Risk Management

Fundamental Approach

Pursuant to the Basic Rules of Risk Management, we manage various risks related to the Hulic Group's businesses, which include operational, market, liquidity, and credit risk, among others.

《Results in FY2020》

  • Number of Risk Management Committee meetings: 4 times
  • Number of Fund ALM Committee meetings: 22 meetings (12 regular meetings, 10 special meetings)
  • Number of BCP drills: 1 time
  • Number of inspections of stockpiled food and goods: 1 time

Risk Management Structure

Hulic recognizes that appropriately managing risks of the Company and its affiliates is one of its most important management challenges, and has set up a structure with the Board of Directors at the top while working to make improvements. The department responsible for a particular risk stripe formulates risk management method, then appropriately monitor and control risk. The status of risk management is reported to the Risk Management Committee and Fund ALM Committee regularly and as required by the department in charge with its recommendations. The Risk Management Committee and Fund ALM Committee, which convene regularly, examine the reports and recommendations provided by the departments in charge of risk management, assess overall risks and discuss appropriate responses before reporting to the Board of Directors. The Board of Directors resolves important matters related to risk management upon receiving reports from the Committees. We also verify that our affiliated companies are implementing appropriate risk management by requiring them to submit accurate and pertinent reports on a regular basis. In these ways, the Board of Directors has an oversight of risk management of our Group.
In 2020, as the spread of COVID-19 increased volatility in markets, the Fund ALM Committee held 10 special meetings in addition to regular monthly meetings in order to closely monitor interest rates, securities and other market risks, in an effort to flexibly respond to each risk scenario.

Risk Management Structure Chart

Business Continuity Initiatives for Disasters

Business Continuity Approach for Disasters

Hulic is a real estate company that engages in development, reconstruction, and operation of office buildings and rental apartments primarily in Tokyo 23 wards. We are constantly working to generate new added value by offering properties that are superior in terms of safety, environmental performance, and convenience. We have established various emergency and disaster scenarios for which we have created measures to improve the structural performance of our buildings as well as operational and management aspects.

Establishment of the Basic Plan for Business Continuity

Our Basic Plan for Business Continuity defines the framework and method for continuing important business functions while minimizing damage to business assets in the event of an emergency, such as a metropolitan epicentral earthquake. We have also created the BCP Manual outlining specific execution plans and have thoroughly communicated the contents of the manual to officers and employees. The BCP Manual outlines practical guidance on confirming customer safety, responding to the injured, confirming employee safety , implementing emergency measures by the BCP response team, and executing emergency and restorative actions to ensure business continuity, etc., based on the time that has elapsed since the disaster.
Further, a portable Disaster Response Manual was prepared and distributed to all employees. This manual contains information on preparedness for disasters, procedures for using emergency messaging service and safety confirmation system, as well as a flowchart showing how to act when a disaster occurs while commuting or during holidays.
Hulic implemented a variety of responses against COVID-19, including working with industrial physicians to formulate response policies and encouraging employees to work from home (expanded eligibility of conventional work from home system which was available only to employees providing childcare or nursing care). We also made efforts to reduce infection risk by staggering work hours and inviting employees to commute to work by bicycle, implemented thorough infection prevention measures for each employee and promoted the use of Web conferencing.

Review and Improvement of the Basic Plan for Business Continuity

Hulic reconfirms basic responses against disaster through annual BCP drill based on the Basic Plan for Business Continuity. The drill tests processes of establishing an emergency response headquarters, verifies operation of the safety confirmation system, and provides training on communication and information gathering among other things. This serves to reaffirm the importance of business continuity for executives and employees as well as standards of behavior related to disaster countermeasures. Furthermore, we analyze and evaluate the issues identified in the drill, and work to build a more practical BCP system by reflecting these issues in a revised BCP manual.
We also established a cross-sectional cooperation with external organizations including design companies, construction companies, management companies as well as elevator companies to ensure continuity of real estate business.

  • BCP drill
  • Fire drill
  • An exhibit of emergency supplies

Facilities and Stockpiles for Sustaining Business Operations

We are proactively carrying out measures to strengthen the business continuity capabilities of our head office functions during an emergency. The following measures have been taken at the Hulic Head Office Building.

  1. Adopts earthquake-absorbing structures that enable building functions to operate even during an earthquake with a seismic intensity of seven
  2. Features emergency generators that can operate continuously for up to six days
  3. Secures food and drinking water to last more than seven days

For buildings which we develop or reconstruct (office buildings, commercial properties and hotels), we also stockpile water, set up a drainage system, and install emergency back-up generators that can generate power continuously for three days.

Emergency back-up generator

Maintaining Functions during a Disaster (Hulic Head Office Building)

Diagram of Hybrid Structure Model

Earthquake Resistance Performance of Buildings

Hulic has established strict internal earthquake-resistance standards which specify building performance that can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquake with a seismic intensity of 7 and applies these standards to all new buildings developed by us regardless of asset type (office, commercial, hotels and ryokans, residential and others).
In addition, Hulic ensures that its new office buildings meet the highest earthquake resistance standards by equipping them with earthquake-absorbing and earthquake-damping structures and other technologies. We made the percentage of buildings meeting internal earthquake resistance standards: 100% each year as one of non-financial KPIs and disclose the result. Additionally, for existing office buildings, we carry out seismic retrofitting to ensure full compliance with new earthquake resistance standards, thereby ensuring the safety of occupants. In addition to measures from a structural perspective such as building structure,we are taking various steps on operational and managerial fronts as well, which are reviewed when required.
With regards to the responses against COVID-19,we confirmed the status of infections at building management companies and building tenants in buildings owned by Hulic in collaboration with Hulic Building Management Co., Ltd. in an effort to avoid standstills in building management operations and prevent the spread of infection among tenants.

Hulic was the First in the Real Estate Industry to Receive the Highest Rating of DBJ BCM

In November 2013, Hulic's business continuity framework (highlighted above) was recognized with a DBJ BCM rating from the Development Bank of Japan. The decision for the rating, the highest from the Bank, praised Hulic for our disaster prevention and business continuity programs. At the same time, Hulic received a favorable loan based on this rating. This marks the first time that a company from the real estate industry has received the highest rating from Development Bank of Japan.

Summary of the DBJ BCM Rating:
The DBJ BCM rating was established by the Development Bank of Japan (DBJ) and recognizes companies with particularly noteworthy business continuity management (BCM). The rating is based on a comprehensive evaluation using tangible and intangible aspects of a company's BCM initiatives, including its ability to quickly restore operations following a natural disaster.

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