Risk Management Activities

Risk management structure

To promptly execute the appropriate counter-measures to any of the multiple risks faced by our businesses, Recruit Group has established a risk management structure within each SBU, in addition to an overarching structure within Recruit Holdings. Specifically, each of our three SBUs has Risk Management Committees, focused on the specific risks that their individual SBU faces. These committees are responsible for identifying important risks related to their own businesses and setting out appropriate mitigation measures, before reporting back to the Risk Management Committee of Recruit Holdings.

The Risk Management Committee of the holding company, which meets twice a year, serves as an advisory body to the Board of Directors. In addition to reviewing the reports received from the three SBUs, the committee identifies the important risks that the Group as a whole faces, determines the priority of the risks, and establishes appropriate responses. These outcomes are then reported to the Board of Directors.

The Board of Directors also has a quarterly report on compliance and risk management, in order to appropriately monitor the current status of risk across the Group, and to determine appropriate responses.

Initiatives at SBUs

With each SBU responsible for running its own business operation, we believe that it is essential that each SBU also carries out its own risk management. The Recruit Group Risk Escalation Rules then ensure prompt reporting back to Recruit Holdings and information sharing regarding critical issues within the entire Group.

Recruit Holdings then takes necessary actions in accordance with the overarching Recruit Group Risk Management Policy.

Compliance initiatives

Recruit Group views compliance as a fundamental prerequisite for our business activities, and defines it as "Meeting society's expectations and demands through appropriate action, by both the company and individuals, beyond the framework of legal compliance." We have therefore established the Recruit Group Code of Ethics, which describes certain fundamental legal and ethical practices that all officers and employees in Recruit Group are required to follow. We also stipulate the "Recruit Group Compliance Policy" as a guideline for our compliance activities.

To instill this mindset and behaviors throughout the Group, we have set up, both at Recruit Holdings and at each of the three SBUs, Compliance Committees that decide upon and monitor Group-wide policies and then report to the Board of Directors. In FY2019, we are implementing three policies as Group-wide initiatives.

1."Tone at the Top" compliance messages from management to employees: communicated through speeches and email, the management of each operating company within the Group convey the importance of compliance directly to employees.
2.Employee training: we provide all employees in the Group with ethics and compliance training at least once a year.
3.Setting KPIs for compliance activities: we are boosting the effectiveness of our compliance activities by setting KPIs for compliance activities at each SBU, e.g., aiming for 100% attendance of compliance tests. In addition, at both Recruit Holdings and operating companies in the Group, we are setting up internal whistleblowing contact points and taking steps--such as publicizing the whistleblowing system and protecting whistleblowers--to make it easy for employees to use the system. We submit quarterly reports to the Board of Directors on the number of whistleblowing reports and the action that was taken.

Recruit Group Code of Ethics

・Fulfilling Legal and Ethical Expectations
・Complying with Laws and Regulations
・Negotiating and Complying with Agreements
・Complying with Fair Competition Laws and Observing Fair Trade Practices
・Interacting Appropriately with Government Persons
・Safeguarding Confidential and Sensitive Information
・Protecting Intellectual Property
・Communicating Effectively and Clarifying Responsibilities
・Fulfilling Our Disclosure Obligations as a Public Company
・Respecting the Rights and Dignity of All People
・Maintaining a Productive Working Environment
・Avoiding Relationships with Organized Crime and Similar Parties
・Protecting the Environment