Risk Management
Risk Management
- Basic Policy on Risk Management
-
As an expert in asset management, the Asset Management Company recognizes its responsibility to conduct the best management possible by understanding and managing various risks appropriately, particularly risks involving management. Moreover, understanding that non-thorough risk management damages the assets it manages and thus hurts the profits of its clients, it positions appropriate management and control of risks based on the characteristics of operations and risks as one of its most important tasks in management. From this perspective, the Asset Management Company has established the following structure regarding risk management, and has made sufficient considerations to ensure that this gets consistently implemented.
- Risk Management Structure
- Board of Directors
The Board of Directors serves as the integrated management body for the risks to be managed by the Asset Management Company.
The Board of Directors regularly conducts monitoring, assessment, and analysis of investment risk and external risk associated mainly with corporate management among other risks, and provides necessary guidance and advice to each department.
Details of deliberations at the Investment Committee and the Risk Management Committee are reported to the Board of Directors on a regular basis.
- Investment Committee
The Investment Committee regularly conducts monitoring, assessment, and analysis of investment risk, external risk, and disaster risk associated mainly with asset management among other risks, and provides necessary guidance and advice to each department. It also reports the results of the assessment and analysis and the contents of the guidance and advice to the Board of Directors.
Please click here for the members and frequency of meetings of the Investment Committee.
- Risk Management Committee
The Risk Management Committee regularly conducts monitoring, assessment, and analysis of disaster risk and internal risk mainly associated with corporate management as well as internal risk associated with asset management; and concerning these risks, deliberates on basic policies and such for actions for risk prevention, response to risk after occurrence, prevention of reoccurrence, etc. It also reports the contents to the Board of Directors.
Please click here for the members and frequency of meetings of the Risk Management Committee.
- Legal & Compliance Department and Compliance Officer
The Legal & Compliance Department and Compliance Officer control risk management of the Asset Management Company and conduct monitoring, etc. of the effectiveness of risk management operations of each department as well as the appropriateness of measures and the status of their implementation.
In addition, the Compliance Officer (Head of the Legal & Compliance Department) fully verifies the details of identification, analysis, evaluation and management of risks of each department.
- Establishment and Execution of Risk Management Manual
-
In addition to maintaining an appropriate risk management structure by establishing risk management regulations to specify the methods of risk management, monitoring, etc., the Asset Management Company works towards thorough risk management through the monitoring, assessment, analysis, etc. conducted by the Board of Directors, Investment Committee, and Risk Management Committee.
Based on this Risk Management Manual, each department can understand and evaluate the risks that exist within their respective areas of work, appropriately compile potential responses based on the evaluation, and can establish a yearly plan regarding risk. By implementing these, a posture capable of conducting risk management appropriately at the opportune time is enabled, enhancing effectiveness, enabling the prevention of risk manifestation and reduction of adverse effects when risks do manifest.
Various related regulations for risk management are reviewed regularly to decide if they need to be revised and, if necessary, they are revised or new regulations are established. Furthermore, where appropriate, advice or validation is sought from external professionals for the purpose of validating the appropriateness of risk management methods, etc.
- Risk Assessment
-
In principle, the Asset Management Company conducts risk assessment once a year based on the risk management manual.
The Asset Management Company carries out risk management in a timely and appropriate manner, such as the prevention of risk manifestation and reduction of adverse effects when risks do manifest by accurate identification of risks inherent in business operations (clarification and visualization), calculation of potential risks (risk-specific assessment without assumption of internal control system) and residual risks (risks remaining even after taking into consideration the effectiveness of the internal control system) of such risks, and formulation of countermeasures (selection of monitoring targets and consideration of additional risk measures) based on these risks.
- BCP Measures
-
In addition to preemptively preventing the expansion of damages during disasters, the Asset Management Company has established the necessary internal structure and a Business Continuity Plan which outlines necessary matters which will help secure the continuation of business operations during disasters and the early return to regular business practices. This plan regulates the flow (process) of operations from the occurrence of a disaster to the full recovery of operations, and clarifies decision-makers and a system of command that will enable flexibly responses to matters affected by the disaster, depending on the details of the disaster and the size of the damages. Moreover, after large-scale disasters occur, we will evaluate the effectiveness of the plan and the important tasks list, and will also identify matters that can be improved. We will continually work to improve the effectiveness of this plan, etc.
In order to raise awareness of disaster prevention among executives and employees and to improve the effectiveness of "Business Continuity Plan”, the Asset Management Company conducts BCP training once a year in principle.
- Confirmation of Executive and Employee Safety
-
Nomura Real Estate Group, which the Asset Management Company belongs to, has implemented a safety confirmation system via the internet and email to quickly comprehend the situation of the disaster and the safety of executives and employees during a disaster. A safety confirmation drill is held four times a year to all executives and employees of the Group.
- Establishment of Inquiry/Assistance Service
-
The Group has set up the Nomura Real Estate Group Human Rights Desk as a point of contact for consultation on human rights issues which is accessible to all employees regardless of employment status, the Sexual and Power Harassment Hotline as an external point of contact for consultation, and the Nomura Real Estate Group Risk Helpline as a point of contact for whistle-blowing and general consultation on human rights abuse and other issues prohibited in the Code of Action. The Group also established an internal point of contact, as well as external points of contact (the Company's lawyer and outsourcing contractors). In addition, the Group established the Helpline for Business Partners (Corporate Customers) as a point of contact for reporting on human rights abuses or possible abuses by Group employees. Reports and consultations received through these points of contact are accepted anonymously, and the Group ensures that the content of information received is kept confidential. If, as a result of investigation, there is a clear violation of respect for human rights, the Group takes appropriate action against the perpetrator, and protects the victim and whistleblower so that they are not treated prejudicially for having made a report.
Internal Audit
-
The Asset Management Company has established the Internal Audit Department as a division to conduct internal audits. The Internal Audit Department formulates an audit plan for each fiscal year and, based on the plan, conducts internal audits across all operations of all departments for each department once a year in principle. The Internal Audit Department uses a risk-based approach from an independent and objective standpoint to assess the effectiveness of the risk management, risk control, and governance processes and works to improve organizational operations. and the department confirm that appropriate business execution is carried out based on various regulations and manuals that stipulate business procedures in accordance with the Nomura Real Estate Group Ethics Regulations and various laws and regulations related to the business.
