Risk Management

Our Policy and Approach

Comprehensive assessments are carried out for risks resulting from the environment surrounding the NTT Group's business along with business strategy and operations responding to that environment, as well as from perspectives including risks resulting from involvement with government, such as those involving regulations.

Business Risk Management

We have put in place risk management regulations that define fundamental policies concerning risk management in order to anticipate and prevent the occurrence of potential risks close at hand and minimizing losses in the event that risks do materialize.

The Business Risk Management Promotion Committee--headed by the senior executive vice president--along with the Group Business Risk Management Promotion Committee are central to establishing and operating a PDCA cycle for risk management.

In fiscal 2023, the Business Risk Management Promotion Committee met twice, as did the Group Business Risk Management Promotion Committee, identifying risks that could have companywide effects and discussing policies for their management.

In order to bring the NTT Group together as one to address risk management, an NTT Group Business Risk Management Manual is created and distributed to all NTT Group companies.

This manual establishes advance courses of action, NTT Group coordination methods and response policies in the case that risks materialize, communication flows, and more, maintaining and operating a system that makes swift responses possible.

Heads of each organization follow established management policies for identified risks involving businesses under their jurisdiction and respond as needed in order to manage said risks across all companies while also creating measures to avoid or minimize such risks.

Organization for Implementation

At NTT, Risk Management Regulations are in place, which define fundamental policies concerning inhouse risk management for effective and efficient business operations. Risk management is carried out based on a continuous PDCA cycle under the leadership of the Business Risk Management Committee, chaired by the representative director and senior executive vice president, and comprised of heads of departments and offices as committee members.

Each department in charge reports on their risk management situation to the Business Risk Management Promotion Committee, while an internal auditing department audits the status of efforts as a third line of defense.

Main Initiatives

From time to time, NTT reviews assumed risks and management policies based on changes in the social environment.

In the identification of Companywide risks, the Business Risk Management Committee leads analysis processes for the risks faced by the NTT Group are formulated and periodically implements risk analyses in accordance with these processes.

In addition, after a correlation analyses on these risks, it specifies those risks with the potential to have the greatest impact as material risks, and we decide on countermeasures.

Matters pertaining to risk management are discussed at meetings of the Business Risk Management Committee.

As part of risk monitoring, each department in charge reports on the status of monitoring and risk mitigation effects to the Business Risk Management Committee, while the Internal Audit Department conducts individual audits on the status of initiatives to address material risks and reports results to the Board of Directors in the subsequent fiscal year.

Among other things, risks are also identified by focusing on the perspective of conduct risk--where customers and other stakeholders suffer negative consequences as a result of actions taken by the NTT Group--by ensuring better planning and implementation of appropriate measures.

Assessing Risk

Possibility of occurrence and size of potential effects of new long-term (3-5+ years) risks among identified risks seen as having the largest effect on future management

Risks relating to advances in employee experience (EX)

In the communications market and related markets, the expansion of cloud services and 5G services, as well as the development of technologies such as AI, digital twin, and quantum computing are rapidly advancing.

A number of companies both in Japan and abroad have entered the markets, in which the diversity and sophistication of services and technology has rapidly increased, and where changes in the market, with a focus on cloud services and AI in particular, are expected to accelerate even further in the future.

In addition, actively investing in growth areas is one of the pillars of the new medium-term management strategy that NTT announced in May 2023, and NTT is focused on creating new value through IOWN-related services, smart world, green solutions and other areas.

In this environment, strengthening EX is critical for improving productivity and creativity, and for the retention of exceptional personnel. Decreased EX could adversely affect NTT Group's ability to develop new technologies, design new services, enhance its existing services, and execute its growth strategy, which could affect its results of operations and financial condition.

In consideration of this risk, NTT Group conducts employee engagement surveys and strengthens initiatives to improve any issues that are identified.

NTT Group analyzes the results of these assessments, and policies for various measures for improvement are submitted to the Sustainability Committee and Executive Officers Meeting, while feedback is also given to employees.

With respect to matters that affect engagement, the NTT Group conducts cross-analyses of various types of human resource measures, monitors a wide range of human resource measures, and promotes improvements in engagement by going through the PDCA cycle.

The NTT Group is also developing opportunities for two-way communications between executives and employees to disseminate and increase understanding of strategies.

At the same time, the NTT Group is continuing its initiatives to achieve a work-in-life environment in which a wide range of personnel can play an active role, which will also serve as a foundation for supporting employee engagement.

Geopolitical Risks

As the NTT Group operates both in Japan and overseas, international issues such as terrorism, armed acts, and regional conflicts can threaten the safety of employees, or damage buildings and equipment. Recent increased fears regarding economic stability may affect local business development, supply chains, financing and more. Such disruptions can hinder business operations, prevent the stable provision of services, and create other operational challenges.

Depending on the situation, these problems may not be limited to the country or region in question and may affect global business continuity.

Consequently, there is a possibility that employees may suffer direct damage, that it may take a long time to restore networks and systems, or that we may not be able to stably provide services due to difficulty in procuring fuel and equipment. This could result in a decrease in income and a large amount of repair costs.

Depending on the circumstances, the NTT Group may be liable for such damages.

In addition, these factors could reduce the credibility and corporate image of the NTT Group.

Given these risks, the NTT Group is strengthening information management methods both in Japan and overseas, conducting regular training to confirm the safety of employees, ensuring security of important equipment such as communication buildings, designing redundant transmission routes, and strengthening emergency power sources for communication buildings and base stations in the event of long-term power outages.

In addition, the NTT Group has released the NTT Group Supply Chain Sustainability Promotion Guidelines. The NTT Group requests suppliers to develop business continuity plans to minimize the impact on the supply chain in case of situations that have a significant impact on business continuity, such as rising prices of raw materials, logistics disruptions, and difficulty in obtaining raw materials and parts, due to international problems, etc., and will cooperate with relevant suppliers to implement measures to minimize the impact on the business if such situations occur.

As described above, the NTT Group has taken various measures to ensure the safe and stable operation of systems and networks necessary for business continuity.