Risk Management : Integrated Risk Management and Monitoring

MC implements integrated risk management and monitoring in addition to responding to risks individually. As an example, we identify operational risks, which have become increasingly important in recent years. Every year, we report our evaluation of these risks to the Board of Directors, which is based on unified standards, as well as on the establishment and operation of risk management systems, taking into account future changes in the external environment. In the fiscal year ended March 31, 2024, we conducted the following three-step evaluation and reported the results to the Board of Directors.

MC identifies the major operational risks in the Company and then evaluates the risks on a consolidated basis in accordance with unified standards, before listing them as a risk map as follows. We identify “Risks that require special monitoring” (located in the upper right hand corner of the risk map), and the Board of Directors monitors the countermeasures.

In addition to evaluating the current situation (Step 1), MC identifies external environmental factors (geopolitics, economics, the environment, etc.) that may affect major operational risks in order to take into account changes in the external environment over the medium-term. We identify operational risks that are particularly susceptible to such factors as “Risks that require attention over the medium term” since they may shift to “Risks that require special monitoring” in the future (see 5 , 6 , 10 , 14 , 15,and 16 below).

In addition to “Risks that require special monitoring,” MC also positions “Risks that require attention over the medium term” as risks for which we should especially strengthen our responses in the future. We arrange the countermeasures for these risks as follows, and the Board of Directors monitors them.

Responding to geopolitical uncertainties, we conducted the Global Intelligence Committee based on information gathered from the global network. In addition, we have developed a country risk countermeasure system on a company-wide basis to cope with the deterioration of national financial discipline, particularly in emerging countries.

For the two assets (metallurgical coal and copper) determined to have a high level of exposure to physical risks in the physical risk assessment (metallurgical coal and copper; see the Climate Change section for additional details), we check annually whether there are any updates to the current measures and future adaptation strategies already disclosed.

We have prepared initial response and BCP on a consolidated basis both in Japan and overseas^*.

We have built up a structure for securing the lives and safety of our employees on a consolidated basis both in Japan and overseas^*.

We are preventing negative impacts come from the transaction risk by clarifying the contractual relationship and to mitigate the loss with the support of the legal department when we expose to the risk.

In the fiscal year ended March 31, 2024, MC determined the risk management policy for each risk and classified them into two categories described below. Among the risk items that is classified to (i), we identified the risk items for which quantitative assessment is to be strengthened and promoted.