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Risk Management

The NTT Group faces a rapidly changing business environment, including intensified competition in the information and telecommunications sector. In this context, NTT Group companies are exposed to an increasing amount of business risk.

The NTT Group strives to minimize the impact of losses that could result from the materialization of risk by anticipating and preventing the occurrence of potential risks.

As part of these efforts, NTT has formulated the NTT Group Business Risk Management Manual and has distributed it to all Group companies so that the entire Group can work together to conduct risk management.

In addition, each Group company has formulated its own manuals and other guidelines, which reflect its specific business operations, business environment, and other factors, and is using these materials to control business risks.

Risk Management System

At NTT, Risk Management Regulations are in place, which define fundamental policies concerning risk management for effective and efficient business operations, and a PDCA cycle has been conducted on a continuous basis under the leadership of the Business Risk Management Committee, chaired by the representative director and senior executive vice president.

Risk Management System

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Identifying Material Risks

From time to time, NTT reviews assumed risks and management policies based on changes in the social environment. The Business Risk Management Committee leads implementation of periodic risk analysis processes for each organization.

A report is submitted to the Board of Directors, which reviews the results as well as the overall risk factors of each organization, prioritizes the material risks, and decides on responses.

Identifying Material Risks

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Response to Individual Risks

Information Security Risk

If there is a leak or other misuse of confidential information such as personal information, the action may affect the NTT Group’s business, including its credibility and reputation, and its ability to obtain new subscribers or secure governmental contracts may be adversely impacted.

To prevent such a situation, the NTT Group is making efforts to protect confidential information obtained in the course of its business, including the personal information of customers. In addition, the NTT Group has formulated the NTT Group Information Security Policy, which outlines our stance on ensuring information security, and is taking rigorous steps on a Group-wide basis, including enhanced internal information management, training and awareness-raising for officers and employees, and publication of manuals, to protect the personal information of our customers and prevent any leakage.

Risks Related to Disasters

Five Group companies—NTT, NTT East, NTT West, NTT Communications, and NTT DOCOMO—have been designated public institutions under the Basic Act on Disaster Control Measures.

Accordingly, in preparation for a disaster, the NTT Group has formulated the Disaster Management Operation Plan for the purpose of smooth, appropriate implementation of measures to prevent damage. Damage prevention measures require an ongoing process of periodic review to reflect the latest knowledge and legal revisions.

In June 2014, the Japanese government revised the Nankai Trough Earthquake Countermeasures Basic Plan. In response, the NTT Group has revised the Disaster Management Operation Plan and is strengthening damage prevention measures.

Pandemic Risk

The global spread of novel influenza and other diseases has had a major influence on economies and lifestyles. In this setting, countermeasures have become a social issue.

In accordance with the Act on Special Measures for Countermeasures against Novel Influenza that was promulgated in 2012, five companies in the NTT Group (same as above) are designated public institutions.

In response, in March 2014 the NTT Group formulated the Novel Influenza Countermeasures Plan. In accordance with the stages of an outbreak of novel influenza or other diseases, we have created a specific plan for the fulfillment of our responsibilities as designated public institutions and for the prevention of infection from the viewpoint of respect for human life.

We also take action to prepare against novel influenza and other diseases by conducting response training in correlation with national training organized by the government.

Risks Arising from Climate Change

Responsible for environmental enhancement activities across the whole Group, the Environmental Protection Office is assigned to identify environmental risks that could affect our businesses not only environmentally but also financially.

As for the risks and opportunities with respect to facilities and equipment, monitoring and assessment are conducted through a collaborative effort between staff in charge of environmental issues and those responsible for facilities, and these individuals are appointed for every Group company. We consider future climate change a particularly imperative issue and are therefore working toward the environmental targets that have been set for the years leading up to 2030.

Emerging Risks Caused by Medium to Long-term Changes in Society

Risk of service interruptions caused by the growing size and frequency of natural disasters due to climate change

Service interruptions caused by damages to telecommunications equipment could occur frequently owing to the increased scale and frequency of natural disasters such as torrential rainfall and typhoons attributable to climate change. This could lead to secondary affects due to the interruption of important telecommunication services, such as the 110, 119 and 118 numbers, and the inability to quickly restore services in such situations could damage the company’s reputation.
In response, we are working to mitigate these effects should a natural disaster strike. This includes the use of multi-routing for communications networks and reinforcing disaster prevention measures of buildings housing our telecommunications equipment. Furthermore, we are also implementing measures that will enable us to quickly restore services in the event of a disaster by expanding the use of disaster resilient equipment and conducting regularly training drills for disaster response personnel.

Risk of workforce shortages caused by the acceleration of the reverse in globalization

The recent political trend indicating the emergence of nationalism and populism, and growing worldwide uncertainty about the rise in terrorist and cyber terrorist attacks, could potentially cause a reversal in globalization restricting the freedom of movement of human resources and making it difficult for the NTT Group to secure the labor force it requires. Specifically, shortages of cyber security personnel could inhibit responses to security incidents that occur at customers or within the NTT Group, making it difficult to sustainably grow the security business, which is a core strategic business of the NTT Group. In turn, this could affect profits and damage the company’s reputation.
In response to this risk, we are stepping up the hiring of security personnel at Group companies inside and outside Japan as well as enhancing industry-wide training programs for developing the talent we require. Additionally, we are developing cross-functional security responses (incident detection, resolution, damage minimization, prevention, etc.) across the NTT Group through NTT-CERT, which offers personnel who are experts in cutting edge and advanced security.

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