2019 Survey on Risk Management and Frauds of Japanese ... · 電気・ガスPower / Gas 41.9% 10.1%...

Deloitte Touche Tohmatsu LLC

2019 Survey on Risk Management and Frauds of Japanese

Companies operating in Asian Countries

© 2020. For information, contact Deloitte Touche Tohmatsu LLC.

Outline of the Surveys

2019 Survey on Risk Management and Frauds of Japanese Companies operating in Asian Countries2


■ Objectives

To understand how Japanese companies operating in the Asian region—including Indonesia, Singapore, Thailand, the Philippines,

Malaysia, Vietnam, Myanmar, China, Taiwan, and India—are addressing risk management; to gain a deep insight into these companies’

responses particularly to frauds; and to obtain basic data on the current satiation surrounding risk management and frauds.

To help Japanese companies operating in Asian countries enhance their management by raising awareness of risk management through

the survey and disclosure of its results.

■ Target

Local subsidiaries of the Japanese companies operating in Indonesia, Singapore, Thailand, the Philippines, Malaysia, Vietnam, Myanmar,

China, Taiwan, and India, including regional headquarters.

[Number of respondents (figures for 2017 and 2018 are the number of respondents in the surveys conducted in those years)]

■ Method

The survey was conducted over the Internet website （September 26 ～October 25, 2019）

■ Items

[Part 1] Risk Management Structures in Asia

[Part 2] Situation of Frauds in Asia

Objectives and method


Indonesia Singapore Thailand Philippines Malaysia Vietnam Myanmar China Taiwan India Total

2017 29 55 19 - 24 - - 119 - 47 293

2018 57 23 87 7 45 - - 177 - 17 413

2019 69 74 103 15 69 49 53 99 39 32 602


* All figures on the charts of this material are rounded to one decimal place.

Respondents’ characteristics

49.5%

16.1%

7.0%

5.8%

4.5%

4.5%

3.8%

3.7%

2.8%1.5% 0.8%

Industry sector (the Group’s main line of business)

製造 Manufacturing

卸・商社 Wholesaler / Trading companies

金融 Financial service

サービス Service

陸・海・空運 Transportation

農林・水産・鉱業・建設 Agriculture / Fishing/ Mining/ Construction

その他 Others

情報・通信 IT / Telecommunication

小売・流通 Retail

不動産 Real estate

電気・ガス Power / Gas

41.9%

10.1%

20.3%

6.5%

7.6%

13.6%

Sales size

50億円未満 Less than 5B yen

50億円以上100億円未満 5B yen or more

and less than 10B yen

100億円以上500億円未満 10B yen or

more and less than 50B yen

500億円以上1,000億円未満 50B yen or


1,000億円以上5,000億円未満 100B yen or


5,000億円以上 500B yen or more

30.1%

26.4%

11.3%

32.2%

Company size

100名未満 Less than 100

100～500名未満 More than 100 and less

than 500

500～1,000名未満 More than 500 and

less than 1,000

1,000名以上 More than 1,000


Manufacturing

Wholesaler / Trading companies

Financial service

Transportation

Service

Agriculture / Fishing / Mining / Construction

Others

IT / Telecommunication

Real estate

Power / Gas

Retail

Less than 5B yen

5B yen or more and less than 10B yen




500B yen or more

Less than 100

More than 100 and less than 500

More than 500 and less than 1,000

More than 1,000


Summary of Results



30% 31%

35%

38%

34%

26%

19%

24% 25%

20%22%

23%

19%

23% 22%

17%

14%

16%

15%

19%

16%

15%

16%

15%16% 14%

12%

9%

8%

10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2017年 2018年 2019年

Market-related risks come in 1st place for the first time, showing clearly fierceness of the

business in Asia.

[Survey on risks: the companies’ attention focuses on the risks related to costs and human resources]

Against the background of intensifying market competition, the risk related to price competitiveness drew the most attention

for the first time.

The level of interest in the risk related to compliance violation dropped from previous years. On the other hand, however, the

attention to delay in response for law and industry standard change shows a moderate growth. This demonstrates that the

attention to law and regulation remains high.

In Asian markets, which are still under development, the outflow of existing staff and shortage of resources remains

recognized as a risk, with a high turnover of staff common and securing talent hard.

Top 3 risks that need to be addressed with priority

(by category of risk)



13.2%

3.9%

5.3%

1.3%

17.1%

3.9%

18.4%

0.0%

23.7%

28.9%

48.7%

8.1%

6.7%

2.0%

8.7%

16.1%

13.4%

25.5%

0.0%

35.6%

34.9%

63.1%

3.1%

6.3%

7.1%

11.8%

15.7%

16.9%

20.9%

21.3%

32.7%

40.2%

63.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

2019年2018年2017年

Internal Audit

External Audit

Whistle blowing

(Internal)

Transfer or resignation

of the person

Whistle blowing

(External)

By chance

IT control

Confession

Tax inspection /

Regulatory

Control Activities

through business process

Other

Survey finds that frauds have increased and diversified, meaning it is necessary to set up a

multifaceted control system.

[Survey on fraud: The number of fraud cases increased, which was presumably

contributed to by growing awareness among management.]

The number of cases in which a fraud was materialized or was concerned has been

increasing since 2017, when this survey began. We presume that this is because fraud

cases have become more visualized as the internal audits is improved and the

management’s awareness of fraud risks grows (Chart 1).

The survey shows a continued tendency in which sales, purchasing, and manufacturing

departments see a larger number of fraud cases (Chart 2).

Regarding fraud types, the higher percentage of Inappropriate information usage /

Fraudulent Reporting surged as well as those of improper spending and bribe, showing

the importance of setting up a control system for information (Chart 3).


31.3%

68.7%

38.9%

61.1%

46.6%

53.4%

(Chart 1)

Whether any fraud is detected or not

in the past three years(From inside: 2017, 2018 and 2019)

(Chart 2) Department where any fraud is detected (Chart 3) Fraud types

0.8%

1.2%

2.8%

5.5%

7.9%

9.1%

10.6%

12.2%

14.2%

14.6%

20.9%

25.6%

36.2%

47.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Executive/Upper Management

Human Resources

Marketing/Public Relations

Customer Service

Research and Development

Internal Audit

Legal

IT

Finance

Other

Accounting

Purchasing

Sales

Manufacturing and Production


[Part 1]

Risk Management Structures in Asia1. Risk types subject to management*

2. Top 3 risks prioritized by Japanese companies operating in Asia**

* The result of the questionnaire with multiple answers allowed on the risks subject to

monitoring at each company.

** The result of the questionnaire on the top 3 risks that respondents think should be

prioritized. (the survey did not involve questions whether respondents took action to manage

or prevent these risks).



The survey listed the following risk types and asked the respondent to choose

appropriate items.The survey defines the risk types (numbers ① to ⑩ of the results refer to the following classifications)

① Related to economics

1 Financial Crisis

2 Economic difficulties

3 Exchange rate fluctuation

4 Price competitiveness

5 High price in raw material or oil in the market

② Related to natural disaster

6 Earthquake, flood and disasters

7 Spread of plague (Pandemic)

③ Related to politics / geopolitics

8 Situation in Korean Peninsula

9Terrorism and Terrorism and political situation in China

and Russia

10Terrorism and political situation in South East Asia and

South Asia

11 Terrorism and political situation in Near and Middle East

12 Terrorism and political situation in Africa

13Terrorism and Terrorism and political situation in

Northern and Southern America

④ Related to law and regulation

14 Delay in response for law and industry standard change

15 Intellectual property infringement

16Response to environmental law and regulation such

pollution

17 Compliance violation

18 Litigation damage

⑤ Related to reputation

19 Damage from unfounded rumors or boycott

20 Stock price down by damage from unfounded rumors

⑥ Related to fraud

21 Financial crime

22 Conduct risk

23 Financial reporting misstatement

24 Organizational fraud such as cartel, collusion

25 Management’s/employee’s fraud/corruption

⑦ Related to product/service and operation

26 Disrupted supply chain

27 Product recall

28 Deficiency in products/services quality control process

29 Incident of facilities

30 Deficiency in Customer Services

31 Huge losses caused by operational mistakes

⑧ Related to IT system

32 Cyber-attack / Virus infection

33 Information leakage

34 Largescale system down / loss of information

⑨ Related to human resources

35Shortage of resources due to outflow of existing staff or

difficulty in hiring staff

36 Labor costs soaring

37Labor issues such as death from overwork, long working

hours

38 Labor-management problem

⑩ Related to governance

39 Failure of proper management

40 Failure of governance over subsidiaries

41 Failure of businesses integration after acquisition



Risk types subject to management (by category)

Overall, companies throughout Asia tend to pick out similar risks as the ones subject to

management. Particularly, however, the risk related to IT system (⑧) draws the most attention.

(See page 8 for detail on number ①～⑩）

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩15.0%

11.0%

4.3%

12.5%3.3%

9.3%

8.0%

16.8%

12.7%

7.0%

Indonesia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

10.9%10.6%

6.3%

11.9%

6.2%

9.7%9.2%

14.9%

10.9%

9.3%

Singapore①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩12.3% 12.9%

4.8%

11.7%

5.0%

8.8%11.4%

15.3%

12.0%

5.9%

Thailand①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

13.5%11.3%

5.1%

12.5%3.6%

8.6%11.7%

16.0%

12.3%

5.4%

Malaysia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

11.1% 13.8%

4.0%

12.7%3.0%

7.1%9.6%

20.4%

11.9%

6.6%

Philippines①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

11.6% 11.0%

4.4%

14.1%

6.0%

8.7%10.4%

15.0%

11.9%

6.9%

China①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩13.4% 13.1%

4.4%

12.3%

5.4%

9.5%10.6%

13.1%

12.3%

6.1%

India①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

12.4% 11.2%

4.4%

12.8%

4.5%

8.5%11.1%

15.8%

14.5%4.8%

Vietnam①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩13.3% 13.1%

5.6%

12.0%

5.3%

9.1%9.5%

13.8%

12.5%

5.8%

Myanmar①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

12.7% 13.7%

4.4%

12.7%

4.7%

8.4%10.6%

14.9%

11.9%

6.2%

Taiwan①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩

25.0%

15.0%

5.0%


➁ Related to natural disaster





⑦ Related to product/service and operation



➉ Related to governance



Risks similar to those chosen in 2018 ranked in the top 10 again for both Japan headquarters and Asian subsidiaries.

A conspicuous gap emerged between Japan headquarters and Asian subsidiaries in the perception of risks: Japan headquarters chose disasters and cyber-attack, which

are the risks that can have direct impact on business continuity, while Asian subsidiaries picked out risks more related to day-to-day business, such as price

competitiveness, which was presumably chosen because of the impact of new emerging forces, and fraud and corruption, which is distinctive of the Asian region.

For Asian subsidiaries, Information leakage ranked in the top 10 for the first time. This was because Asian subsidiaries had started using IT system in a wider area than

before and, therefore, had begun to pay more attention to the importance of information.

There is a gap of 11.0 points between Asian subsidiaries and Japan headquarters for Delay in response for law and industry standard change. Although the gap

narrowed from a year earlier, this remaining gap illustrated that a huge gulf still existed in the perception of how important the response to legal change was.

Comparison between the top 3 risks that Japan headquarters perceives to be prioritized for their overseas

subsidiaries and the top 3 risks that subsidiaries in Asia perceive to be prioritized

”What risks should be taken actions with priority?”: Japan headquarters and their subsidiaries

in Asia have different answers, as they did last year, showing the gap in perception between

them.


Headquarters in Japan *Ordinal numbers in brackets following

percentages show ranks in the survey in 2018.

Subsidiaries in Asia *Ordinal numbers in brackets following

percentages show ranks in the survey in 2018.

Compliance violation (④) 21.5%（No. 1） No. 1 Price competitiveness (①) 34.6%（No. 2）

Failure of governance over subsidiaries (⑩) 19.4%（No. 2） No. 2 Compliance violation (④) 25.8%（No. 1）

Deficiency in products/services quality control

process (⑦)18.7%（No. 3） No. 3

Shortage of resources due to outflow of existing

staff or difficulty in hiring staff (⑨)24.8%（No. 3）

Management’s/Employee’s fraud/corruption (⑥) 16.2%（No. 6） No. 4Delay in response for law and industry standard

change (④) 22.7%（No. 5）

Earthquake, flood and disasters (②) 15.8%（No. 4） No. 5 Exchange rate fluctuation (①) 21.5%（No. 4）

Shortage of resources due to outflow of existing staff

or difficulty in hiring staff (⑨)14.2%（No. 5） No. 6 Management’s/Employee’s fraud/corruption (⑥) 16.0%（No. 9）

Cyber-attack / Virus infection (⑧) 12.2%（No. 12） No. 7 High price in raw material or oil in the market (①) 16.0%（No. 6）

Exchange rate fluctuation (①) 12.1%（No. 7） No. 8 Labor costs soaring (⑨) 15.5%（No. 7）

Delay in response for law and industry standard

change (④) 11.7%（No. 10） No. 9

Deficiency in products/services quality control process

(⑦)11.7%（No. 8）

Information leakage (⑧) 11.7%（No. 8） No. 10 Information leakage (⑧) 9.8%（N/A）


30% 31%

35%

38%

34%

26%

19%

24% 25%

20% 22%

23%

19%

23%22%

17%

14%

16%

15%

19%

16%

15%

16%

15%16% 14%

12%

9%

8%10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2017年 2018年 2019年

Cash Theft

Top 3 risks to be prioritized (All Asia Top 10)

Price competitiveness ranks 1st for the first time, reflecting fiercer market competition in Asia

and no material violation of law and regulation by Japanese companies operating overseas in

2019.


* Percentages for the same year do not add up to 100%

because multiple answers have been allowed.

Price competitiveness

Compliance violation


staff or difficulty in hiring staff


change

Exchange rate fluctuation

Management’s/employee’s fraud/corruption

High price in raw material or oil in the market

Labor costs soaring

Deficiency in product/services quality control

process

Information leakage


Top 3 risks to be prioritized (rankings by country)

Survey results suggest that new emerging forces—Myanmar and Vietnam—are fueling the

price competition, as Asia’s low economic growth and increasing labor costs affect medium

developed countries.

※リスクはAsia全体の順位に沿って並べている


Risk Singapore China Taiwan Thailand Malaysia India Myanmar Vietnam Philippines Indonesia

Price competitiveness (①) No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 2 No. 4 No. 4 No. 5

Compliance violation (④) No. 2 No. 2 No. 2 No. 7 No. 4 No. 7 No. 4 No. 2 No. 4 No. 2


staff or difficulty in hiring staff(⑨)No. 4 No. 4 No. 3 No. 2 No. 3 No. 4 No. 1 No. 1 No. 2 No. 6


change (④)No. 5 No. 3

No. 11 or

lower No. 4 No. 6 No. 3 No. 2 No. 5 No. 1 No. 4

Exchange rate fluctuation (①) No. 9 No. 9 No. 3 No. 4 No. 2 No. 2 No. 5 No. 8No. 11 or

lower No. 1

Management’s/Employee’s fraud/corruption (⑥) No. 8 No. 5No. 11 or

lower No. 3 No. 9 No. 9 No. 6 No. 2 No. 8 No. 9

High price in raw material or oil in the market (①) No. 9 No. 8 No. 8 No. 9 No. 5 No. 4No. 11 or

lower No. 6 No. 3No. 11 or

lower

Labor costs soaring (⑨)No. 11 or

lower No. 5No. 11 or


lower

No. 11 or


lower No. 2

Deficiency in products/services quality control

process (⑦)

No. 11 or

lower

No. 11 or

lower No. 6 No. 4 No. 9 No. 7 No. 6 No. 10No. 11 or

lower No. 10

Information leakage (⑧) No. 7No. 11 or


lower

No. 11 or

lower

No. 11 or

lowerNo. 11 or


lower


[Part 2]

1.Situation of Frauds in Asia(1) Situation in fraud detection in the past 3 years

(2) Fraud types

(3) Departments where fraud was detected

(4) Means of fraud detection

(5) Maximum damage caused by fraud

(6) Position of perpetrators who caused the largest damage

2. Efforts to Take Measures for Frauds(1) Corporate culture to prevent frauds

(2) Current fraud risk prevention status

(3) Obstacles for taking measuring for/managing of fraud risk



Situation in fraud detection in the past 3 years (All Asia)

The number of cases in which a fraud is detected or suspected continues to increase, and it

now amounts close to about half in 2019.


31.3%

68.7%

38.9%

61.1%

46.6%

53.4%

All Asia

12.0%

88.0%

37.3%

62.7% 57.9%

42.1%

Indonesia

37.8%

62.2%

40.0%

60.0%

48.6%51.4%

Singapore

42.1%57.9%

38.3%

61.7%

47.3%

52.7%

Thailand

38.1%

61.9%

23.8%

76.2%

31.1%

68.9%

Malaysia

0.0%0.0%

100.0%

0.0%

38.5%

61.5%

Philippines

30.6%

69.4%

43.5%

56.5%

45.6%

54.4%

China

29.3%

70.7%

21.4%

78.6%

50.0%50.0%

India

0.0%0.0%

45.7%

54.3%

Vietnam

0 0

0 0

62.5%

37.5%

Myanmar

0 0

0 0 29.0%

71.0%

Taiwan

Fraud detected

Fraud not detected

* From inside: 2017, 2018, and 2019. In some

countries, no survey was conducted in

previous years.


0.0%

1.2%

17.3%

0.0%

6.2%

3.7%

7.4%

18.5%

6.2%

11.1%

33.3%

9.9%

29.6%

0.0%

2.0%

18.1%

2.0%

5.4%

2.0%

8.1%

9.4%

3.4%

10.7%

37.6%

17.5%

36.9%

2.0%

6.0%

6.0%

6.8%

7.6%

9.6%

12.0%

15.5%

15.9%

25.9%

33.5%

43.8%

56.2%

2019年

2018年

2017年

The percentage of inappropriate information usage jumps, as well as those of improper

spending and bribe. It is urgently necessary to establish a system to prevent these kinds of

frauds by, for example, improving internal control and enhancing the way of detecting frauds.

Improper spending type

Ratio(%)

2019 2018

44.6 50.6

36.6 38.7

給与に関する不正支払 18.8 10.7

Fraud types (All Asia / compared with 2018)


* Percentages for the same year do not add up to 100% because multiple answers have been allowed.

Improper spending

Bribe

Theft of inventory or other assets

Fraud in sales

Illegal conflict of interest

Concealment of liabilities or expense

Manipulation of sales/expenses cut-off

Bid-rigging / Cartel

Cash Theft

Inappropriate revenue recognition

Inappropriate evaluation of assets

Others

Fraud disbursement relating to purchasing

Fraud disbursement relating to expenses

Fraud disbursement relating to payroll

Inappropriate information usage /

Fraudulent Reporting


Bribe


Inappropriate information usage / Fraudulent Reporting


Cash Theft

Fraud in sales

Others

Fraud disbursement relating to checks


Fraud disbursement relating to purchase







48.8%

53.7%

31.7%

36.6%

26.8%

22.0%

2.4%

17.1%

14.6%

12.2% 14.6%

4.9%

9.8%

2.4%China

Pie charts visualizing percentages of various frauds by country

The most common frauds are improper spending and asset misappropriation, which directly

link to individuals’ interests, although there are some differences in their percentages among

countries/regions.

36.7%

36.7%

23.3%

20.0%

23.3%6.7%

36.7%

6.7%

13.3%

10.0%

6.7%

10.0%6.7%

10.0%

3.3% 3.3%Myanmar

33.3%

11.1%

11.1%

33.3%

11.1%

33.3%

11.1%

11.1%

11.1%

11.1%11.1%

Taiwan

47.4%10.5%

52.6%

42.1%36.8%

21.1%

21.1%

5.3%

26.3%

10.5%15.8%

15.8%

5.3% Malaysia

40.0%

20.0%

40.0%60.0%

20.0%

40.0%

Philippines

73.3%

26.7%

13.3%

6.7%

6.7%

6.7%

6.7%

6.7%

13.3%

6.7% India

43.8%

35.9%

33.5%

29.5%

25.9%

15.9%

15.5%

15.1%

12.0%

9.6%

7.6%

6.8% 6.0%

6.0% 3.2% 2.0%All Asia

39.4%

27.3%

27.3%

39.4%

18.2%3.0%

24.2%

18.2%

12.1%

6.1%

6.1% 6.1%

6.1%3.0%Indonesia

38.2%

44.1%

26.5%

35.3%

32.4%20.6%14.7%

14.7%

23.5%

20.6%

20.6%

20.6%

2.9%20.6%

5.9% 2.9%Singapore

34.1%

40.9%

50.0%

18.2%

25.0%

18.2%

13.6%

15.9%

4.5%

6.8%2.3%

2.3% 6.8%2.3%Thailand


61.9%

33.3%

42.9%38.1%

38.1%

38.1%

9.5% 19.0%

4.8%4.8%

4.8%Vietnam


* Percentages for the same year is over 100%



0.8%

1.2%

2.8%

5.5%

7.9%

9.1%

10.6%

12.2%

14.2%

14.6%

20.9%

25.6%

36.2%

47.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Departments where any fraud is detected (All Asia)

Sales departments record the largest number of fraud cases among all departments,

conspicuously higher than last year, presumably because of fiercer market competition.




Executive/Upper management

Human Resources

Marketing/Public relations

Customer service

Research and Development

Internal Audit

Legal

IT

Finance

Other

Accounting

Purchasing

Sales

Manufacturing and Production


13.2%

3.9%

5.3%

1.3%

17.1%

3.9%

18.4%

0.0%

23.7%

28.9%

48.7%

8.1%

6.7%

2.0%

8.7%

16.1%

13.4%

25.5%

0.0%

35.6%

34.9%

63.1%

3.1%

6.3%

7.1%

11.8%

15.7%

16.9%

20.9%

21.3%

32.7%

40.2%

63.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

2019年

2018年

2017年

Control Activities through business process

Means of fraud detection (All Asia)

An increasing number of fraud cases have been detected through internal audit, showing

again the importance and necessity of audits.




Internal Audit

External Audit

Whistle blowing (Internal)

Transfer or resignation of the person

Whistle blowing (External)

By chance

IT Control

Confession

Tax inspection / Regulatory

Other


Maximum damage caused by fraud (All Asia)

About 15% of the detected fraud cases cause damage of over 10 million yen each, signaling

that management needs to weigh the cost of prevention against the amount of damage.

28.8%

16.1%

24.3%

28.8%

30.9%

35.6%

30.1%

29.5%

23.0%

12.3%

14.8%

10.0%

5.4%5.0%

2.7% 0.8%

0.7% 1.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2017年 2018年 2019年

1 万円以上 10 万円未満 10 万円以上 100 万円未満 100 万円以上 1,000 万円未満

1,000 万円以上 1億円未満 1 億円以上 10 億円未満 10 億円以上 100 億円未満

100 億円以上

JPY1 million or more but less than JPY10 million

JPY100 million or more but less than JPY1 billion


JPY10 thousand or more but less than JPY100 thousand JPY100 thousand or more but less than JPY1 million

JPY10 million or more but less than JPY100 million

JPY10 billion or more

JPY1 billion or more but less than JPY10 billion


Position of perpetrators who caused the largest damage (All Asia)

Over 50% of frauds are committed by managers or those with higher authority, indicating the

necessity to implement an internal control and audit system that monitors managers and

executives.

6.8%

44.6%

44.6%

2.4% 1.6%

経営者・役員

正社員－管理職

正社員－非管理職

パートアルバイト派遣社員

その他


Full-time employees - manager

Full-time employees - non-manager

Part-time / Temporary staff

Management / Officer

Others


Corporate culture to prevent frauds

The key challenge is: to create a corporate culture that allows an employee to directly report

any issue that may lead to a fraud, as shown by Q3: monitor each other and Q8: encouraging

employees to report any fraud

51.1%

36.6%

21.9% 24.2%33.6%

26.1%

46.6%

24.2%

38.9%

53.0%

50.5%51.6%

51.2%

51.6%

40.5%

47.3%

8.1% 9.5%

24.7% 21.9%13.3%

20.1%11.5%

25.3%

1.9% 0.9% 2.8% 2.3% 1.9% 2.1% 1.4% 3.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1 十分である 2 まあ十分である 3 あまり十分でない 4 十分でない


Q1: Company mission and action guideline are clearly stated.

Q2: Managements are addressing fraud prevention through their words and behaviors.

Q3: Communicate and monitor each other by sharing goals and results of each department.

Q4: Problems are able to be presented to senior positions as well.

Q5: Problems are able to be presented to members of specialized units.

Q6: Quality has priority over short-term results.

Q7: Punishment for fraud is pervasively acknowledged.

Q8: Pointing out issues which might be fraud is stimulated.

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

Sufficient Modestly sufficient Not sufficient Insufficient


A relatively large number of companies answer that no internal whistle-blowing system has

been introduced, despite the fact that such a system has been proved effective.


Current fraud risk prevention status

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11Q1: Company policies for fraud prevention are established (e.g. Code of

conduct, compliance stipulation, manuals, and fraud prevention policies,

etc.)

Q2: Messages that states “all the frauds by managements are non-

permissive” are delivered.

Q3: Fraud prevention training to employees are provided.

Q4: Compliance consciousness survey with employees are performed.

Q5: Information of actual fraud cases are collected for risk assessment.

Q6: Whistle-blowing policies are established .

Q7: Internal audit is conducted for early detection of frauds.

Q8: Selection and management of business partners with the idea of fraud risk

management are performed.

Q9: HR policies with the idea of fraud risk management are performed.

Q10: J-SOX based whistle-blowing policies are leveraged.

Q11: Framework (incl. initial investigation, risk management, etc.) for fraud

detection (incl. possible cases) are established and performed.

Well acknowledged and being operated Implemented but acknowledgment and operations are not sufficient Not implemented


The keys to managing fraud risks are: to standardize operation processes and augment them

by an internal control system designed to prevent individual employees from acting at their

discretion; and to secure the personnel who can properly conduct such standardized

processes.


Obstacles for implementation of fraud risk prevention


Business operations run by specific personnel

Management shortage

Staffing shortage at job sites

Business manner gaps

Great pressure by budget and sales goals

Vulnerable information infrastructure

Unclear reporting lines

Great pressure by delivery schedule and customers.

Unclear role definition between group entities

Insufficient delegation of authority from headquarter


[Appendix 1]

Risk Management System in Asian Countries

1. Risk types subject to management

2. Top 3 risks prioritized by Japanese companies operating in Asia



The percentage of the risk related to economics (①) decreases as people become less

concerned about the possibility of soaring oil prices. On the other hand, the percentage of

the risk related to IT system (⑧) including information leakage increases.

*Figures in percentage above have been calculated, based on the ratios of the categorized risks chosen as ones subject to management, in a way that all percentages add up to 100%.

12.5%11.8%

4.9%

12.5%5.0%

8.9%10.3%

15.3%

12.2%

6.6%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

①経済環境関連

②自然災害関連

③政治・地政学関連

④法律・規制関連

⑤レピュテーション関連

⑥不正関連

⑦製品/サービスおよびオペ

レーション関連

⑧システム関連

⑨人材・労務関連

⑩ガバナンス関連

All Asia2018 2019

(Data label is for 2019)


Risk types subject to management (by category, compared with 2018)







⑦ Related to product

/service and operation





Risk types subject to management (compared with 2018)

The percentage of the risk related to economics decreases as people become less concerned

about the possibility of soaring oil prices. On the other hand, the percentage of the risk

related to IT system including information leakage increases.

3.4%

5.4%

4.1%

6.4%

6.7%

14.4%16.0%

9.8%

24.2%

20.4%14.9%

18.3%

21.6%27.1%

22.2%

29.6%

27.8%

38.1%33.0%

36.1%38.4%

32.5%

32.5%33.0%

32.7%

21.6%34.3%

57.7%42.0%

48.2%

33.8%52.6%

63.7%

48.5%

60.3%70.9%

73.5%60.3%

62.6%

77.1%67.5%

3.3%7.3%

9.8%

10.5%

10.8%

12.8%18.8%

20.0%

24.0%24.5%

25.8%

26.0%27.0%

29.0%30.1%

30.4%

30.6%33.6%

34.1%

34.4%38.4%39.3%

39.8%

40.8%

41.4%

42.8%

46.1%

49.3%50.1%

52.2%54.2%

64.1%

64.4%66.4%

66.9%

71.5%

71.5%71.7%

73.5%

74.4%80.9%

12 アフリカにおけるテロ、政治情勢

8 朝鮮半島情勢

20 風評被害等による株価の下落

11 中東・中近東におけるテロ、政治情勢

41 買収後の事業統合不全

13 北米・南米におけるテロ、政治情勢

37 過労死、長時間労働等労務問題の発生

22 コンダクトリスク

2 財政難

27 リコール

21 金融犯罪

40 子会社に対するガバナンス不全

24 カルテル談合等の組織不正

15 知的財産侵害

19 風評被害・不買運動等の発生

9 中国・ロシアにおけるテロ、政治情勢

7 疫病の蔓延（パンデミック）等の発生

16 公害等の環境関連法規制対応

18 訴訟被害

1 金融危機

38 労使問題

26 サプライチェーン寸断

23 財務報告の虚偽記載

29 設備事故

31 業務運用ミスによる多額損失発生

39 経営の機能不全

34 大規模システムダウン・情報逸出

5 原材料ならびに原油価格の高騰

28 製品/サービスの品質チェック体制の不備

30 顧客対応の不備

10 東南・南アジアにおけるテロ、政治情勢

6 地震・風水害等、災害の発生

36 人件費高騰

32 サイバー攻撃・ウイルス感染

25 役員・従業員の不正・贈収賄等

4 市場における価格競争

3 為替変動

33 情報漏えい

35 人材流失、人材獲得の困難による人材不足

17 法令遵守違反

14 法改正や業界基準変更時の対応の遅れ

2019年

2018年

14. Delay in response for law and industry standard change17. Compliance violation

35. Shortage of resources due to outflow of existing staff or difficulty in hiring staff33. Information leakage

3. Exchange rate fluctuation4. Price competitiveness

25. Management’s/employee’s fraud/corruption32. Cyber-attack / Virus infection

36. Labor costs soaring6. Earthquake, flood and disasters

10. Terrorism and political situation in South East Asia and South Asia30. Deficiency in Customer Services

28. Deficiency in products/services quality control process5. High price in raw material or oil in the market

34 . Largescale system down / loss of information39. Failure of proper management

31. Huge losses caused by operational mistakes29. Incident of facilities

23. Financial reporting misstatement26. Disrupted supply chain

38. Labor-management problem1. Financial crisis

18. Litigation damage 16. Response to environmental laws and regulations such as pollution

7. Spread of plague (Pandemic)9. Terrorism and political situation in China and Russia

19. Damage from unfounded rumors or boycott15. Intellectual property infringement

24. Organizational fraud, such as cartel, collusion40. Failure of governance over subsidiaries

21. Financial crime27. Product recall

2. Economic difficulties22. Conduct risk

37. Labor issues, such as death from overwork, long working hours13. Terrorism and Terrorism and political situation in Northern and Southern America

41. Failure of businesses integration after acquisition11. Terrorism and political situation in Near and Middle East

20. Stock price down by damage from unfounded rumors8. Situation in Korean Peninsula

12. Terrorism and political situation in Africa

All Asia



Top 3 risks that need to be addressed with priority (Compared with 2018)

Overall results show the impact of intensifying market competition. The risks related to law

and regulation as well as human resources remain prioritized, and the system-related risk

ranks higher in priority than before.

0.3%

0.3%

0.0%

1.0%

0.3%

1.5%

1.5%

0.8%

0.0%

0.5%

0.5%

1.3%

1.0%

1.8%

1.5%

1.8%

5.7%

2.8%

4.4%2.1%

3.6%

8.5%

7.5%

4.4%

4.9%

5.4%

6.4%

1.8%

6.7%

5.7%

4.4%

7.5%

14.4%15.5%

18.8%

13.7%

22.7%

21.9%

24.0%

34.3%30.7%

0.0%

0.2%

0.2%

0.3%

0.5%

0.7%

0.7%

0.9%

1.0%

1.0%

1.2%

1.2%

1.5%

1.7%

1.9%

2.4%

2.8%

4.0%

4.1%

4.5%

5.0%

5.3%

5.5%

6.0%

6.0%

6.2%

6.5%

6.7%6.9%

7.4%

8.6%

9.8%

11.7%

15.5%

16.0%

16.0%

21.5%

22.7%

24.8%

25.8%

34.6%

20 風評被害等による株価の下落12 アフリカにおけるテロ、政治情勢

8 朝鮮半島情勢13 北米・南米におけるテロ、政治情勢

11 中東・中近東におけるテロ、政治情勢41 買収後の事業統合不全

18 訴訟被害21 金融犯罪

37 過労死、長時間労働等労務問題の発生7 疫病の蔓延（パンデミック）等の発生

22 コンダクトリスク24 カルテル談合等の組織不正

27 リコール19 風評被害・不買運動等の発生

15 知的財産侵害23 財務報告の虚偽記載

38 労使問題34 大規模システムダウン・情報逸出

9 中国・ロシアにおけるテロ、政治情勢39 経営の機能不全

2 財政難30 顧客対応の不備

26 サプライチェーン寸断31 業務運用ミスによる多額損失発生

1 金融危機40 子会社に対するガバナンス不全

6 地震・風水害等、災害の発生10 東南・南アジアにおけるテロ、政治情勢

16 公害等の環境関連法規制対応29 設備事故

32 サイバー攻撃・ウイルス感染33 情報漏えい

28 製品/サービスの品質チェック体制の不備36 人件費高騰

5 原材料ならびに原油価格の高騰25 役員・従業員の不正・贈収賄等

3 為替変動14 法改正や業界基準変更時の対応の遅れ

35 人材流失、人材獲得の困難による人材不足17 法令遵守違反


2019年

2018年

All Asia


4. Price competitiveness17. Compliance violation

35. Shortage of resources due to outflow of existing staff or difficulty in hiring staff14. Delay in response for law and industry standard change

3. Exchange rate fluctuation25. Management’s/employee’s fraud/corruption5. High price in raw material or oil in the market

36. Labor costs soaring28. Deficiency in products/services quality control process

33. Information leakage32. Cyber-attack / Virus infection

29. Incident of facilities16. Response to environmental laws and regulations such as pollution10. Terrorism and political situation in South East Asia and South Asia

6. Earthquake, flood and disasters40. Failure of governance over subsidiaries

1. Financial crisis31. Huge losses caused by operational mistakes

26. Disrupted supply chain30. Deficiency in Customer Services

2. Economic difficulties39. Failure of proper management

09. Terrorism and political situation in China and Russia34. Largescale system down/loss of information

38. Labor-management problem23. Financial reporting misstatement15. Intellectual property infringement

19. Damage from unfounded rumors or boycott27. Product recall

24. Organizational fraud, such as cartel, collusion22. Conduct risk

7. Spread of plague (Pandemic)37. Labor issues, such as death from overwork, long working hours

21. Financial crime18. Litigation damage


13. Terrorism and Terrorism and political situation in Northern and Southern America8. Situation in Korean Peninsula

12. Terrorism and political situation in Africa20. Stock price down by damage from unfounded rumors


Risks in Indonesia are similar to those found in All Asia; however, more respondents in

Indonesia recognize the risk related to economics as the one subject to management than

other countries.

15.00%

10.96%

4.31%

12.54%3.29%

9.30%

8.04%

16.81%

12.72%

7.02%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連

⑦製品/サービスおよびオ

ペレーション関連




Indonesia25.0%

15.0%

5.0%





③ Related to politics and geopolitics









12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩



Risks in Indonesia are similar to those found in All Asia; however, more respondents in

Indonesia recognize the risk related to economics as the one subject to management than

other countries.

0.0%2.9%

4.3%2.9%

7.2%7.2%

11.6%13.0%

23.2%14.5%

23.2%21.7%

17.4%21.7%

17.4%10.1%

18.8%8.7%

30.4%44.9%

36.2%23.2%

37.7%31.9%

29.0%40.6%

47.8%42.0%

26.1%34.8%

62.3%53.6%

63.8%56.5%

62.3%58.0%

79.7%62.3%

56.5%68.1%

78.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい











28. Deficiency in products/services quality control process5. High price in raw material or oil in the market34. Largescale system down/loss of information

39. Failure of proper management31. Huge losses caused by operational mistakes

29. Incident of facilities23. Financial reporting misstatement

26. Disrupted supply chain38. Labor-management problem

1. Financial crisis18. Litigation damage

16. Response to environmental laws and regulations such as pollution7. Spread of plague (Pandemic)

9. Terrorism and political situation in China and Russia19. Damage from unfounded rumors or boycott

15. Intellectual property infringement24. Organizational fraud, such as cartel, collusion

40. Failure of governance over subsidiaries21. Financial crime

27. Product recall2. Economic difficulties

22. Conduct risk37. Labor issues, such as death from overwork, long working hours

13. Terrorism and Terrorism and political situation in Northern and Southern America41. Failure of businesses integration after acquisition

11. Terrorism and political situation in Near and Middle East20. Stock price down by damage from unfounded rumors

8. Situation in Korean Peninsula12. Terrorism and political situation in Africa

IndonesiaRisk types subject to management


Top 3 risks to be prioritized

A larger proportion of companies in Indonesia recognize as key issues the risks arising from

external environments, such as the risks related to exchange rate fluctuation, compliance

violation, and labor costs soaring.

36.0%

38.5%

21.7%

28.0%

21.2%

26.7%

12.0%11.5%

16.7%

36.0%

23.1%23.3%

36.0%

46.2%

38.3%

28.0%

32.7%

8.3%

4.0%

13.5%

11.7%

16.0%

34.6%

26.7%

8.0% 11.5% 10.0%8.0%

1.9%

6.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2017年 2018年 2019年

Indonesia

4 市場における価格競争 Price competitiveness

17法令遵守違反 Compliance violation

35人材流失、人材獲得の困難による人材不足 Shortage of

resources due to outflow of existing staff or difficulty in hiring staff

14法改正や業界基準変更時の対応の遅れ Delay in response for

law and industry standard change

3 為替変動 Exchange rate fluctuation

5 原材料ならびに原油価格の高騰 High price in raw material or oil

in the market

25役員・従業員の不正・贈収賄等 Management’s/employee’s

fraud/corruption

36人件費高騰 Labor costs soaring

28製品/サービスの品質チェック体制の不備 Deficiency in

products/services quality control process

33情報漏えい Information leakageInformation leakage


Compliance violation

Shortage of resources due to outflow of existing staff or

difficulty in hiring staff


change

Management’s/employee’s fraud/corruption

Labor costs soaring

Deficiency in product/services quality control

process

Price competitiveness

Exchange rate fluctuation

High price in raw material or oil in the market


Companies in Singapore are more likely to see the risks related to fraud / governance as the

ones subject to management, partly because companies there often function as regional

headquarters in Asia.

10.89%10.59%

6.32%

11.93%

6.19%

9.73%

9.21%

14.94%

10.93%

9.26%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Singapore

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















Companies in Singapore are more likely to see the risks related to fraud / governance as the

ones subject to management, partly because companies there often function as regional

headquarters in Asia.

12.2%18.9%18.9%

24.3%23.0%23.0%

32.4%39.2%

31.1%28.4%

33.8%58.1%

40.5%43.2%

41.9%31.1%

40.5%40.5%

44.6%37.8%

43.2%54.1%

55.4%36.5%

54.1%55.4%55.4%

51.4%51.4%

47.3%77.0%

63.5%73.0%

81.1%70.3%70.3%

77.0%83.8%

66.2%83.8%

81.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい






















13. Terrorism and Terrorism and political situation in Northern and Southern America41. Failure of businesses integration after acquisition



SingaporeRisk types under management



Although the risk related to compliance violation becomes less prioritized, the attention to

overall compliance in the region—including the response to law change and failure of

governance—remains high in Singapore.

30.4%

19.0%

34.2%

52.2%

42.9%

31.5%

15.2%

23.8%

19.2%

15.2%

19.0%17.8%

23.9%

28.6%

11.0%

8.7%9.5%

11.0%

19.6%

9.5%

12.3%

8.7%9.5% 9.6%

6.5%

9.5%

4.1%

21.7%

9.5%

15.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2017年 2018年 2019年

Singapore









in the market


fraud/corruption




33情報漏えい Information leakage



Since Thailand has more manufacturing bases than other Asian countries do, fewer

respondents in the country recognize the risk related to governance (⑩) as the one subject to

management.

12.27%12.86%

4.84%

11.66%

4.96%

8.83%11.37%

15.26%

12.04%5.90%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Thailand

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















Since Thailand has more manufacturing bases than other Asian countries do, fewer

respondents in the country recognize the risk related to governance (⑩) as the one subject to

management.

1.9%1.9%

9.7%11.7%

6.8%12.6%

9.7%23.3%

21.4%30.1%

25.2%19.4%

21.4%18.4%

31.1%16.5%

29.1%29.1%

34.0%32.0%

43.7%41.7%

43.7%52.4%

45.6%46.6%

53.4%56.3%57.3%

53.4%74.8%

76.7%66.0%

65.0%68.0%

72.8%69.9%69.9%

78.6%76.7%

81.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい






















13. Terrorism and political situation in Northern and Southern America41. Failure of businesses integration after acquisition



Risk types subject to management Thailand



Due to some changes in the market, the risks related to markets and labor costs soaring

skyrocket in percentage terms, while the risk related to compliance violation nose-dive.

15.8%

27.2%

34.0%

26.3%

34.6%

18.4%

31.6%

27.2%

23.3%

10.5%11.1%

19.4%

36.8%

21.0%

21.1%

13.6% 15.5%

21.1%

12.3%

20.4%

0.0%

12.3%

18.4%15.8%

22.2%

19.4%

10.5%9.9%

6.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

2017年 2018年 2019年

Thailand









in the market


fraud/corruption







More respondents in the Philippines choose the risks related to IT system (introduction and

operation of a system under the current laws) and natural disaster (development of a

business continuity plan) as the one subject to management than other countries.

11.07%13.83%

3.95%

12.65%2.96%

7.11%9.55%

20.42%

11.86%

6.59%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Philippines

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















More respondents in the Philippines choose the risks related to IT system (introduction and

operation of a system under the current laws) and natural disaster (development of a

business continuity plan) as the one subject to management than other countries.

0.0%6.7%

0.0%6.7%

0.0%6.7%6.7%6.7%

13.3%6.7%

13.3%6.7%6.7%

0.0%20.0%20.0%20.0%

13.3%26.7%26.7%26.7%

33.3%26.7%

33.3%53.3%

60.0%66.7%

40.0%26.7%

40.0%40.0%

73.3%40.0%

60.0%66.7%66.7%

40.0%80.0%

86.7%86.7%86.7%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい












34. Largescale system down / loss of information39. Failure of proper management










37. Labor issues, such as death from overwork, long working hours13. Terrorism and political situation in Northern and Southern America




Risk types subject to management Philippines



The risks related to operational and profit/loss aspects rank in the Philippines, including law

change (including the impact of tax law amendment), the hiring and retention of talent, and

high prices in raw material.

40.0%

20.0%

60.0%

20.0%20.0%

33.3%

40.0% 40.0%

0.0%

6.7%

20.0%

26.7%

20.0%

13.3%

0.0% 0.0%0.0% 0.0%

20.0% 20.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2018年 2019年

Philippines









in the market


fraud/corruption





Survey started in the Philippines in 2018



More companies in Malaysia choose the risk related to IT system, including Cyber-attack /

Virus infection and information leakage, as the ones subject to management than other Asian

countries.

13.50%11.25%

5.08%

12.49%3.63%

8.64%11.74%

15.97%

12.25%5.44%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Malaysia

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















More companies in Malaysia choose the risks related to IT system, including Cyber-attack /

Virus infection and information leakage, as the ones subject to management than other Asian

countries.

2.9%4.3%4.3%

8.7%13.0%

11.6%18.8%

26.1%26.1%

24.6%21.7%

17.4%24.6%

20.3%24.6%

26.1%39.1%

44.9%27.5%

33.3%29.0%

46.4%40.6%

50.7%40.6%

34.8%46.4%

60.9%63.8%

55.1%68.1%

50.7%65.2%

76.8%59.4%

69.6%79.7%

68.1%82.6%

73.9%82.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい


























Risk types subject to management Malaysia



High priority is still placed on the risks related to price competitiveness, exchange rate

fluctuation and personnel shortage, mainly against the background of the pay raises in

manufacturing industries in and after 2018.

25.0%26.2%

39.7%

35.0%35.7%

27.9%

40.0%

47.6%

29.4%

20.0%

26.2%

19.1%

35.0%35.7% 36.8%

30.0%

21.4%

25.0%

15.0%

7.1%

10.3%

15.0%

19.0%17.6%

15.0%

9.5%10.3%

0.0%

4.8%5.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2017年 2018年 2019年

Malaysia









in the market


fraud/corruption







More respondents in Vietnam perceive the risk related to human resources (⑨) as the one

subject to management than other Asian countries.

12.40%11.17%

4.37%

12.84%4.47%

8.49%11.08%

15.82%

14.52% 4.84%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Vietnam

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















More respondents in Vietnam perceive the risk related to human resources as the one subject

to management than other Asian countries.

0.0%4.1%

6.1%8.2%

6.1%12.2%

16.3%18.4%

14.3%22.4%

24.5%16.3%

18.4%32.7%

26.5%24.5%

22.4%26.5%

22.4%16.3%

36.7%44.9%

26.5%40.8%

38.8%30.6%

38.8%59.2%

51.0%44.9%

46.9%59.2%

77.6%63.3%

67.3%65.3%

71.4%71.4%

81.6%69.4%

83.7%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい


























Risk types subject to management Vietnam



Many companies in Vietnam perceive compliance-related risks—including compliance

violation and fraud/corruption—to be their priority as well as the risk related to shortage of

resources.

0.0%0.0%

2.0%0.0%0.0%0.0%0.0%

2.0%0.0%0.0%

2.0%0.0%0.0%

2.0%0.0%0.0%

4.1%2.0%2.0%

0.0%4.1%

0.0%8.2%

6.1%2.0%

0.0%6.1%

4.1%4.1%

8.2%8.2%

14.3%12.2%

18.4%24.5%

30.6%14.3%

26.5%32.7%

30.6%28.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%







18 訴訟被害

21 金融犯罪





27 リコール




38 労使問題




2 財政難




1 金融危機





29 設備事故


33 情報漏えい


36 人件費高騰



3 為替変動





* Figures for only the year of 2019 are shown because this is the first survey in Vietnam2019 Survey on Risk Management and Frauds of Japanese Companies operating in Asian Countries46











9. Terrorism and political situation in China and Russia34. Largescale system down / loss of information







13. Terrorism and political situation in Northern and Southern America8. Situation in Korean Peninsula


Vietnam


Fewer companies in Myanmar pick out governance-related risks than other Asian countries,

presumably because priority is placed on the response to external risks, such as shortage of

resources, to stabilize operations first.

13.33%13.12%

5.60%

11.97%

5.25%

9.13%9.54%

13.82%

12.47%5.77%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Myanmar

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















5.7%3.8%

11.3%11.3%

7.5%9.4%

24.5%9.4%

35.8%13.2%

26.4%20.8%

34.0%20.8%

26.4%20.8%

32.1%20.8%

26.4%37.7%

35.8%17.0%

28.3%34.0%

47.2%34.0%

28.3%34.0%

30.2%64.2%

69.8%62.3%

49.1%54.7%

66.0%69.8%

62.3%66.0%

69.8%64.2%

83.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい





Fewer companies in Myanmar picked out governance-related risks than other Asian countries,

presumably because priority is placed on the response to external risks, such as personnel

shortage, to stabilize operations first.






















Risk types subject to management Myanmar


Many companies in Myanmar recognize that the key is to operate in a stable manner by

addressing risks related to unclear regulations and a high turnover of staff.

0.0%0.0%0.0%0.0%0.0%

2.1%2.1%

0.0%6.3%

2.1%2.1%

4.2%0.0%0.0%0.0%

4.2%6.3%

2.1%2.1%

8.3%8.3%

12.5%4.2%

12.5%10.4%

4.2%4.2%

8.3%0.0%

8.3%4.2%4.2%

12.5%4.2%

8.3%12.5%

14.6%31.3%

41.7%20.8%

31.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%







18 訴訟被害

21 金融犯罪





27 リコール




38 労使問題




2 財政難




1 金融危機





29 設備事故


33 情報漏えい


36 人件費高騰



3 為替変動





* Figures for only the year of 2019 are shown because this is the first survey in Myanmar2019 Survey on Risk Management and Frauds of Japanese Companies operating in Asian Countries49




















Top 3 risks to be prioritized Myanmar


Many respondents in China choose the risk related to the response to law and regulation as

the key issue, showing their high interest in law and regulation-related risks.

11.59%10.97%

4.42%

14.13%

6.00%

8.68%10.39%

15.01%

11.89%

6.93%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






China

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















Many respondents in China choose the risk related to the response to law and regulation as

the key issue, showing their high interest in law and regulation-related risks.

2.0%13.3%14.3%

6.1%13.3%13.3%

19.4%16.3%

22.4%33.7%

25.5%34.7%

32.7%45.9%

38.8%70.4%

36.7%56.1%

49.0%34.7%

40.8%46.9%

41.8%38.8%

37.8%43.9%

49.0%49.0%

62.2%56.1%

12.2%60.2%

76.5%71.4%

75.5%81.6%

68.4%78.6%

73.5%79.6%

81.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい


























Risk types subject to management China



Many respondents in China perceive the environmental law and regulation aimed at

preventing pollution and political circumstances as risks, in addition to the risks related to

price competitiveness, compliance violation, and law and regulation change.

29.6%

31.4%

35.1%36.1%

34.9%

29.9%

20.4%20.9% 20.6%

15.7%

25.6%

27.8%

12.0% 12.2%13.4%

12.0%

18.6%

16.5%

19.4%

16.9%

19.6%20.4%

11.6%

19.6%20.4%

13.4%

9.3%

6.5%

8.1%9.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

2017年 2018年 2019年

China









in the market


fraud/corruption







Many respondents in Taiwan choose the risks related to natural disaster and law and

regulation, against the background of the typhoons and earthquakes that hit Taiwan and the

amendments to the Company Act and the Labor Standards Law in 2018.

12.66% 13.67%

4.44%

12.66%4.68%

8.35%10.55%

14.87%

11.87%

6.24%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






Taiwan

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















2.6%10.3%

5.1%5.1%5.1%

12.8%20.5%

10.3%12.8%

15.4%20.5%

15.4%30.8%30.8%

28.2%51.3%

12.8%33.3%

20.5%25.6%

41.0%28.2%

30.8%35.9%35.9%

46.2%33.3%

35.9%41.0%

69.2%12.8%

84.6%33.3%

59.0%56.4%

76.9%74.4%

66.7%74.4%

66.7%74.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい





Many respondents in Taiwan choose the risks related to natural disaster and law and

regulation, against the background of the typhoons and earthquakes that hit Taiwan and the

amendments to the Company Act and the Labor Standards Law in 2018.







28. Deficiency in products/services quality control process05. High price in raw material or oil in the market34. Largescale system down / loss of information











13. Terrorism and political situation in Northern and Southern America41. Failure of businesses integration after acquisition



Risk types subject to management Taiwan



About half the companies surveyed in Taiwan recognize the risk related to price

competitiveness as the key issue, followed by the risks related to compliance violation,

human resources, and exchange rate fluctuation.

0.0%0.0%0.0%

2.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%

5.6%2.8%

13.9%2.8%

5.6%16.7%

0.0%2.8%

5.6%2.8%

13.9%0.0%

5.6%5.6%

2.8%19.4%

16.7%8.3%

13.9%8.3%

25.0%11.1%

25.0%30.6%

47.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%







18 訴訟被害

21 金融犯罪





27 リコール




38 労使問題




2 財政難




1 金融危機





29 設備事故


33 情報漏えい


36 人件費高騰



3 為替変動





* Figures for only the year of 2019 are shown because this is the first survey in Taiwan

Taiwan






















Awareness is growing in India of the risk related to economics (①)—including fiercer market

competition amid slowing economy, and soaring price of oil—and so is the awareness of the

risk related to human resources (⑨)—including labor costs soaring.

13.35%13.05%

4.35%

12.28%

5.37%

9.52%10.62%

13.05%

12.28%6.14%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%






⑥不正関連






India

12.5% 11.8%

5.0%

12.6%

5.0%

8.9%10.3%

15.3%

12.0%

6.6%

All Asia①

②

③

④

⑤

⑥⑦

⑧

⑨

⑩
















Awareness is growing in India of the risk related to economics (①)—including fiercer market

competition amid slowing economy, and soaring price of oil—and so is the awareness of the

risk related to human resources (⑨)—including labor costs soaring.

3.1%3.1%

12.5%18.8%

15.6%12.5%

28.1%15.6%

31.3%31.3%

37.5%18.8%

28.1%31.3%31.3%

9.4%37.5%

34.4%37.5%

50.0%37.5%37.5%

43.8%37.5%

34.4%40.6%

34.4%43.8%

62.5%56.3%

59.4%68.8%

56.3%56.3%

68.8%81.3%

65.6%68.8%

78.1%71.9%

75.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%









2 財政難

27 リコール

21 金融犯罪








18 訴訟被害

1 金融危機

38 労使問題



29 設備事故









36 人件費高騰




3 為替変動

33 情報漏えい


























Risk types subject to management India



Demand is growing in India to address the risks related to the intensifying price competition

in the market amid a slowing economy as well as the exchange rate fluctuation because of

the falling rupee.

37.5%35.7%

56.3%

37.5%

42.9%

15.6%

5.0%

21.4%

18.8%

30.0%

21.4% 21.9%

2.5%

35.7%37.5%

12.5%

7.1%

18.8%

12.5%

7.1%

12.5%

15.0%

7.1%

9.4%

17.5%

21.4%

15.6%

7.5% 7.1%

9.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2017年 2018年 2019年

India









in the market


fraud/corruption







[Appendix 2]

Frauds That Have Occurred in Asian Countries

1. Fraud types



0.0%

3.0%

6.1%

6.1%

0.0%

6.1%

6.1%

12.1%

18.2%

24.2%

3.0%

18.2%

39.4%

27.3%

27.3%

39.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

談合・カルテル

小切手に関する不正支払

負債・費用の隠蔽

その他

不適切な資産評価等

不適切な収益認識

費用・収益期間帰属操作

売上入金に関する不正

給与に関する不正支払

現預金の窃盗

違法な利益相反

情報の不正利用、不正な報告

購買に関する不正支払

在庫・その他資産横領

経費に関する不正支払

賄賂

Indonesia

Bribe

Fraud types

Many companies in Indonesia perceive frauds related to compliance violation including bribe

as the key risk, in addition to frauds committed by employees, such as asset

misappropriation

Asset Misappropriation

Financial Statement Fraud

Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


2.9%

5.9%

20.6%

2.9%

20.6%

20.6%

20.6%

23.5%

14.7%

14.7%

20.6%

32.4%

35.3%

26.5%

44.1%

38.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Singapore

Fraud types

The percentage of frauds related to inappropriate information usage / fraudulent reporting is

high in Singapore, in addition to asset misappropriation including Fraud disbursement

relating to expenses and purchasing.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


Fraud types

Following 2018, many respondents in Thailand choose frauds related to corruption as the key

risk as well as frauds related to misappropriation and improper disbursement.

2.3%

0.0%

0.0%

6.8%

2.3%

2.3%

6.8%

4.5%

15.9%

13.6%

18.2%

25.0%

18.2%

50.0%

40.9%

34.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Thailand



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

40.0%

20.0%

0.0%

0.0%

60.0%

40.0%

20.0%

40.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Philippines

Fraud types

The percentage of frauds related to the disbursement for purchasing is the highest in the

Philippines, followed by frauds related to inventories/other assets, salary/wages, and

facilitation payments.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


5.3%

15.8%

0.0%

0.0%

15.8%

0.0%

10.5%

26.3%

5.3%

21.1%

21.1%

36.8%

42.1%

52.6%

10.5%

47.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Malaysia

Fraud types

Similarly to last year, the percentage of misappropriation of inventories/other assets is the

highest in Malaysia. Also, the percentage of fraud disbursement relating to purchasing and

that of frauds related to bribe is growing.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


4.8%

0.0%

4.8%

0.0%

0.0%

0.0%

4.8%

0.0%

19.0%

9.5%

38.1%

38.1%

38.1%

42.9%

33.3%

61.9%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Vietnam

Fraud types

The percentage of frauds related to bribe is outstandingly high in Vietnam, with the

percentages of frauds related to misappropriation and improper disbursement being also

relatively high.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


3.3%

3.3%

10.0%

6.7%

10.0%

6.7%

10.0%

13.3%

6.7%

36.7%

6.7%

23.3%

20.0%

23.3%

36.7%

36.7%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Myanmar

Fraud types

Many respondents in Myanmar choose frauds related to cash management and improper

spending for expenses as the key risks, in addition to bribe (with authorities), because the

practice of cash transactions is still common.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


0.0%

0.0%

2.4%

9.8%

4.9%

14.6%

12.2%

14.6%

17.1%

2.4%

22.0%

26.8%

36.6%

31.7%

53.7%

48.8%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

China

Fraud types

The percentages of fraud disbursement relating to expenses, bribe, and inappropriate

information usage are high in China. The increase in Bribe reflects tightened law and

regulation.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


0.0%

0.0%

11.1%

11.1%

0.0%

11.1%

11.1%

11.1%

33.3%

11.1%

0.0%

33.3%

0.0%

11.1%

11.1%

33.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

Taiwan

Fraud types

One in three companies that have experienced fraud cases in Taiwan recognize corruption,

inappropriate information usage, and frauds related to payroll as key risks.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


0.0%

6.7%

0.0%

13.3%

6.7%

0.0%

0.0%

0.0%

6.7%

0.0%

6.7%

6.7%

6.7%

13.3%

26.7%

73.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%




その他






現預金の窃盗






賄賂

India

Fraud types

Attention is high in India to frauds related to fraud disbursement and misappropriation, in

addition to corruption, which reflects tightened regulations against corruption.



Corruption

Other fraud







Cash theft


Fraud in sales




Others




Bribe


Contact

Asia Pacific Region

Yoshifumi Yanagisawa

[email protected]

+65 8318 3536

Indonesia

Hideo Minowa

[email protected]

+62 8577 9666 201

Singapore

Tommy Ohashi

[email protected]

+65 6800 2317

Thailand

Satoshi Akao

[email protected]

+66 98 297 1874

Philippines

Hiroyuki Hanaoka

[email protected]

+63 2 581 9098

Malaysia

Yasuharu Okamoto

[email protected]

+60 11 6162 4708

Vietnam

(Hanoi)

Sumihito Kido

[email protected]

+84 24 6288 3568

(Ho Chi Minh)

Gen Takaishi

[email protected]

+84 28 3910 0751

Myanmar

Eijun Arakawa

[email protected]

+95 92 5559 1224

China

(Shanghai)

Masaki Ishii

[email protected]

+86 21 23166356

(Beijing)

Yuji Koike

[email protected]

+86 158 1156 6631

Taiwan

Tsuyoshi Nakamura

[email protected]

+886 2 2725-9988 #3755

India

Tamon Hatakeyama

[email protected]

+91 8447709450

70

mailto:[email protected]













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