warned and asked to pledge they will no longer handle them. They are requested to destroy stocks and reveal the names of their suppliers. Kyocera also uses hologram seals to distinguish between genuine and counterfeit products for some products, such as toner containers, making it easier to determine whether a product is authentic.

photo:Counterfeit ceramic knife

Counterfeit ceramic knife
Kyocera Document Solutions Inc. Intellectual Property Protection

 Thorough Legal Compliance

Photo: Global Legal Affairs Meeting

Kyocera Group Global Legal Affairs Meeting
The Kyocera Group ensures thorough compliance with the law by taking measures including management by each division in charge of a specific law or regulation, the establishment of an in-house communication system for notification of the enactment or revision of a law or regulation, the establishment of Employee Consultation Offices (internal reporting system), the implementation of regular legal compliance audits, and provision of compliance education to employees upon new employment or promotion.

We also regularly hold the Kyocera Group Global Legal Affairs Meeting, in which legal affairs personnel of major Group companies in the U.S.A., Europe, and China participate in order to reinforce global cooperation. At each Meeting, participants learn about each other’s results, share information on legal issues currently being faced by each company, and engage in discussions regarding various legal issues affecting the Group.

Measures for Fair and Free Competition
The Kyocera Group considers it important to maintain fair and free competition and promote it while using as a judgment criterion the concept, “What is the right thing to do as a human being?EAs part of such activities, the Kyocera Group issued the Kyocera Group Global Antitrust Compliance Manual, common to the entire Group and provides education on antitrust laws to employees in and out of Japan. We also formulated the Antitrust Act Compliance Regulations that specifically provide for items of compliance for employees. In FY2017, Kyocera started an individual interview based educational program for managers in sales departments so as to enhance employeesEunderstanding of the antitrust act. We continue to provide education to ensure thorough compliance with the antitrust act and other relevant laws and regulations.
Security Trade Control System
The Kyocera Group complies with the Foreign Exchange and Foreign Trade Act and other regulations relating to international security. In addition, the Kyocera Group is establishing a system for heightening security trade control. The purpose is to prevent the outflow of components for weapons of mass destruction and arms, or products and technology that could be used for their production and development.

Kyocera introduced the audit and storage system for cargoes not subject to the laws or orders and for fees and commissions to reinforce the voucher management system of audit results. In addition, the Kyocera Group (Japan) regularly holds the Security Trade Control Committee to ensure thorough compliance with the foreign exchange act and export-related laws and regulations. Our overseas Group companies have established a system focused on education and audit related to security trade control for reinforcement of security trade management.

One Approach

Measures to Ensure Security in International Distribution
Kyocera is recognized as an “authorized exporter” and “authorized importer” according to the AEO (Authorized Economic Operator) system, an international standard designed to ensure safety and smoothness of international trading and for which the mechanism of mutual approval is established in each country. This authorization helps us ensure security and smooth trading related to products delivered to customers outside Japan.

We will continue to improve maintenance of the security system in distribution.
Photo: Authorized exporter certificate Photo: Authorized importer certificate
Authorized exporter certificate Authorized importer certificate
Appropriate Information Disclosure
The Kyocera Group complies with regulations relating to the disclosure of information. The Group endeavors to provide appropriate information without falsehoods or expressions that invite misunderstanding, in accordance with social and moral principles. Additionally, display of product labels and operating instructions, catalogs, sales promotion documents, advertisements and other materials by Kyocera is in line with the company standard as set out in our Public Document Verification Guidelines. We are building a check system for verification by the Quality Assurance, Legal, Intellectual Property and Corporate Communications divisions.
Measures for Prevention of Bribery and Corruption
For the Kyocera Group, the basis of dealings with business associates is to always be fair and just, and to approach all manner of transactions in the spirit of fair play with the correct attitude as a human being. The Kyocera Group CSR Guideline prohibits the excessive exchange of gifts, the provision and receipt of excessive entertainment, and other corrupt activities. The Guideline also forbids activities that depart from customary business practice.
Ensuring Transparency in Political Donations
The Kyocera Group may provide political donations as required from perspectives such as the realization of policy-oriented politics and contributing to the sound growth of parliamentary democracy. When we make political donations, we will comply with relevant laws and regulations including the Political Funds Control Act as well as relevant bylaws.
Measures for Prevention of Insider Trading
The Kyocera Group has in place management systems to prevent insider trading and educates employees thoroughly. Kyocera has enacted the Insider Trading Prevention Regulations, which establish a management system for insider information and provide restrictions on stock trading. The company prepared an Insider Trading Prevention Handbook and distributed it to employees to enhance understanding of its importance. In addition, the company takes various continuing actions including provision of education on prevention of insider trading to newly hired or promoted employees and advising of no stock trading periods at morning meetings. In FY2017, Kyocera provided education to a greater range of employees, including employees who recently became Kyocera employees through Group company integration, merging fixed-term employees, part-timers, and temporary staff, in addition to all Kyocera Group (Japan) employees in the form of e-learning, group training, and distribution of hand-outs. In FY2018, we intend to provide refresher courses to all employees of Kyocera and have overseas Group companies provide similar education.
Measures for Exclusion of Antisocial Groups
The Kyocera Group established a basic policy for corporate governance and internal control including the prevention of involvement in management activities by antisocial groups and the prevention of damage by such groups.

The basis of the measures for exclusion of antisocial groups is that “the entire company is united in confronting antisocial groups with determination.” The Kyocera Group CSR Guideline clearly specifies how to handle antisocial groups to notify all employees of the company’s attitude.

The transaction basic contract form Kyocera has with our business associates now contains terms on exclusion of antisocial groups. More efforts will be made in the entire supply chain to redouble exclusion of antisocial groups.
Establishment of Employee Consultation Hot-Line Center (Internal Reporting System)
Kyocera Group employees can consult the Employee Consultation Hot-Line Center on diverse issues. Employees can seek advice and consult on diverse matters of doubt, and report actions that are or may be in violation of laws and internal regulations relating to human rights, labor, safety and health, environment, fair business practices, etc. Measures for protection of individual privacy are clarified, and employees can consult the Hot-Line Center directly by telephone, e-mail or other means. Details of the consultation are investigated and ascertained in cooperation with the relevant divisions. This is followed by corrective action and preventive measures against recurrence. At Kyocera, consultations were undertaken on 32 matters in FY2017, and steps toward resolution were taken in each case.
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