Increasing Corporate Value by Enhancing Business Continuity Management (BCM)
Increasing Corporate Value by Enhancing Business Continuity Management (BCM)
Center: Yusuke Sekiguchi
Chief Consultant, Kansai Branch, Risk Consulting Division, MS&AD InterRisk Research & Consulting, Inc. Right: Toshio Hiroe
Representative Director, President, Member of the Board, Chief Executive Officer, SCREEN Holdings Co., Ltd. Left: Masao Tomonaga
Senior Corporate Officer, Chief Officer of Sustainability Promotion, SCREEN Holdings Co., Ltd.
The titles are current at the time of the meeting.
The dialogue took place on March 28, 2023, at the SCREEN Holdings head office in Kyoto.
Recent years have seen intensifying natural disasters and other crises, such as earthquakes, typhoons, torrential rains, and pandemics. The risks posed by these occurrences are recognized as threats to corporate business continuity, and properly responding to them is becoming increasingly important. This has brought increased attention to building systems for business continuity management (BCM).
With this situation in mind, we have invited Mr. Yusuke Sekiguchi, Chief Consultant of MS&AD InterRisk Research & Consulting, Inc., to discuss the SCREEN Group’s BCM activities with Toshio Hiroe, CEO of SCREEN Holdings Co., Ltd., who heads the Group Emergency Headquarters under our business continuity plan (BCP), and Masao Tomonaga, who is the deputy head of the same emergency organization, as Senior Corporate Officer and Chief Officer of Sustainability Promotion.
SCREEN’s policy and goals for BCM
The SCREEN Group pursues sustainable management and rolls out initiatives intended to turn it into a sustainable corporation by meeting the expectations and earning the trust of various stakeholders. In this management structure, what is the role of BCM?
Hiroe: BCM is one of the key topics in Sustainable Value 2023, our medium-term management plan targeting the improvement of our social value. The Group’s BCM originated in the SPE business about 20 years ago. Then the Great East Japan Earthquake in 2011 prompted us to develop and implement business continuity plans (BCPs) as a group-wide project. These measures have further evolved through during the COVID-19 pandemic. Our primary focus is on fulfilling our responsibility to customers as a supplier and continuing business while placing first priority on protecting the safety of our employees and their families. I believe that this perspective must also be taken into consideration as we work on business continuity.
Strengthening risk management is identified as one of our material issues, and we are striving toward that goal to ensure we can detect signals and promptly respond even while the business is on track. We have a list of risks that should be recognized across the Group and identify and share high-priority risks to facilitate business segment-level management. These risks include natural disasters and pandemics caused by infectious diseases. BCM is an indispensable approach that is effective for systematically managing such risks.
Sekiguchi: There are only a few companies like SCREEN that implement BCM under the initiative of top management. Responsibility as a supplier is a crucial concept. Yet companies are more likely to focus on quality or safety perspectives, and only a handful highlight that concept. Now that SCREEN has BCPs in place and is training employees, continuation is key. The “M” in BCM stands for “management,” and this management must continue as long as the business remains running. It is also important to remember that, as President Hiroe said, the lives and safety of employees and their families come first.
What are the goals pursued in everyday activities to build BCM under Sustainable Value 2023?
Tomonaga: At the SCREEN Group, we share values through the president’s strong messages delivered throughout the organization to stress the importance of BCM. BCM is isolated from our sales targets and is included in our social value-oriented medium-term management plan as a priority initiative. To prepare for increasingly diverse and intense disasters, we must build a global system that allows us to respond to such events without panicking. We are streamlining the current systems and implementing specific measures in a manner that accommodates many different Group companies.
Sekiguchi: SCREEN assigns a unique role to BCM. In particular, the mindset of responding to disasters calmly and promptly reflects your corporate culture, and the president serves as the leading advocate of safety culture. This demonstrates how much BCM is valued here and holds the key to SCREEN’s future growth. On the other hand, there is a need to focus on the development of human resources who will maintain BCM, just like technologies being passed on to next generations. Creating an autonomous organization is also essential – an organization where any member can act autonomously in an emergency even in the absence of the decision-maker. I think these elements will help the Group fulfill its responsibility as a supplier.
Hiroe: As our organization originally consisted mainly of factories, our staff is good at working in unison once the factory manager gives directions. This is good for discipline in the organizational operation, but if we are to maintain BCM, we need more autonomous people who can think on their own in this time of dynamic change in the business environment.
That is one reason why we are encouraging every employee to become a “solution creator.”
By leading them to think on their own and always act in a forward-looking manner, we are trying to transform our culture.
BCM system and associated efforts
Could you describe the SCREEN Group’s current system for BCM implementation?
Tomonaga: Our BCM organization is headed by the president and steered by the Disaster Prevention BCM Subcommittee, which is formed under the Group EHS Committee as part of the sustainable management organization. BCP teams at individual business sites and business operating companies are the drivers of group-wide implementation. We identify and assess risks and ensure BCP systems are implemented for emergencies as well as for normal times. When a disaster occurs, the Group Emergency Headquarters is activated to deal with the situation in accordance with our Business Continuity Management (BCM) Rules and
ISO 22301* standards. Specific criteria and procedures have been established to facilitate switching to an emergency system.
* ISO 22301 is the international standard for business continuity management systems (BCMS). It provides a comprehensive framework that helps organizations to prepare for potential threats to business continuity, such as natural disasters like earthquakes, floods, and typhoons, as well as system failures, outbreaks of infectious diseases, power failures, and fires, and to efficiently and effectively respond to such events.
Hiroe: In October 2022, we held a large BCP drill. As the head of the Group Emergency Headquarters, I presided over the drill, which ended successfully as very realistic training.
A point for improvement was that communication between HQ and the site of the disaster was not as smooth as expected. At HQ, we are supposed to assess the extent of damage, establish recovery plans, and check safety according to the progress of the plans. However, we were in fact unable to receive sufficient information needed for determining the situation and hardly able to locate emergency supplies. The drill was very meaningful in that it allowed us to identify these issues.
Sekiguchi: The main purpose of drills is to identify issues, and if you were unable to do so in a drill, it would mean the drill is ineffective. Poor communication comes from a lack of experience. More frequent BCP drills will help you act spontaneously in an actual emergency. Aside from large-scale drills, you can try Q&A training sessions in which participants gather in a room to receive one-hour training. This approach will help your staff gradually embrace BCPs. After several Q&A training sessions, you can hold a large drill and identify issues again. The key is repeating the process of identifying issues.
In relation to BCM, could you describe how effective SCREEN’s measures against COVID-19 were?
Hiroe: During the pandemic, the local emergency headquarters of our production sites remained much more tense and nervous than I had expected, because they were under pressure to keep the factory running. To understand the site situation, the top management team held discussions with them once every other week and received updates. Over the past three years, we have never skipped this regular meeting and have somewhat managed to contain the spread of the virus in the workplace. We confronted the unprecedented adversity as one team and went through it with no shutdowns of factory or office operations. I really appreciate everyone’s whole-hearted commitment.
What are your views on the importance of enhancing the business continuity capacities of stakeholders at large, including those in the supply chain?
Sekiguchi: It comes down to how you can build a win-win relationship with them. It would not make sense that SCREEN alone could continue business in an emergency situation. A first step is to be more active in communicating SCREEN’s initiatives. Working toward mutually complementary relationships in the supply chain will be an effective way to enhance your BCM.
If you look at suppliers from the viewpoint of protecting their business, you will certainly find what is needed to be mutually complementary.
Hiroe: The basic strategy for BCM in the SCREEN Group’s supply chain is creating redundancy. We are aware of the importance of building continued business relationships with suppliers based on redundant supply chains extended in everyday operations. This is the only way to form such relationships. Our fundamental policy is to develop the Group’s supply chain based on a shared understanding of the significance of redundancy, now when many things are becoming redundant, as in the case of data mirroring. At the same time, we will properly manage single sources, which cannot be made redundant. By showing our commitment to suppliers, we are delivering the message, “Let’s continue business together.”
Sekiguchi: To prepare for future contingencies, first you should identify risks to suppliers. Then, find the bottlenecks and develop redundancy. Work together with suppliers, especially by supporting those lacking capacity to implement BCM. An ideal approach could be described like this.
In the context of stakeholders, cooperation with local communities also needs attention. Are there any ongoing initiatives?
Tomonaga: We have many ongoing projects of varying scales to cooperate with communities and neighborhoods. One example is cooperation with Kyoto City. City officials said that there were community-based stockpiles of emergency supplies and they needed sheds to store them. SCREEN donated emergency storage sheds for 11 districts. As shown in this example, we are taking one step at a time according to the local needs.
Enhancing BCM: Ultimate goal, progress, and future actions
How is SCREEN’s effort to enhance BCM working out?
Tomonaga: Pursuit of not just BCM but sustainable management in general would be impossible without consideration of the supply chain. We should begin by establishing a solid framework for communication with suppliers.
During the COVID-19 pandemic, we have learned how difficult it is to coordinate with Group companies around the world and what needs to be improved in that regard. After all, we must build globally-oriented BCM and combine it with collaboration with the supply chain.
“Supply chain” and “global” are the key words. We are strongly committed to them regardless of the period of the medium-term management plan.
What is needed to make the SCREEN Group more resilient as a corporation and enhance its BCM, including supply-chain perspectives?
Sekiguchi: Above all, you should strengthen ties with suppliers and act globally. Many other companies are having difficulty overcoming these hurdles. Even under various constraints, you must change your work practices in such a way that your business can continue even in an emergency. This process is nothing less than operational improvement. You can think about this in light of future enhancement of BCM and redefine BCM as part of risk management in a broad sense. It seems to me that BCM, including the supply chain, is at the heart of SCREEN’s business. The core is becoming stronger now. Therefore, I believe that SCREEN will continue to grow with its enhanced BCM and higher resilience.
As SCREEN strives to enhance BCM with all stakeholders, what are your resolutions as president in light of future directions?
Hiroe: As I said earlier, we currently face the need to strengthen risk management. Recognizing that this is also essential for stronger governance, we placed the Group Risk Management Committee, which was formed in 2020, directly under the Board of Directors two years ago. This move reflects our strong belief that risk management with “high sensitivity” is crucial. Under this risk management system, we will unearth all risks, including those associated with BCM. BCM can also be used as a means of communication. It will help us establish a SCREEN way of risk management that is closely coordinated with suppliers. My goal is to visualize all risks, including BCM risks, and enable staff to propose solutions to them, although there is nothing new about this idea. I believe that this will drive the enhancement of BCM without fail. Then, advanced BCM will make a major contribution to making the SCREEN Group an excellent corporation that can grow sustainably.
Postscript to the Dialogue
There are various kinds of risks: some emerge in everyday operations and others occur suddenly. Once manifested, risks also vary widely in terms of scale and impact on business.
For effective risk management, you need a team that constantly watches out for risks. At SCREEN, the Group Risk Management Committee plays this role. When you try to distinguish risk management from BCM, the easiest way to draw a distinction is to find, among all risks assumed, which are major threats that are unavoidable (e.g., natural disasters), and which could bring damage serious enough to affect people’s lives. These events can be catastrophic if they become a reality, and you must prepare for them with BCM!
During today’s dialogue, President Hiroe said that SCREEN’s medium-term management plan values BCM. This is a very important message. You should more actively disseminate the message internally and externally, along with the idea that enhanced BCM will increase a company’s resilience and eventually boost its corporate value.
Chief Consultant, Kansai Branch
Risk Consulting Division
MS&AD InterRisk Research & Consulting, Inc.
(as of March 2023)
His areas of expertise include safety culture development, general safety management, and reinforcement and support for disaster risk-related systems.
The titles are current at the time of the meeting.