Risk Management
Basic Risk Management Policy
The Asset Manager, under its own responsibility as an asset management specialist, fully recognizes that it has an obligation to monitor and manage various risks, especially management-related risks, in an appropriate manner and conduct its business optimally and that failure to implement appropriate risk management will damage TLR's assets under management and hurt customers' interests. It has therefore positioned appropriate management and control of risks, based on the characteristics of its business and the associated risks, as a key management issue and strives to implement a risk management system.
Risk Management System
TLR's organizational structure relating to risk management is as follows:
- (1) TLR was established based on the Act on Investment Trusts and Investment Corporations and is managed by a Board of Directors comprised of one executive director and two supervisory directors. The executive director holds Board of Directors meetings at least once every three months, and in addition to matters for approval as stipulated by law, detailed reports are provided on the execution status of TLR's operations and the Asset Manager's operations. Through this reporting procedure, the supervisory directors, who are independent of the Asset Manager and related interested parties, etc., obtain accurate information, and a structure is maintained that enables them to supervise the executive director's execution of his/her duties. At the same time, based on the reports in question, TLR verifies whether there are any concerns about conflicts of interest in the Asset Manager's transactions with interested parties, etc., and thereby strives to manage risks relating to conflicts of interest, etc.
- (2) TLR has the right to receive various types of report from the Asset Manager relating to the asset management outsourcing contract and the right to investigate the Asset Manager's books and other documents. Based on the exercising of the rights in question, TLR maintains a structure that enables it to supervise the Asset Manager's execution of its operations.
The Asset Manager's organizational structure relating to risk management is as follows:
This table can be scrolled sideways.
| Body | Main Role |
|---|---|
| Board of Directors | After identifying the types and characteristics of risks faced by the Asset Manager, the Board of Directors determines key matters concerning risk management, such as establishing the organizational structure and regulations with respect to risk management. |
| Compliance Committee | The Compliance Committee serves a role as a cross-organizational consultative body. It discusses and considers the formulation, revision, and abolition of the organizational structure and regulations relating to risk management, monitors risks, etc. and passes resolutions on key matters concerning risk management, as well as collaborating with the Board of Directors, auditors, and Compliance Officer as needed. |
| Risk Management Supervisor | The role of the Compliance Officer includes supervising risk management for the Asset Manager. |
| Risk Managers | The head of each department manages risks that fall under their department's jurisdiction and reports to the risk management supervisor regarding the status of management. |
Asset Manager Risk Management
As a rule, the Asset Manager monitors and manages risks relating to operation and management via multiple verification systems at various levels.
- A. The Asset Manager has stipulated a portfolio development policy, due diligence standards, portfolio operation and management policy, etc. in its Operation Guidelines. By complying with these guidelines, it strives to manage risks relating to real estate and real estate trust beneficiary interest.
- B. The Asset Manager has formulated Investment Committee Regulations with the aim of making the decision-making process for key matters relating to investment and management on behalf of TLR more transparent. It also strives to manage risks by establishing objective business procedures for real estate research, acquisition, management, operation, and other tasks.
- C. The Asset Manager has formulated Compliance Regulations, a Compliance Manual, and Interested Party Transaction Regulations. Compliance with laws and regulations, etc. is verified by the Compliance Officer, while the Compliance Committee deliberates and approves transactions with interested parties as stipulated in the Interested Party Transaction Regulations. Through these activities, the Asset Manager strives to prevent risks associated with legal violations and conflicts of interest.
- D. The Asset Manager has stipulated Risk Management Regulations and specific methods for managing risks, etc., and through maintaining an appropriate risk management structure, it strives to implement thorough risk management.
- E. The Asset Manager has formulated Insider Trading Prevention Regulations and strives to prevent insider trading by officers, employees, etc.
Cybersecurity
Information Security Manual
The Information Security Manual stipulates cybersecurity measures, which are rigorously managed and supervised by the information security supervisor.
BCP
Crisis Management Manual
With regard to crisis management, we fulfill our social obligations as a company and ensure our social credibility based on the following basic approach:
- (1) We will prioritize saving the lives and ensuring the health of officers, employees, and related persons over everything else.
- (2) We will preserve the assets managed for TLR and meet our commitments as an asset management company.
- (3) We will rapidly restore and normalize business operations, as well as supporting the stabilization of the local community and economy.
- (4) We will minimize the negative impact on stakeholders and seek to continuously improve the situation.
Emergency Response Manual
The Emergency Response Manual comprehensively outlines response guidelines in the event of a disaster or accident, from advance preparations to communication. The manual was developed based on the following basic response procedure, which enables an appropriate response when a crisis occurs:
- (1) Emergency Communication Guidelines, Emergency Response Guidelines, and Response Flow relating to properties entrusted to the Asset Manager by TLR
- (2) Disclosure rules in the event of a disaster
- (3) Advance preparation methods in anticipation of disasters or accidents
- (4) Response procedure and triggering of BCP measures in the event of a crisis
Business Continuity Planning (BCP)
Business Continuity Planning (BCP) is formulated for the purpose of continuing the company's business while ensuring the safety of employees and their families even in emergency circumstances (presumably when a natural disaster such as an earthquake occurs, but not limited to this). The basic approach is shown below.
The Asset Manager will implement measures aimed at business continuity in the event of an emergency based on the following basic policy:
- ・Ensuring the safety of people's lives (employees, outsourcing contractor employees, customers).
- ・Continuing asset management operations (maintaining the company's own business).
- ・Fulfilling our fiduciary responsibilities and carrying out our mandate from unitholders.