Basic Policy

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

In a basic policy for the establishment of an internal control system, compliance and risk management in the OMRON Group is defined as follows:

Promotion Structure

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

Establishment of global promotion structure

The OMRON Group integrates compliance and risk management. To promote activities in which management and employees on the frontline work together, risk managers are appointed (approximately 160 people) at each headquarters department, business divisions, overseas regional headquarters, and each Group company in Japan and overseas. Using a global network, risk information is shared on a daily basis, and measures to deal with risks are discussed in a timely manner.

The three main activities are as follows:

• Timely identification of environmental changes and impact assessment, sharing of information among relevant parties
• Conduct global risk analysis to identify important risks and establish appropriate responses
• Establish crisis response measures when a risk is identified

In order to promote ethical practices and risk management, we have established a Corporate Ethics and Risk Management Committee which consists of key risk managers, and generally meets four times a year. The status of Integrated Risk Management activities is reported to the Executive Council and the Board of Directors as appropriate.

Compliance

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

Group-wide Management Policies and Rules

The OMRON Group has established the OMRON Group Management Policy and OMRON Group Rules as the foundation for fair and transparent management.

The OMRON Group Management Policy sets forth the policies for organizational management in the OMRON Group based on our corporate philosophy, so that employees with diverse values can think and act autonomously under a global sense of unity.
The OMRON Group Rules (OGR) are common rules for the OMRON Group that stipulate matters to be observed in order to realize the OMRON Group Management Policy. OGR is systematized by the OGR Management Rules and was established for major functions such as compliance, risk management, accounting and finance, human resources, information security, and quality assurance. The rules are reviewed annually to ensure that changes in the internal and external environment are reflected in the rules in an appropriate and timely manner.

Group Code of Conduct

The OMRON Group considers corporate ethics and compliance to be one of its most important issues. In order to practice Socially Responsible Corporate Management, we have established the OMRON Group Rules for Ethical Conduct, which provide specific codes of conduct for officers and employees, in 25 languages.

• OMRON Group Sustainable Conduct Policies and OMRON Group Rules for Ethical Conduct

We regard education and awareness-raising activities for directors and employees as the basis for promoting and ensuring corporate ethics and compliance, and we provide ongoing education through new employee training, position-based training, and other opportunities. In the employee evaluation process, we require employees to practice our corporate philosophy, and one of the evaluation items is the degree to which they embody the behaviors of integrity and trust.

Corporate ethics month

In addition to establishing the Corporate Ethics and Risk Management Committee as an organization to promote corporate ethics and compliance, we have designated October of each year as Corporate Ethics Month to educate employees on strict adherence to corporate ethics and compliance. We distribute top management messages to directors and employees in Japan and overseas, disseminate the OMRON Group Rules, which are the Group's common management foundation, provide compliance education on cartel prevention, anti-bribery, etc., and disseminate information about the Whistleblower Hotline.

Efforts to prevent of anti-competitive behavior and bribery

The OMRON Group Rules of Ethical Conduct stipulate fair trade and compliance with laws and regulations, and in particular prohibit cartels and other anti-competitive behavior, as well as bribery of domestic and foreign public officials and others. It also prohibits entertainment and gift-giving in excess of moderation, even with business partners and related parties. No cases of administrative or criminal penalties related to anti-competitive behavior or bribery were identified in fiscal 2022.

Risk Management

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

Risks surrounding management and businesses, and risk analysis

Based on the OMRON Group Rules for Integrated Risk Management, the OMRON Group identifies and analyzes risks related to the Group from a global perspective every year, and identifies important risks at the Executive Council.

At its quarterly meetings, the Corporate Ethics and Risk Management Committee discusses and shares information on the occurrence of significant risks, environmental changes, and the status of risk mitigation measures. It also conducts a group-wide risk assessment to systematically promote initiatives.

In our long-term vision SF2030, the OMRON Group aims to solve social issues that arise in the transition to a new social and economic system. To this end, we are committed to transformation of business and transformation of corporate management and organizational capability based on the factors that influence social issues.

In carrying out these activities, we consider key elements that require attention as risks. These risks are classified as Significant Group Risks, which are those that have the potential to jeopardize the continuity of the Group operations or pose significant social responsibilities, as well as risks that may hinder the achievement of important Group objectives. Within the Group Significant Risks, we have assigned an S Rank to the most critical risks and an A Rank to the important risks.

Overview of businesses and other risks

The overall picture of the Significant Group Risks based on the risk analysis conducted at the end of fiscal 2022 is shown in the table below.

We describe risk scenarios and response measures under Business and Other Risks for risk categories which the group focuses on in particular.

• Business and Other Risks

Risk reporting and crisis management

In case of crisis, if at all, we pursue “bad news first” rule by immediately reporting such risk to the appropriate level according to our Integrated Risk Management Rules. We then centrally manage such information to be able to place a measure to prevent recurrence, tracing whether such measure worked well.

Raising risk sensitivity based on lessons of the past

The ideal structure for us at the OMRON Group is the one in which our front lines and management work together to solve issues arising from changes in the environment that cannot be addressed by those on the front lines alone. Accordingly, we have created the OMRON Risk Book – Risk Scenario 100 - a business risk casebook aimed at using previous case examples to look forward, and have been sharing with the management as an awareness-raising tool. This will use case examples from others as object lessons in increasing our sensitivity to risk.

Global Information and IT Security

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

Promotion structure

For IT systems and information security risks, under the supervision of the Cybersecurity Director, each Head Office Administrative Division Managers are responsible for controlling and managing in each area such as information security, product security, and confidential/personal information as the Executive Officer. In addition, the Board of Directors sets "Strengthening Cybersecurity" as a supervisory perspective with " Risk Responses in times of uncertainty" as one of the priority themes. The Board of Directors monitors and supervises cybersecurity issues and initiatives for future enhancement.

Regarding information security, the Head of the Global Business Process and IT Innovation HQ, as the Group Information Security Officer, supervises the overall status of information security management in the OMRON Group. Underneath, Information Security Responsible Department is responsible for grasping the overall status of information security management in the OMRON Group and planning and promoting the overall measures necessary for the OMRON Group. For product security, as part of product quality assurance, Product Security Responsible Department has been established under the supervisory of the Head of the Global Procurement, Quality, and Logistics HQ to strengthen it. Similarly, regarding management of confidential and personal information, the Head of the Global Risk Management and Legal HQ as the person responsible, grasps the trends in laws and regulations of each country and the situation of the OMRON Group in the affiliated departments and promotes necessary measures.

Issues that are across each area are resolved by holding the Cybersecurity Integration Conference, chaired by the Cybersecurity Director, as needed.

At the OMRON Group, should we have cybersecurity beaches in and out of Japan, we report the cases to the CSIRT (Computer Security Incident Response Team) located in Japan.
In fiscal 2022, there were no serious incidents that affected our business.

Protection of personal information

The OMRON Group Rules for Ethical Conduct stipulate the protection and management of information. We have established the OMRON Group Rules Concerning Personal Information, and have established management measures for the acquisition, use, and disposal of information according to its rank of importance. We are also promoting necessary measures by keeping abreast of trends in laws and regulations in various countries concerning the protection of personal information and the status of the OMRON Group. If any violation of the rules is discovered, disciplinary action is taken, and the matter is dealt with strictly. In fiscal 2022, there were no cases of administrative or criminal penalties for violation of the Personal Information Protection Law.

• Dealing with Violations

Internal Audit

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

In order to ensure the soundness and efficiency of organizational operations, the OMRON Group's Global Internal Auditing HQ conducts regular internal audits based on the Basic Policy for the Maintenance of Internal Control Systems. Through these internal audits, we regularly evaluate and improve the status of compliance with laws and regulations, including personal information protection, and the effectiveness of risk management activities.

• Internal Controls

Whistleblower System

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

Global operation of a Whistleblower Hotline that ensures fairness and protection for whistleblowers

OMRON has established a whistleblower hotline. We accept reports of any conduct that violates or may violate the OMRON Group Rules of Ethical Conduct, employment regulations, or laws and ordinances. Our internal rules require strict confidentiality and prohibit retaliatory action as a result of reporting or maintaining secrecy. Information about the Whistleblower Hotline is disseminated through the intranet and internal training programs.

In Japan, we accept notifications from a wide range of personnel, including executives, employees, and temporary employees, as well as families, retired personnel, suppliers and on-site contract workers. Besides handling whistleblower reports by a dedicated department within the company, we also have an external law firm commissioned to accept reports from whistleblowers. A whistleblower system is also available outside Japan, with contact desks in place at major sites in the Americas, Europe, Greater China, Korea, and Asia. This system is operated in accordance with the rules in Japan.

Furthermore, we have established operational guidelines to comply with the amended Whistleblower Protection Act, which came into effect in Japan in June 2022. Globally, we are establishing a system to accept reports from suppliers in all regions starting from the fiscal 2023, aiming to enhance continuous operational improvements.

Reporting and consultation status

We consider the number of whistleblowing cases to be one of the indicators of the effectiveness of the whistleblower system, and regard it as appropriate to have a certain number of reported cases. The number of reports overseas varies by region, increasing and decreasing over time in general. In Japan, the number of reports increased steadily until fiscal 2018. Reports decreased beginning in fiscal 2019, partly due to the impact of COVID-19 infections and other factors. The number of reports in Japan has been recovering since fiscal 2021.

The most frequent reports were related to power harassment, followed by labor management. These two categories account for about half of all reports.

Examples of actions taken include warnings to individuals engaging in micro-management, reassessment and strengthening of controls for operations with problems or vulnerabilities.

Number and breakdown of reports received in fiscal 2022

Dealing with Violations

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

When any conduct is found to be in violation of the OMRON Group Rules of Ethical Conduct, employment regulations, internal rules, or laws and regulations, the Company takes disciplinary action and other strict measures, in accordance with the employment regulations and other rules established by each company in the OMRON Group. In fiscal 2022, there was one significant disciplinary action reported to the Board of Directors.

Participation in Business and Industry Associations

• Basic Policy
• Promotion Structure
• Compliance
• Risk Management
• Global Information and IT Security
• Internal Audit
• Whistleblower System
• Dealing with Violations
• Participation in Business and Industry Associations

By proposing solutions through participations in various business and industry associations, OMRON contributes to achieving a sustainable society.