Risk Management（P63-65）（395KB）

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Management Foundation

The Sinanen Holdings Group has defined its mission to "make people's lives more comfortable in every community by providing energy and home life services." In order to address risks that could hinder the fulfillment of this mission, our basic policy is to identify such risks and, depending on their level of importance, implement effective measures to prevent them from materializing or to mitigate their impact. Furthermore, we operate our risk management system in accordance with the following fundamental objectives and action guidelines.

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Sinanen Holdings and its key Group companies convene Risk Management and Compliance Committee meetings on a quarterly basis. The committee identifies priority risks, reviews the status of risk management throughout the Group, and deliberates on necessary measures. Chaired by the representative director and president, the committee reviews the overall state of Group risk management, reports the results to the Board of Directors, and thereby ensures a framework under which the board can exercise oversight and supervision.

Through a resolution of the Board of Directors, the Group has established a Basic Policy on Internal Control System Development, and has built a risk management framework in line with this policy.

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Internal regulations are established on risk management to clarify risks involved in business execution, and risks are managed appropriately in accordance with their nature

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Risks that may arise in the course of company operations are managed by assigning particular responsibility to each organizational role in line with its authority under the organizational rules The Audit Department conducts internal audits in accordance with internal audit regulations,

based on risk-based audit plans approved by the Board of Directors, and audit results are reported directly

to the board

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The Risk Management and Compliance Committee reviews the status of risk management at Sinanen Holdings and its Group companies, and deliberates on necessary measures

Group companies* Sinanen Holdings Co., Ltd.

Risk Management Department / Committee Secretariat (Operations Management Department)

Instructions / Reporting / Reporting of compliance Reporting of compliance PDCA-Cycle support discussion violations (internal hotline) violations (external hotline)

Reporting of compliance violations (internal hotline)

Reporting

Instructions

Reporting

Reporting

Instructions

Risk Management and Compliance Committee

(Chairperson: Representative Director and President)

Cooperation

Audit/Supervisory Committee

Reporting

Reporting

* Some Group companies have their own Risk Management and Compliance Committee.

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Non-disclosure agreement

Basic agreement Letter of intent

Management Meeting

Decision-making body

Continuation Plan changes Withdrawal

From Investment Investigation to Execution

The Group operates a risk management process as stipulated in its risk management regulations. Under these regulations, approximately 100 categories of risks are defined, with a designated risk owner (responsible department) assigned to each. This framework enables comprehensive and integrated management of all identified potential risks.

Risk Management and Countermeasures https://sinanengroup.co.jp/en/sustainability/governance/compliance/riskmanagement.html

Strategy Risks

New business investments Capital investments

Loss of competitiveness Deterioration in subsidiary performance, etc.

Market / Credit Risks

Economic fluctuations Fluctuations in procurement costs Uncollectible receivables

Foreign exchange fluctuations, etc.

Accident / Disaster Risks

Natural disasters (typhoons, earthquakes) Industrial accidents

Serious product or product liability accidents

Defects in construction or services, etc.

Labor-Related Risks

Violations of labor-related laws and regulations

Talent shortages, delays in human resource development Declining motivation, workplace harassment Misconduct by officers and employees, etc.

Review/Monitoring

Legal Risks

Falsified financial reporting Violations of laws and regulations, contractual issues

System / Information Leakage Risks

System failures

(including cyber incidents) Leakage of personal or customer information Leakage of confidential information, etc.

Society-Related Risks

Declining birthrate and aging population

Reputational risks (deterioration of corporate image)

Country risks, etc.

Withdrawal Decision

Failure to comply with environmental regulations Litigation, dealing with antisocial forces, etc.

Under the Third Medium-Term Management Plan, the Group is aiming to make proactive investments to transform its business portfolio. As a result, the importance of risk management in investments and financing has grown. To maximize the Group's investment and financing outcomes, we have created and implemented a Group-wide investment policy. Under this policy, we have established mechanisms that support timely, impartial, and appropriate management decisions. These include improving the accuracy of investment and financing project selection, enhancing preparedness for risks, and addressing the diversification of investment targets. The goal is to steadily advance investment activities that contribute to the continued enhancement of corporate value. In terms of decision-making, depending on the scale of the investment, the policy establishes a framework in which discussions are held from the investigation stage by the boards of directors of each Group company, and by Sinanen Holdings' Preliminary Review Committee, Board of Directors, and Management Meeting. Since the policy is reviewed as necessary, going forward, it will continue to be updated based on external environmental changes, the Group's business conditions, and knowledge gained from past investment projects. In this way, we will strengthen risk management in relation to investments while also pursuing investment and financing with agility and speed.

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Management Foundation

VOICE

Strengthening My Practical Skills and Ability to Follow Through to Help Raise Overall Safety and Security

At Melife-West Co., Ltd., in addition to legally mandated inspections, we have established even stricter voluntary safety standards. We conduct practice safety inspections internally using a safety inspection checklist. Starting this fiscal year our company has also adopted the Ministry of Economy, Trade and Industry's official inspection sheet, thereby working to strengthen more practical response capabilities. We also ensure next-business-day responses to minor gas leaks and strictly manage inspection/ maintenance deadlines for bulk storage tanks, promoting higher levels of safety. Looking ahead, one initiative I would like to focus on is strengthening follow-up after our own inspections. Currently, while we receive improvement reports about one month after our annual voluntary safety inspections, confirmation of whether improvements are sustained is postponed until the following year's inspection. To reinforce continuous improvement and raise safety awareness, we are working to build a framework for ongoing follow-up. Based on the three guiding principles of protecting the lives of customers and employees, preventing accidents, and complying with laws and regulations, I will

continue to help build safer and more efficient safety systems. My aim is to contribute to society through my work at Melife-West.

Yoshimi Hirokawa

Security Team, Security Department Melife-west Co., Ltd.

1. We will continue to rigorously adhere to the fundamental principles of prioritizing safety above all else, ensuring security through legal compliance, acknowledging that if we cannot ensure security, we are not qualified to handle energy, and recognizing that there is no business without security.

2. As the chosen partner of our customers, we will raise our awareness of compliance and strive to protect the safety of customers by implementing measures that address anticipated risks such as natural disasters.

3. We will utilize digital technology to improve work processes and productivity, we will pursue efficiency, accuracy and safety during tasks, and we will develop independent security actions and reinforce our security management systems.

The Group conducts stringent safety audits of its equipment chain for petroleum and LP gas sales, based on relevant laws and internal regulations. We are working to reduce risks at our petroleum facilities by practicing comprehensive risk management and carrying out leak inspections to prevent environmental damage caused by oil spills. For customers with LP gas contracts, in addition to the legally mandated inspections for gas-related equipment, the Group carries out voluntary safety inspections as requested. The Group has implemented safety education for employees using e-learning.

To deploy smart safety technologies in our Retail/Wholesale Energy & Related Businesses, we have adopted new handheld safety terminals. These devices have enabled greater operational efficiency by reducing inspection time and the need for re-inspections. The technology also allows handwritten electronic signatures directly on a handheld device, enhancing customer convenience. Furthermore, by linking them with our safety system, we have shifted from paper-based to digital management and storage of safety records, thereby preventing record loss and reducing environmental impact. Moreover, the Group's LPWA* network connection rate has now exceeded 70%. As a certified liquefied petroleum gas retailer, we continue to provide services using an even safer and more reliable system.

* Low-power wide-area network: Wireless communication network featuring technology for low power consumption and long-range communication

Promoting Smart Safety Technologies

Gas meters connected to an LPWA network