Nissan 2012 Annual Report Download - page 40

4) Supply Chain Continuity
Control was enhanced as follows to prepare for increased supplier risk.
Response to suppliers’ financial risk
(1) Risk assessment (annual)
• Work with Alliance partner Renault to conduct financial assessments of suppliers based on the
latest data on a global basis.
(2) Prompt decision on risk aversion
• Prompt decision making by a cross functional committee based on risk assessment findings
• Thoroughgoing monthly management of risks for each supplier and anticipated expenditures
• Steady implementation of the above operational process
Response to suppliers’ disaster risk
(1) Ensuring business continuity
In fiscal 2011, cooperation with suppliers was an essential factor in the recovery from natural disasters
like the Great East Japan Earthquake and the floods in Thailand. The fruits of such efforts included
support for affected suppliers and early restart of production. Some of the major initiatives are as
follows:
• Sharing of information relating to production recovery with suppliers frequently and from an early stage
• Soliciting of feedback from suppliers in advance of the rolling blackouts and weekend operations
during the summer period, enabling the provision of support for power shortages as necessary
• Establishment of a BCP for the supply chain (for both Japan and Thailand).
(2) BCPs for overseas operations
In fiscal 2012, Nissan plans to introduce measures taken in Japan to overseas operations besides
Thailand and to establish similar BCPs for those regions.
5) Risk Financing and Loss Prevention
Global Insurance Management Policy
Nissan manages hazard risk on a global basis with risk financing techniques that combine self-
retained risk with external risk transfer via insurance.
In order to minimize the cost of risk, Nissan adheres to the following global insurance management
policy. This policy has provided appropriate coverage for damage resulting from the unpredictable and
massive disasters that the world has seen in recent years.
• Predictable risks with low impact and high frequency
→Retained risks up to an acceptable level on a consolidated basis by the company
• Unpredictable risks with low frequency and high impact or shock value
→
Risks whose financial impact may exceed the acceptable level of self-retention are
transferred outside the company via insurance
Global Insurance Program
In order to minimize the cost of hazard risks and manage risks occurring globally and interdependently
in a concentrated manner, global insurance programs have been established for main lines of
insurance. The Finance Department in the Global Headquarters decides insurance conditions and
structures, and negotiates directly with insurance companies for these global programs. The insurance
companies are important strategic partners, and they are thus decided in consideration of risk spread
and financial solvency.
The following risks are covered in this way.
• Property damage and business interruption by accidents
The program covers risks not only for property damage but also for business interruption and
contingent business interruption due to accidents, taking into consideration the global expansion
of the supply chain for products and parts. Coverage limits are determined based on the probable
maximum loss amount measured by third-party experts.
We achieved further improvement and optimization of insurance conditions by negotiating with
insurance companies together with our Alliance partner Renault from fiscal 2011.
Innovation & Power of brandYear 2 Power 88 Performance Corporate Data
Corporate Governance 39
NISSAN Annual Report 2012Maintaining Trust Through Transparency