Osamu Fujimoto
Economic Impact of STC(Strategic Trade Control) from the Industry’s viewpoint -Experience of Japan
Osamu Fujimoto CISTEC (Center for Information on Security Trade Control) Japan Copyright CISTEC(C) 2014 All rights reserved.
Contents 1. What is Economic Impact of STC for Company? 2. Huge Damage in case of STC breach 3. Mission of STC for Company
4. Company’s Efforts to realize good cost-performance management [Reference Slides] [A. Company’s Risk Management System] [B. Company’s Measures for the better cost-
performance Management] Copyright CISTEC(C) 2014 All rights reserved.
1. What is Economic Impact of STC for Company? (1) Positive: 1.Passport to enter Business with top class companies -Company of breach/concerns avoided -Reliable company selected 2.Reliable brand Image -Socially evaluated as a good reliable company
Copyright CISTEC(C) 2014 All rights reserved.
1. What is Economic Impact of STC for Company? (2) Negative: 1.Penalty/Reputation Damage by the breach 2.Business Risk by promoting a business of concern & Business Loss by giving up a business of concern
3.Management Cost -Cost for the STC personnel -Education, IT etc.
Copyright CISTEC(C) 2014 All rights reserved.
2. Huge Damage in case of STC breach
Because STC is directly connected to each country’s National Security, Breached is Enemy of the Country. [ Japanese case in 1987]
Copyright CISTEC(C) 2014 All rights reserved.
3. Mission of STC for Company 1. Risk Management to avoid Huge Damage [For details of Company’s Risk Management System, please look at Reference Slides A.]
2. Effective Performance by the Minimum cost
Copyright CISTEC(C) 2014 All rights reserved.
4. Company’s efforts to realize good Cost-Performance management 4-1. Performance of STC 4-2. Cost of STC 4-3. Effectiveness of Priority Control [For the concrete measures of company to realize better cost-performance, please look at Reference Slides B.]
Copyright CISTEC(C) 2014 All rights reserved.
4-１. Performance of STC（１） Performance of STC = Positive Effect (Business chance with top companies, Brand Image Up etc.) + Prevention Effect of Negative Factor (Damage by breach, Loss by giving up a business of concern etc.) ≒ Expected Prevented Amount of Damage by breach ≒ Expected Prevented STC Risk
Copyright CISTEC(C) 2014 All rights reserved.
4-１．Performance of STC（２） STC Risk ＝ƒ（Scale of Company/Business, Degree of Sensitive Product/Sensitive area,・・・）
STC Risk
Positive Correlation
Sales Amount, Export Amount, Sensitive Product Ratio etc. Copyright CISTEC(C) 2014 All rights reserved.
4-１．Performance of STC（3） It is possible to reduce Risk by taking appropriate measures.
Original Risk STC Risk
Performance of STC Controlled Risk
Sales Amount, Export Amount, Sensitive Product Ratio etc. Copyright CISTEC(C) 2014 All rights reserved.
4-１. Performance of STC（4） 《Example of reducing STC Risk》 High Sensitive Product Ratio ⇒Stringent Product Classification Management ⇒Reduce risk value by reducing occurrence probability Original Risk STC Risk
Controlled Risk
Sensitive Product Ratio Copyright CISTEC(C) 2014 All rights reserved.
4-2．Cost of STC Cost of STC is almost the personnel cost in charge of STC, except IT cost.
Try to use all personnel resources of other division.（Personnel cost of other division is fixed cost. It will not be cost-up to increase the productivity.）
Using other resources like CISTEC is also costsaving. Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control (1)
【Average Risk】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control (2)
【Export to Country A】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control(3)
【Export to Country B】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Ｅｆｆｅｃｔｉｖｅｎｅｓｓ of Priority Control (4)
【Export to Country C】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Export Control (5)
【Export to Country D】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control (6)
【Export to Country D】 Original Risk STC Risk
Higher STC effect by concentrating on Higher sensitive country
Higher Effect of STC Controlled Risk
Effectiveness of Priority Control
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
In the last, 1.Huge STC Risk never disappear as long as company exists. 2.Risk Management System should be founded considering whether company will be accepted in case of breach. 3.At the same time, Company should take into consideration “high performance by minimum cost”, taking 1)Priority Control Method and Using 2)All internal resources and outside resources like CISTEC.
Copyright CISTEC(C) 2014 All rights reserved.
Thank you for your attention!
CISTEC English Top page http://www.cistec.or.jp/english/index.html
Copyright CISTEC(C) 2014 All rights reserved.
Reference Slide
Copyright CISTEC(C) 2014 All rights reserved.
A. Company’s Risk Management System (1) -Management System which satisfies Accountability/Transparency/Record Duty -Mandatory points of Internal Export Control System ① Export Control Structure (Organization &Rule) ② Transaction Screening ③ Shipping Control ④ Audit ⑤ Education/Guidance ⑥ Record ⑦ Report (Model ICP supplied by CISTEC include all of above points and it help Company found and operate its management system efficiently.) -Dynamic maintenance Required, because business environment always changes. Copyright CISTEC(C) 2014 All rights reserved.
A. Company’s Risk Management System (2) PLAN
Foundation
Organization Control Rule －Procedure －Document －IT System －（Audit Guide）
Record
⑥
CP
Education
①Export Control Strucure
⑤
ACTION
DO
CHECK
Operation
Verification
②Transaction Screening -Product Classification -End User/End Use
③Shipping Control （Technology Transfer）
⑥Record
Education Control Text Document Education Detailed Evidence Record Rules Document
Regulation Change Accident
Refoundation
Gov.
⑦ Report
⑤Guidance
・Revision of System
・Revision of Operation Inspection by Gov. ④Audit
Penalty
Self Aware Explanation Letter Audit Report
Copyright CISTEC(C) 2014 All rights reserved.
Improvement Report
B. Company’s Measures for the better costperformance Management (1) A. Company’s Mind Setup (Using All resource) Heighten Awareness of all employees and let them watch/take appropriate action. B. Using CISTEC (Outside resource) Seminar, Guidebook, User Information DB, Consultation Service, Item Classification Verification Service etc.
Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (2) C. Resource allocation ①Priority allocation to High risk Business/Function ②Double responsibility Local Compliance Officer in each business group ③Use of other administration division Legal, Audit, Personnel, Logistics etc.
Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (3) D. Use of ＩＴ lots of merits -Easy to explain to outside -No exception (flexibility) -No Human Error -Automated Record Examples -Item classification Data Base -Shipping Control System -Customer Data Base -HP for STC -e-learning Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (4) E. Procedure ①Priority Thick control for Big risk business As a result of screening by Business Group, big risk business is required to be authorized and watched by STC Division
②Priority Thin control for Small risk business ③Tool example: Screening Check Panel
Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (5) E. Procedure ④STC items ＢＵＩＬＴ-ＩＮ on other existing documents (Example: STC Screened Results in Shipping Instruction)
⑤STC Procedure ＢＵＩＬＴ-ＩＮ on business procedure (Example: Product Release Decision needs completion of Product Classification work)
Copyright CISTEC(C) 2014 All rights reserved.
Osamu Fujimoto CISTEC (Center for Information on Security Trade Control) Japan Copyright CISTEC(C) 2014 All rights reserved.
Contents 1. What is Economic Impact of STC for Company? 2. Huge Damage in case of STC breach 3. Mission of STC for Company
4. Company’s Efforts to realize good cost-performance management [Reference Slides] [A. Company’s Risk Management System] [B. Company’s Measures for the better cost-
performance Management] Copyright CISTEC(C) 2014 All rights reserved.
1. What is Economic Impact of STC for Company? (1) Positive: 1.Passport to enter Business with top class companies -Company of breach/concerns avoided -Reliable company selected 2.Reliable brand Image -Socially evaluated as a good reliable company
Copyright CISTEC(C) 2014 All rights reserved.
1. What is Economic Impact of STC for Company? (2) Negative: 1.Penalty/Reputation Damage by the breach 2.Business Risk by promoting a business of concern & Business Loss by giving up a business of concern
3.Management Cost -Cost for the STC personnel -Education, IT etc.
Copyright CISTEC(C) 2014 All rights reserved.
2. Huge Damage in case of STC breach
Because STC is directly connected to each country’s National Security, Breached is Enemy of the Country. [ Japanese case in 1987]
Copyright CISTEC(C) 2014 All rights reserved.
3. Mission of STC for Company 1. Risk Management to avoid Huge Damage [For details of Company’s Risk Management System, please look at Reference Slides A.]
2. Effective Performance by the Minimum cost
Copyright CISTEC(C) 2014 All rights reserved.
4. Company’s efforts to realize good Cost-Performance management 4-1. Performance of STC 4-2. Cost of STC 4-3. Effectiveness of Priority Control [For the concrete measures of company to realize better cost-performance, please look at Reference Slides B.]
Copyright CISTEC(C) 2014 All rights reserved.
4-１. Performance of STC（１） Performance of STC = Positive Effect (Business chance with top companies, Brand Image Up etc.) + Prevention Effect of Negative Factor (Damage by breach, Loss by giving up a business of concern etc.) ≒ Expected Prevented Amount of Damage by breach ≒ Expected Prevented STC Risk
Copyright CISTEC(C) 2014 All rights reserved.
4-１．Performance of STC（２） STC Risk ＝ƒ（Scale of Company/Business, Degree of Sensitive Product/Sensitive area,・・・）
STC Risk
Positive Correlation
Sales Amount, Export Amount, Sensitive Product Ratio etc. Copyright CISTEC(C) 2014 All rights reserved.
4-１．Performance of STC（3） It is possible to reduce Risk by taking appropriate measures.
Original Risk STC Risk
Performance of STC Controlled Risk
Sales Amount, Export Amount, Sensitive Product Ratio etc. Copyright CISTEC(C) 2014 All rights reserved.
4-１. Performance of STC（4） 《Example of reducing STC Risk》 High Sensitive Product Ratio ⇒Stringent Product Classification Management ⇒Reduce risk value by reducing occurrence probability Original Risk STC Risk
Controlled Risk
Sensitive Product Ratio Copyright CISTEC(C) 2014 All rights reserved.
4-2．Cost of STC Cost of STC is almost the personnel cost in charge of STC, except IT cost.
Try to use all personnel resources of other division.（Personnel cost of other division is fixed cost. It will not be cost-up to increase the productivity.）
Using other resources like CISTEC is also costsaving. Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control (1)
【Average Risk】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control (2)
【Export to Country A】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control(3)
【Export to Country B】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Ｅｆｆｅｃｔｉｖｅｎｅｓｓ of Priority Control (4)
【Export to Country C】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Export Control (5)
【Export to Country D】 STC Risk
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
4-3. Effectiveness of Priority Control (6)
【Export to Country D】 Original Risk STC Risk
Higher STC effect by concentrating on Higher sensitive country
Higher Effect of STC Controlled Risk
Effectiveness of Priority Control
Export Amount Copyright CISTEC(C) 2014 All rights reserved.
In the last, 1.Huge STC Risk never disappear as long as company exists. 2.Risk Management System should be founded considering whether company will be accepted in case of breach. 3.At the same time, Company should take into consideration “high performance by minimum cost”, taking 1)Priority Control Method and Using 2)All internal resources and outside resources like CISTEC.
Copyright CISTEC(C) 2014 All rights reserved.
Thank you for your attention!
CISTEC English Top page http://www.cistec.or.jp/english/index.html
Copyright CISTEC(C) 2014 All rights reserved.
Reference Slide
Copyright CISTEC(C) 2014 All rights reserved.
A. Company’s Risk Management System (1) -Management System which satisfies Accountability/Transparency/Record Duty -Mandatory points of Internal Export Control System ① Export Control Structure (Organization &Rule) ② Transaction Screening ③ Shipping Control ④ Audit ⑤ Education/Guidance ⑥ Record ⑦ Report (Model ICP supplied by CISTEC include all of above points and it help Company found and operate its management system efficiently.) -Dynamic maintenance Required, because business environment always changes. Copyright CISTEC(C) 2014 All rights reserved.
A. Company’s Risk Management System (2) PLAN
Foundation
Organization Control Rule －Procedure －Document －IT System －（Audit Guide）
Record
⑥
CP
Education
①Export Control Strucure
⑤
ACTION
DO
CHECK
Operation
Verification
②Transaction Screening -Product Classification -End User/End Use
③Shipping Control （Technology Transfer）
⑥Record
Education Control Text Document Education Detailed Evidence Record Rules Document
Regulation Change Accident
Refoundation
Gov.
⑦ Report
⑤Guidance
・Revision of System
・Revision of Operation Inspection by Gov. ④Audit
Penalty
Self Aware Explanation Letter Audit Report
Copyright CISTEC(C) 2014 All rights reserved.
Improvement Report
B. Company’s Measures for the better costperformance Management (1) A. Company’s Mind Setup (Using All resource) Heighten Awareness of all employees and let them watch/take appropriate action. B. Using CISTEC (Outside resource) Seminar, Guidebook, User Information DB, Consultation Service, Item Classification Verification Service etc.
Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (2) C. Resource allocation ①Priority allocation to High risk Business/Function ②Double responsibility Local Compliance Officer in each business group ③Use of other administration division Legal, Audit, Personnel, Logistics etc.
Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (3) D. Use of ＩＴ lots of merits -Easy to explain to outside -No exception (flexibility) -No Human Error -Automated Record Examples -Item classification Data Base -Shipping Control System -Customer Data Base -HP for STC -e-learning Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (4) E. Procedure ①Priority Thick control for Big risk business As a result of screening by Business Group, big risk business is required to be authorized and watched by STC Division
②Priority Thin control for Small risk business ③Tool example: Screening Check Panel
Copyright CISTEC(C) 2014 All rights reserved.
B. Company’s Measures for the better costperformance Management (5) E. Procedure ④STC items ＢＵＩＬＴ-ＩＮ on other existing documents (Example: STC Screened Results in Shipping Instruction)
⑤STC Procedure ＢＵＩＬＴ-ＩＮ on business procedure (Example: Product Release Decision needs completion of Product Classification work)
Copyright CISTEC(C) 2014 All rights reserved.
