Basic Approach
We at Tokyu Construction have put systems in place to prevent risks from occurring, respond to risks when they do occur, and deal with changes in the business environment.
Risk Management System
We have set up a system to exhaustively uncover risks from events and factors that may impact business operations or hinder management and review them annually, in order to flexibly deal with changes in business environment. In addition, we have established company-wide regulations and codes of conduct for health and safety, the environment, quality, compliance, business continuity in times of large-scale disasters, personal information management and information security, among others. We also leverage the risk management system to take precautionary measures against risks as well as to swiftly respond to risks that do occur.
Business Risks
*Extracted from the 21st Annual Securities Report (April 1, 2023–March 31, 2024)
| Business Risk | Mechanism/Response |
|---|---|
| (1) Risks of climate change and natural disasters | If we delay our response to more stringent government regulations on construction projects and building lifecycles, and to the growing demand for sustainable procurement as climate change caused by massive emissions of greenhouse gases progresses, the Tokyu Construction Group’s performance may be affected by a decline in sales revenue or construction profitability. To deal with these risks, we have been implementing our Long-term Management Plan, which focuses on our three deliverable values of decarbonization, zero waste and disaster risk reduction. This includes the use of electricity from renewable energy and the promotion of Net Zero Energy Building (ZEB). To address the risks of wind and flood damage, which are becoming more severe with climate change, as well as damage caused by earthquakes and tsunamis to Group employees and assets, we are also engaged in business continuity management (BCM), which includes conducting drills based on our business continuity plan (BCP). |
| (2) Increase in Wage Procurement Costs Due to Rising Interest Rates | In financing from financial institutions necessary to support our business activities, rising interest rates may increase the cost of wage procurement, potentially impacting the Group’s performance. To address this risk, we are diversifying our funding methods by issuing short-term bonds and utilizing green loans to secure lower-cost wage procurement. |
| (3) Trends in the construction market | If the construction market in Japan shrinks due to economic fluctuations or if material and labor prices fluctuate suddenly, the Group’s performance may be affected by a decline in sales revenue or construction profitability. To deal with these risks, we are expanding into new business areas through innovation in response to market shrinkage, and proposing advance procurement and alternative construction methods in response to sudden fluctuations in material and labor prices. |
| (4) Risks related to structural changes in the construction industry | If we delay our response to structural changes in the construction industry caused by a decline in supply capacity due to skilled labor shortages, the Group’s performance may be affected by a decline in sales revenue, among others. To deal with these risks, we are strengthening collaboration with our subcontractors, and at the same time transforming our construction production systems and improving productivity through the use of ICT tools and other digital transformation technologies at construction sites. |
| (5) Risks related to securing employees | With a declining workforce, diversification of work styles, and competition for human resources among industries, it is expected that delays in improving employee treatment and addressing diversity and inclusion will make it difficult to secure employees and lead to staff shortages. This could affect the Group’s performance with a decline in sales. To deal with these risks, we are strengthening our human resource development to further enhance each employee’s skills, and boosting employee engagement to help them make the most of their abilities. We are also undertaking personnel system reforms, and work style reforms, to make it more attractive for people to work in the company. |
| (6) Construction defects and poor quality | If there is a problem in the design or construction that involves serious defects or poor quality requiring extensive costs to repair, the Group’s performance may be affected by a decline in construction profitability resulting from the repair costs or fewer opportunities to get orders resulting from a loss of customer trust. To deal with these risks, we are enhancing our response based on the quality policies: strengthening organizational collaborations with Civil Engineering and Building Construction Business Divisions, as well as enhancing our quality control initiatives using the PDCA cycle. To prevent quality-related problems from occurring as well as reduce their impacts when they occur, we established a system for rapidly sharing information with management, expanded the whistleblowing system and restructured our quality control method in the area of construction. We are also working to reform the organizational culture and increase human resource investments on work site engineers to improve their skills. |
| (7) Serious accidents and disasters | If there is a serious accident or disaster involving a third party or a large number of casualties, or an accident in a construction project with a large social impact, the Group’s performance may be affected by a loss of social trust and fewer opportunities to get orders. To deal with these risks, we set up a safety management system with more involvement from top management, based on our established safety policies. |
| (8) Cyber Risk | If a cyberattack results in the leakage of confidential information or a disruption in the functionality of internal systems, it could lead to a loss of trust from customers and society, stagnation in business activities, and potentially impact the Group’s performance. To address this risk, we implement information security measures across physical, human, and IT aspects to prevent information leaks and related issues, based on our Basic Policy on Information Security. We also promote employee education through e-learning programs. |
| (9) Risks associated with international business development | When developing our international business, if there is a significant change in the business environment, such as in political or economic conditions, exchange rates or regulations in countries other than Japan, the Group’s performance may be affected by a decline in sales revenue, among others. To deal with these risks, we are expanding the functions of the head office and other corporate governance, and strengthening our risk management. |
Business Continuity Management (BCM)
In 2008, we formulated a business continuity plan (BCP) to prepare for potential large-scale disasters. The following year, in 2009, we received certification for Construction Company Continuity Capacity During Disasters from the Kanto Regional Development Bureau of Japan’s Ministry of Land, Infrastructure, Transport and Tourism, and we update that certification every two years.
We carry out our business continuity management (BCM) through drills and other trainings based on the BCP, led by the Emergency Response Department at head office that include participation by our directors. We also continuously work on identifying and improving issues with the BCP. At each of the Tokyu Construction Group’s bases, we maintain a stockpile of essential items, including food and beverages, power generators in case of prolonged power outages, and emergency communication equipment, to ensure continued operation for a certain amount of time in the event of various types of disasters. In December 2021, the Emergency Response Department shifted to a hybrid work model with onsite and remote staff from all branches at 14 bases to align with the remote working practices that have become prevalent in recent years.
In addition, because our head office is located adjacent to Shibuya Station, one of Japan’s major transportation hubs, we are a part of a council comprising Shibuya Ward Office staff and local businesses that is responsible for helping people unable to return home in case of a disaster, and support disaster response efforts as a member of the community. In December 2021, we received a certification from the Tokyo Metropolitan Government as a company helping in the reduction of large numbers of working people going home simultaneously in times of disaster. We are strengthening and carrying out initiatives to ensure the safety of our employees and prevent potential mass disruptions due to the number of stranded people.
Furthermore, we intend to fulfill our social responsibilities by doing our utmost to ensure early restoration of infrastructure ― especially access to disaster response routes that are essential for search and rescue.We have entered into cooperative agreements for emergency response with national and prefectural government agencies and infrastructure companies. We will also work together with our subcontractors in the event of a disaster.
（Dec.2021）
Information Security
We have established our Basic Policy on Information Security in order to protect business-related information assets from threats, such as intentional or accidental information leaks, and to earn the trust of society and our clients. In addition, we revised our Information Security Guidelines in November 2022, and are conducting e-learning sessions based on these Guidelines.
Basic Policy on Information Security（Enacted on March 31, 2013）
- To manage information, we establish a management system to ensure the security of our information assets, regularly conduct reviews of the system, and make improvements as necessary.
- We formulate and carry out information security measures that are well-balanced from the physical, human, IT and other aspects, in order to prevent information leaks and other issues and promptly deal with any problems that may occur.
- We establish operational systems for carrying out our information security measures, and identify the roles and persons in charge.
- We demand clear responsibility for violations of this basic policy as well as related rules and regulations, based on employment regulations or terms of contract.
- We conduct regular reviews to identify and resolve problems, and ensure that this basic policy as well as related rules and regulations are disseminated, implemented and maintained, and that improvements are made continuously.