Risk Management System

Because more than 90% of Advantest sales depend on overseas markets, we must implement risk management across multiple countries and regions. We believe that the key to quick response is a management system that addresses risks both top-to-bottom and bottom-to-top.

We believe it is essential to identify present and future risks, prepare for them, and take appropriate countermeasures in order to seize business opportunities and tackle challenges amidst the upheavals affecting our business environment.

Advantest is working on the key theme of “enhancing risk management” in our Sustainability Action Plan, with KPIs in place.

Advantest has established an Internal Control Committee in which the Group COO acts as the chairperson and outside Directors are observers. This committee identifies and analyzes significant risks for the whole company, and clarifies the responsible department and procedures for responding to each risk. The secretariat of the Internal Control Committee supports information sharing and other activities among the units.

Regarding the Internal Control System, the execution status of implementation of the system to ensure the appropriateness of business is reported directly to the Board of Directors once a year. Furthermore, if a material weakness is found in the internal control system development and operating status and the internal control evaluation process, it is reported to the Board of Directors.

For details on the Internal Control System, please refer to "Internal Control System".

At Advantest, each unit carries out risk management under the risk control policy designated by the Internal Control Committee, and the Internal Control Committee supervises and assesses the statuses of each unit before offering feedback.

Compliance risks are reported to the Chief Compliance Officer (CCO) in a timely manner or a regular basis, and the CCO then reports risks to the Executive Management Committee and the Board of Directors. Certain types of risk information are reported directly to the Executive Management Committee, Board of Directors, and the Audit and Supervisory Committee.

Emergency response is allocated to the Risk Management Group headed by the Group COO.

At Advantest, management supervises risk analysis and risk response implemented at the unit level. It is because we believe it is essential to identify present and future risks, prepare for them, and take appropriate countermeasures in order to seize business opportunities and tackle challenges amidst the upheavals affecting our business environment.

At the same time, regarding corporate-level risks, the Board of Directors or the Executive Management Committee makes timely decisions and gives instructions to relevant departments. Thus, risk management processes at Advantest consist of bottom-up and top-down approaches.

We have prioritized the creation of a system that can promptly respond to these risks if and when they materialize. Each unit strives to coordinate with the so-called second line (i.e. administration group) and third line (internal audit division) of defense so as to be fully prepared to respond to risks.

Based on the management plan formulated by the Board of Directors and the Executive Management Committee, each unit formulate the measures of its own division. Each unit identifies risks from a bird's-eye view, defining risks as factors that may hinder the achievement of management strategies, and takes appropriate countermeasures according to the magnitude of the risks. The Internal Control Committee defines the factors that may hinder achievement of those measures as risks. It requests individual units to identify risks and report on their risk responses. In this manner, the Internal Control Committee supports and reviews the risk analyses of individual units and promotes information sharing between units from a company-wide perspective.

Each unit reports its risk management status to the Internal Control Committee twice a year. The Internal Control Committee then checks the risk management status of individual units and provides feedback. The Secretariat of the Internal Control Committee also supports each unit in various manners as appropriate, such as providing proposals for risk analysis and countermeasures, and providing necessary information.

Corporate-level risks are reported to the Executive Management Committee or the Board of Directors in a timely manner, through the director in charge, and the relevant departments take prompt actions according to the instructions from management. In the event of a compliance-related incident, the CCO promptly instructs the relevant unit to take actions, and reports the status of the response to the Board of Directors and the Executive Management Committee. Depending on the nature of the risk, risk information may be reported directly to the Board of Directors or the Executive Management Committee. The Board of Directors or the Executive Management Committee handles risks at the corporate level by making timely decisions and giving instructions to related units.

In the case of an emergency, necessary measures are taken in accordance with the directions given by the Risk Management Group.