Monthly report on risk management matters

We will report on our risk management and related undertakings from the perspective of recent news headlines.

December, 2019

Regarding storage devices used in data migration tasks: The number of storage devices or HDDs used for data migration is regularly controlled. Also, periodic audits were performed during this term, as well.
Regarding HDDs etc. in PCs taken back from customers: In terms of PCs taken back from customers due to replacement or disposal, customers choose either to have built-in storage devices returned to them or to have the storage devices disposed of after being destroyed. In addition, the status of such operations is regularly checked by audits and a scheme for mutual supervision.

Disaster prevention: Each office conducts disaster drills based on laws and regulations. In addition, the situation of disaster prevention is periodically checked by internal audits and other processes.

Notification of our corporate policy: As a means of notifying our staff of our corporate policy, we hold a policy release meeting, which was organized in May and October this year. In addition, we release documents outlining the philosophy of the President, thus providing diverse opportunities for staff members to understand our corporate policy.
A reminder regarding contagious diseases and service: We take measures against seasonal and foreign contagious diseases in the form of having our staff members receive vaccinations and rest in advance. Moreover, alert notices are distributed by a dedicated unit of ours.

Impact of 2019's Typhoon No. 15 on store operations: We prepare for typhoons by giving top priority to the safety of staff when opening the store. Due to the disruption of infrastructure services such as loss of the electric power caused by 2019's Typhoon No. 15, we suspended the operations of some stores. The operations resumed once the safety of store operations was assured.
Changes in systems and operations associated with the consumption tax increase: We have appropriately dealt with the changes associated with the consumption tax increase and are continuing to do business without any disruption.

Stable distribution of our products: This year, we expect fluctuations in demand for some of our products and supply from manufacturers due to various external factors such as the consumption tax increase, the end of Windows 7 support, increased interest in gaming PCs and international trade issues.
A supply shortage in the market could affect PC DEPOT, but we have taken measures to ensure stable distribution of our products by building up our inventories in anticipation of increasing demand and making well-planned offers to our premium members.

Review of PC DEPOT's internal rules on insider trading: With regard to the handling of our treasury stock, we reviewed insider trading laws and regulations as well as our internal rules.

Auditing: As in past years, we have made changes to audit items as necessary.
Inclement weather alert and immediate confirmation when natural disasters strike: PC DEPOT has a knowledge system that is supported by cameras and communication devices (transceivers) through a dedicated system, which it uses to take precautions by immediately confirming the safety of store facilities and responding to ensure the same.
We will make a decision on whether or not to temporarily suspend business operations ahead of time according to the situation.
Change of executives: As key executives have changed, we ensured the proper handover of job duties with the staff of the Internal Control Department and the corporate auditor in attendance.

Proposed resolution for the election of directors to be submitted to the 25th Ordinary General Shareholders’ Meeting: The proposed resolution for determining candidates for directors was submitted upon obtaining the consent of the Nomination and Compensation Committee, and the proposed resolution the election of corporate auditors was submitted upon obtaining the consent of the Board of Corporate Auditors in advance.
Incentive compensation for directors: The proposed resolution for the introduction of the transfer-restricted stock compensation system was determined through deliberations at a Nomination and Compensation Committee meeting and a Board of Directors meeting before being submitted for a General Shareholders’ Meeting.
Long-term incentive system for employees: We distributed the company’s shares to full-time employees again this year under an employee stock ownership plan (J-ESOP) system.

Structure to evaluate value-generation activities: We arranged for a staff evaluation to be done through a 360-degree assessment. In 2018, we renewed our personnel affairs system and evaluation platform under the basic philosophy of ensuring continuity for many years.
To ensure that individual staff members look at their decisions and achievements, have a sense of independence, think about increasing their income, and cope with diverse ways of working, we are sharing our values with unions and other groups on the ideal state and implementing activities.
Promotion and education on compliance and ethics awareness: Periodic signing of pledge letters, role model cases, and detected fraud cases are deliberated by the Reward and Punishment Committee to discourage violations. Moreover, we foster work ethics through employee training in conformity to our CSR philosophy.

New employee training: We will carry out training for new employees joining the company this April. As is the case every year, new employees will be led to develop the mindset as working adults and professional ethics for working in our company in addition to undergoing usual practical training, so as to ensure strict compliance with laws, regulations and internal rules.
Pension system: Although we have not deployed a corporate pension fund system, it has in place a defined contribution corporate pension plan that helps employees accumulate financial wealth in a stable manner.

Reinforcement of Corporate Governance System: We have set up the nomination and compensation committees as voluntary advisory bodies to the Board of Directors with the aim of ensuring objectivity, fairness and transparency in business management. Please visit here for details.

The safety of products which fall under the scope of the Electrical Appliances and Material Safety Act and our products: All of our products are purchased and sold in accordance with applicable laws and regulations.Our products in stores and inventory are duly managed.

Actions to respond to the Work Style Reform Act: We have established systems which support diverse working styles of our employees. As is the case every year, we are continuing to implement the program to promote the use of paid leave. Each of our employees is taking actions in order to improve their way of working and we share values with union members.