The Company, by resolution of its Board of Directors, adopts the Basic Policy on Internal Controls to ensure the proper operations of the Sompo Group (hereinafter the “Company Group”) and contribute to enhancement and quality improvement of corporate governance based on relevant laws and regulations and the Group’s management philosophy. The Company shall strive to appropriately capture and validate the Company Group’s control status based on the Basic Policy on Internal Controls at the Board of Directors and enhance its systems. In the event of an incident that may have a material impact on the management of the Company Group, the Company shall promptly determine a response policy at the Board of Directors and take necessary measures.
1. System for Ensuring Proper Conduct of Operations of the Group
As set forth below, the Company shall establish the systems required to ensure that the operations of the Company Group are conducted properly.
2. System for Ensuring Execution of Duties of Directors,Executive Officers, and Employees in Compliance with Applicable Laws and the Company’s Articles of Incorporation
As set forth below, the Company shall establish the systems required to ensure that the Company Group’s directors, executive officers, and employees (“Officers and Employees”) execute their duties in compliance with applicable laws and the firm’s Articles of Incorporation.
3. Strategic Risk Management Frameworks
The Company shall set forth a basic policy on ERM and implement the Strategic Risk Management, i.e. an ERM designed to minimize unforeseen losses while effectively utilizing its capital, increasing its profits under appropriate control of risks, and maximizing the Company Group’s corporate value.
4. System to Ensure Effective and Accurate Execution of Duties
As set forth below, the Company shall delegate authority for the execution of job duties, prescribe rules regarding decision-making and reporting, establish a command and control structure, and effectively utilize management resources to ensure that the Company Group’s Officers and Employees execute their duties properly and efficiently.
5. System for Ensuring the Financial Soundness
The Company shall set forth a basic policy on management of financial soundness and actuarial matters in order to develop and ensure an appropriate management system for these matters in the Company Group. In order to ensure its effectiveness, the Company shall set up a department to supervise the management of financial soundness and actuary, while appointing a person in charge of these, and clarify the preparation of proper financial statements and various processes on it. Based on results of the accounting audit and internal audit, the Company shall review various processes in timely manner and ensure their appropriateness.
6. System for Ensuring Appropriate Information Disclosure
7. System for Retention and Management of Information Related to Directors and Executive Officers’ Performance of Their Duties
In order to appropriately retain and manage information related to the executive officers’ performance of their duties, the Company shall prescribe rules dictating methods for retaining and managing information related to the executive officers’ execution of their duties, including minutes of the meetings of the important meetings and documentation related thereto. The Company shall also establish the system required to retain and manage such information.
8. System to Ensure Internal Audits’ Effectiveness
In order to ensure the effectiveness of the Company Group’s internal audits, the Company shall set forth a basic policy on internal audits, which shall define matters, such as securing independence concerning internal audits, establishing rules and developing plans, and establishing internal audit systems that are efficient and effective for the Group as a whole.
9. System Related to Audit Committee’s Audits
The Company shall establish the following systems to improve the effectiveness of Audit Committee’s audits:
9-1. Matters relating to employees who assist Audit Committee in the performance of their duties
The Company shall establish an Audit Committee Office as an organization that reports directly to Audit Committee and appoint personnel with the requisite knowledge and experience to serve as Staff of Audit Committee (employees to assist with Audit Committee’s duties) assigned exclusively to audit duty. The Company shall also set forth the Rules Regarding Staff of Audit Committee and ensure their independence from executive functions and the effectiveness of instructions issued by Audit Committee to the Staff of Audit Committee as follows.
9-2. System for Reporting to Audit Committee
9-3. Other Systems to Ensure that Audit Committee’s Audits are Conducted Effectively