Governance Risk Management

Risk Management System

SHA established “Risk Management Regulations” to properly manage and minimize the risks that arise when managing the assets of SHR by avoiding, reducing or transferring them in addition to minimizing damage in the event of a risk occurring. SHA stipulates methods for risk management, monitoring of the status of risk management and responding to unforeseen circumstances, etc., in its “Risk Management Regulations”. Each department of SHA manages the risks associated with the operations related to its division of duties. In addition, the Compliance Officer and the Internal Control Promotion Department as the department dedicated to risk management oversee and monitor risk management in each organization and also report to the Board of Directors.

Risk Management Process

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Risk Management Method

In accordance with the “Risk Management Regulations”, SHA manages risks related to the duties of each department through the following methods.

  • SHA stipulates a portfolio development policy, portfolio management and administration policy, investment screening criteria and property due diligence criteria, etc., in its management guidelines. In addition, SHA stipulates internal rules regarding the selection of other service providers including property management companies as well as tenants and strives to manage the risks associated with real estate and real estate trust beneficiary interest by complying with these operational guidelines and other internal rules.
  • SHA strives to clarify the decision-making process for important matters related to the asset management of SHR and monitors the legal compliance status during the decision-making process by establishing internal rules such as the rules on segregation duties, rules on authority, committee rules and compliance rules. In addition, SHA strives to manage relevant risks by establishing the objective operational procedures for its operations, including real estate research, acquisition, operation and management.
  • The Internal Control Promotion Department of SHA monitors the legal compliance status and is responsible for ensuring thorough compliance, including the elimination of transactions involving conflicts of interest, insider trading and transactions with antisocial forces. In addition, the Compliance Officer is responsible for maintaining compliance-related rules and regulations, including the preparation of the compliance manual, in accordance with laws and regulations, and is also working to raise employees' and officers' compliance awareness through internal trainings and other means.
  • Internal audits of SHA are conducted by the Compliance Officer and the Internal Control Promotion Department, which are independent of other organizations and departments, with the Compliance Officer serving as the person responsible. Meanwhile, internal audits of the Compliance Officer and the Internal Control Promotion Department are carried out by the General Affairs Department with the President & Chief Executive Officer serving as the person responsible. The system for internal audits is maintained based on the internal audit rules, etc., and the Compliance Officer reports the results of internal audits and the improvement status of the issues identified to the Board of Directors. By maintaining this system, internal audits are carried out objectively, and the Board of Directors monitors the status of each organization’s business execution within SHA.
  • Properties that are subject to forward commitments, etc. will not be recorded on the balance sheet of SHR and will be off-balance until settlement, but the price fluctuation risk of the property during this period will be borne by SHR. Therefore, when entering into forward commitments, etc., SHA manages this risk by complying with the rules for forward commitments, etc., which stipulate rules including the maximum penalty amount, the maximum acquisition price of a property and the maximum period from contract conclusion to property delivery.
  • Regarding SHR's fund-raising activities, such as the issuance of new investment units, borrowings and the issuance of investment corporation bonds, a system has been established in which SHR's Board of Directors must approve such activities in accordance with the laws and regulations. In addition, SHA has established guidelines for the management of surplus funds and the rules for the handling of derivative transactions and risk management, and manages SHR's financial risks.
  • SHA has established the emergency response regulations and the business continuity plans to establish a system for the BCP of SHR's assets and SHA in the event of a disaster or other emergency.
  • SHA has established the internal rules regarding information assets, including information management rules, document rules, information system management rules, personal information protection policies and personal information protection rules, and has established a management system for information assets, such as important information used in the execution of SHA's business and personal information related to SHA's officers and employees, as well as SHR's unitholders, tenants. In addition, a system has been established to monitor the status of information management of subcontractors.

Enhancement of Information Security

To minimize the risks of information leakage, operation shutdown caused by cyber attacks, and other risks that could hinder the continuation of business, the Sekisui House Group strives to strengthen Corporate Governance System about information security regarding the establishment of the group-wide information security governance system as a key initiative, based on "Information Security Policy" regarded as Sekisui House Group's Basic Policy and "Confidential Information Management Regulation".

Click here for the Sekisui House Information Security Policy (Japanese Only).

SHA established "Information Management Regulations", "In-house Information System Management Manual" and "Mobile Device Operation Manual" clearly stating information management in daily operations, the proper way to use mobile devices and what to do in case of an information security incident. SHA strictly manages its information assets by ensuring that directors and employees perform their duties in accordance with these manuals.

SHA stipulates procedures for dealing with attacks (targeted e-mail) that are intended to infect computers with viruses or other malware via e-mail from outside the company and is working to improve IT literacy through regular targeted e-mail drills and E-learning trainings, etc.