Scope of this report - NRI · PDF fileScope of this report This report focuses on NRI activities, ... Seven-Eleven Japan Co., Ltd., stores throughout Japan, and the Postal Advanced

Scope of this reportThis report focuses on NRI activities, but also covers some activities of the entire NRI Group and Group companies.

The report primarily covers fiscal 2006 (April 1, 2006 through March 31, 2007), but also addresses some events in the past, some activities after April 1, 2007 and certain plans for future activities.

Nomura Research Institute, Ltd. (NRI) began issuing a CSR Report in 2005 with the aim of deepening stakeholders’ understanding of the NRI Group’s efforts in the name of CSR.

CSR Report 2007 lays particular emphasis on “proactive CSR,” one of the three approaches NRI adopts to its social responsibilities (the others are fundamental CSR and NRI’s unique contributions to society). In its proactive CSR, NRI provides clients with “Navigation” and “Solutions.” NRI first identifies clients’ main issues and objectives; then presents measures––consulting, system design, development, etc.––to achieve those objectives through “Navigation”; and finally proposes “Solutions,” which are specific measures to solve problems and achieve the objectives.

Published in January 2008(Previous report was published in September 2006, and the next report is planned for publication in September 2008.)

Exemplifying this proactive approach to CSR, this report introduces the NRI Group’s business in Asia through the views of its clients and business partners, as well as through case studies. The roles of Assistant CIOs are described as examples of NRI’s “Navigation” and multi-user systems such as THE STAR and e-JIBAI, which have garnered high praise from clients, serve as proof of the efficacy of its “Solutions.”

Guidelines referred to in this reportThe Sustainability Reporting Guidelines Version 3.0 of the Global Reporting Initiative (GRI) were used in this report. A comparative table is posted on the NRI website (http://www.nri.co.jp/english/company/csr.html).

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Editorial Policy

Message from the President

NRI Group’s Three CSR Activities

Corporate Social Responsibility: Built into the Business of the NRI Group

Part 1. Growth in Asia and the NRI GroupPart 2. CSR through NavigationPart 3. CSR through Solutions

Strengthening Corporate Governance, Internal Controls and Compliance

Key Management Issues1. Quality Management2. Information Security Management3. Crisis Management4. Research and Development5. Intellectual Property Management6. Environmental Protection

Engagement with Stakeholders1. Engagement with Shareholders and Investors2. Engagement with Clients3. Engagement with Business Partners 4. Engagement with Employees

Topic: Smart Work Style Campaign

Contribution to Society1. Propagation of Intellectual Assets2. Development of Society3. Development of Human Resources

Third-party Opinion, Corporate Profile and Consolidated Financial Results

1NRI CSR Report 2007

Nomura Research Institute, Ltd. (NRI) celebrated the 20th anniversary of its merger with Nomura Computer Systems Co., Ltd., in January 2008. This merger between a think tank and an information systems company created a radically new industry, previously unknown in Japan.

Our services provide innovations for both our clients’ businesses and for society as a whole. We have proposed solutions for the issues future generations will be facing. Over the years, our solutions have become a crucial element of society’s strength, and with this NRI’s business has expanded.

NRI, a listed company since December 2001, achieved consolidated sales of 322.5 billion yen in

the fi scal year ended in March 2007, with a total market value of 780 billion yen. The NRI Group now comprises eight companies in Japan and six companies overseas, with over 5,300 employees.

As we pass the 20th anniversary of our merger with Nomura Computer Systems Co., Ltd., I would like to express my deep gratitude to our shareholders, investors, clients, business partners and employees for their support and cooperation in helping NRI achieve this impressive growth.

In line with its corporate philosophy, “Dream up the future.,” the NRI Group works toward paradigms for the future. Our business is to realize this future for society.

NRI proposes strategies for the businesses of a wide range of customers, including private corporations in the securities, banking, insurance, retail, manufacturing and service industries, national government agencies and local governments.

The measures that NRI proposes to national and local government affect citizens and residents’ lives directly. We have created a vital part of social infrastructure with THE STAR, which comprises a multi-user system for securities operations used by about 70 companies. NRI has also designed an integrated information system that covers 10,000 Seven-Eleven Japan Co., Ltd., stores throughout Japan, and the Postal Advanced Network (PNET) System which links all Japan’s post offi ces.

As a corporate group offering such important services, we are acutely aware of the signifi cant infl uence we have on society, and of the role we must play in the community. For us, providing these services is the very essence of fulfi lling our responsibilities for social contributions. This is the essential ethos driving our CSR activities.

20 years of ties between NRI and Nomura Computer Systems

Basic policy for CSR activities

NRI is committed to contributing to society by creating the information systems that underpin society’s needs and offering a vision for the future.

Message from the President

2 NRI CSR Report 2007

In fi scal 2007, NRI will devise a long-term management plan looking ahead to 2015. This plan will continue to target annual growth of over 7%, to make the NRI Group an even stronger organization. The plan will also stipulate measures for branching into new businesses, and I believe that this will also expand the possibilities of our future CSR activities through NRI’s business.

We will see the history, the culture and climate that we have built up with fresh eyes and start the “NRI Way” campaign, which uncovers new strengths in all employees as we move toward the future. I believe that these activities will enable all NRI Group employees to take up the challenge with their dreams and visions for the NRI Group’s future.

The NRI Group is committed to making a better world by developing the information systems that underpin society’s needs and by proposing innovative solutions for our future. We embrace our responsibility, as a mature corporate group, to take the initiative in contributing to society.

I would like to thank our shareholders, investors, clients, business partners and employees for their unfl agging support and encouragement for the NRI Group.

Akihisa FujinumaPresident, CEO & COONomura Research Institute, Ltd.

In fi scal 2006, the NRI Group continued offering consulting and IT solution services. We introduced innovations to clients’ businesses and to the industry, holding the needs of the larger community paramount. These efforts were part of our “proactive CSR.”

In pursuing “fundamental CSR,” we established basic principles for developing an internal control structure and revised our compliance regulations along with devising regulations protecting whistleblowing employees. This strengthened internal control and legal, regulatory and ethical compliance. With solid quality management and information security measures, our corporate structure has been reinforced even further.

We also endeavored to release more information to shareholders and investors—particularly private investors—through our website and at investors’ seminars. The NRI Group has been vigorously involved in activities benefi ting its employees, such as in the Smart Work Style Campaign that aims to create a work-friendly environment.

Our contributions to society have included many proposals submitted to the “Proposing Japan’s Future toward 2010” campaign, attracting suggestions for the future for society in Japan. The NRI Student Essay Contest encouraged students to think about Japan’s future. These were part of NRI’s efforts to actively impart information that will help to build a bright future for Japanese society.

In September 2006, NRI was selected for inclusion in the FTSE4Good, a global socially responsible investment (SRI) index. I am proud that our CSR activities earned this recognition.

CSR activities in fi scal 2006 Looking Ahead to 2015


The NRI Group carries out three forms of CSR activities: fundamental CSR, proactive CSR and NRI’s unique contributions to society.

Fundamental CSR refers to compliance with laws, as well as conducting business in accordance with fair and honest corporate management and a sense of conscience.

In its proactive CSR, NRI provides clients with “Navigation” and “Solutions.” NRI fi rst identifi es clients’ main issues and objectives; then presents measures––consulting, system design, development, etc.–– to achieve those objectives through “Navigation”; and fi nally proposes “Solutions,” which are specifi c measures to solve problems and achieve the objectives.

NRI’s unique contributions to society involve propagating information on the NRI Group’s business, and on the results of its studies and research to the public. In addition, NRI does its best to utilize the know-how it has built up to contribute to the development of society and of human resources.

By putting these three CSR activities into practice, the NRI Group hopes to fulfi ll its responsibilities to society.

All business divisions and employees in the NRI Group promote the three forms of CSR activities in daily operations.

In October 2004, the Corporate Social Responsibility Department was established under the president to devise action guidelines, promote CSR activities in collaboration with related divisions, compile information about CSR and educate company employees on CSR.

Departments in charge, such as the Internal Control Department, the Legal Department, the Quality Management Division, the Security

Management Section, the Crisis Management Section and the Intellectual Property Department, stipulate guidelines for fundamental CSR, and lead business divisions and employee activities.

The NRI Group’s businesses are made up of the interactions between its various stakeholders. Shareholders and investors, clients, business partners and employees are particularly important stakeholders for the NRI Group. NRI emphasizes direct communication with its stakeholders, and strives to meet their expectations.

Three forms of CSR activities

NRI Group’s stakeholders

Structure for promoting CSR activities

Chapter 6 of this Report, “Engagement with Stakeholders” introduces CSR activities that are closely related to the various stakeholders. The activities discussed in other chapters also involve multiple stakeholders.

NRI Group’sCSR activitiesCSRCSR ac a tivvitiitieses

ProactiveCSR

NRI’s uniquecontributions

to society

FundamentalCSR

NRI Group’s stakeholders and the three forms of CSR activities

EmployeesBusinesspartners

ClientsShareholdersand investors

● Corporate governance, internal control● Compliance● Quality management● Information security management● Crisis management● Intellectual property management● Environmental protection

● Navigation● Solutions● R & D

● Information propagation● Development of society● Development of human resources

Striving to fulfi ll responsibilities to society through three approaches to CSR

NRI Group’s Three CSR Activities


Fundamental CSR is crucial to the NRI Group’s CSR activities, and NRI believes that it can protect its corporate value by promoting fundamental CSR.

With this understanding, NRI lays out clear policies on corporate governance, internal controls and compliance to ensure adherence by all concerned. An implementation structure has also been put in place.

In addition, NRI believes that there are fi ve key management issues in pursuing fundamental CSR: quality management, information security management, crisis management, intellectual property management and environmental protection. These areas are managed as priorities, with clear management and implementation policies.

The NRI Group provides consulting services consisting of management consulting and systems consulting, as well as IT solution services, made up of development and operation services for information systems and system product sales. NRI provides “Navigation” and “Solutions” to clients through these two services.

By providing “Navigation” and “Solutions” to strengthen proactive CSR, NRI strives to offer solutions that anticipate the issues clients may face in the future and enhance clients’ corporate value.

Also, NRI strategically promotes R&D, an important foundation supporting its “Navigation” and “Solutions.”

The NRI Group offers the intellectual assets created in its research and businesses to contribute to the development of society through publications, the mass media and seminars.

To promote the development of society, NRI recommends new techniques and approaches at international conferences and at national and local government committees.

NRI also educates company managers, capitalizing on the know-how it has accumulated by providing management consulting services. NRI employees are sent as instructors for university courses, and the company trains both Japanese and foreign students and instructors to develop human resources.

The NRI Group endeavors to make its unique contributions to society by propagating its intellectual assets and by the development of society and human resources.

The NRI Group strives to meet the expectations of its valuable stakeholders—shareholders, investors, clients, business partners and employees—and fulfi ll its responsibilities to society by ensuring that all employees promote fundamental CSR, proactive CSR and NRI’s unique contributions to society.

Fundamental CSR

Proactive CSR

NRI’s unique contributions to society

Chapter 4 of this Report, “Strengthening Corporate Governance, Internal Controls and Compliance” and Chapter 5, “Key Management Issues” discuss fundamental CSR activities. Chapter 6, “Engagement with Stakeholders” introduces fundamental CSR, as related to the Group’s stakeholders.

Chapter 3 of this Report, “Corporate Social Responsibility: Built into the Business of the NRI Group” discusses the company’s business expansion in Asia as an example of proactive CSR, as well as other “Navigation” and “Solutions” businesses. “Research and Development” in Chapter 5, “Key Management Issues” includes proactive CSR. “Engagement with Clients” in Chapter 6, “Engagement with Stakeholders” also introduces proactive CSR.

Chapter 7 of this Report, “Contribution to Society” discusses “NRI’s unique contributions to society.”


The NRI Group sees Asia as a vital region for its global growth, and offers consulting and system development services to local governments and companies throughout Asia. These pages offer an overview of NRI’s business in Asia. They introduce the partnerships that NRI has built with people throughout Asia, using the words of the customers and business partners themselves to provide sketches of some of the ongoing projects.


Partnering with the people of Asia for growth and development

Part 1 Growth in Asia and the NRI Group

Standing with our neighbors in Asia

NRI in Asia

As Asia grows, the NRI Group grows. In its local business expansion, NRI is committed to hiring local employees and building capacity among its business partners.

best way to ensure this is by proactive hiring of local employees. Of NRI’s 248 employees in Asia at the end of March 2007, 219 were local hires. As an added motivational plus, training is provided in Japan, which facilitates teamwork with employees in Japan, and creates a productive, borderless work environment.

In addition to increasing local hiring, NRI began outsourcing some of its system development operations in the late 1990s, primarily to IT companies in China. As of March 2007, NRI was outsourcing operations to 21 outstanding companies in China, two of which had become NRI “e-Partners” (see page 34) on the merits of their exceptional operational skills and expertise in information technology.

The NRI Group will continue to act in solidarity with Asia’s aspirations for growth and development by working with a passion to expand its business throughout the region.

Economies in Asia are expected to continue to grow in the 21st century. The NRI Group considers the region the key to its global expansion, and has worked aggressively to build its business in Asia.

NRI’s expansion in the region got its start early on with the establishment of Nomura Research Institute Hong Kong Limited in 1976, followed in later years by Nomura Research Institute (Singapore) Private Limited and NRI branches in Taipei, Seoul and Manila. More recently, NRI founded Nomura Research Institute (Beijing), Ltd., and Nomura Research Institute Shanghai Limited in 2002. These local hubs collaborate closely with NRI’s business divisions in Japan to offer consulting and system development services to Japanese corporations moving into the rest of Asia, as well as to local governments and companies.

Successful international expansion requires careful adaptation to local norms, and NRI recognizes that the

Project for Asian Bond Market Initiative

NRI provides wide-ranging support for the growth and development of ASEAN member countries, from identifying issues to drafting implementation plans.

and monetary authorities, and the start of efforts by these countries’ national and local governments to facilitate fund-raising.

ABMI’s objective is to develop the Asian bond market in which bonds can be issued in local Asian currencies so that Asia’s savings can be used by private-sector business in long-term capital formation and investment. To achieve this goal, bonds in a variety of currencies and of different maturities must be issued in large quantities, and an environment conducive to participation must be created by increasing the number of guarantee and rating agencies. Such efforts will create a highly liquid bond market that is easily accessible to both bond issuers and investors.

With assistance from Japan’s Ministry of Finance, the ASEAN Secretariat took on the role of supervising this

ASEAN member countries continue to experience rapid growth, and companies’ demand for capital is increasing with the recent expansion of markets and business opportunities. Capital markets in these countries are unable to provide the requisite long-term financing for economic development, forcing companies to rely on short-term bank loans for much of their financing. This excessive reliance on banks increased the severity of the effects of the Asian financial crisis that commenced in 1997.

Having learned this lesson from the Asian financial crisis, creating channels other than banks to provide long-term financing has become an urgent issue for ASEAN member countries. Accordingly, in December 2002 the Japanese government advocated the formation of the Asian Bond Market Initiative (ABMI) to ASEAN+3 (the ASEAN member countries plus Japan, South Korea and China). This resulted in further development of the Asian bond market in collaboration with these countries’ financial

Case study from NRI’s business

Aid for development of bond markets in ASEAN member countries


Vietnam

The Philippines

Cambodia

Laos

Thailand

Malaysia

Brunei

Indonesia

Zou XiaopingDirector, Chongqing Sub-Council, China Council for the Promotion Of International TradeDirector, Chongqing Chamber Of Commerce, China Chamber of International Commerce

ABMI, and commissioned NRI to identify the current status of issuers, investors, brokers and infrastructure in eight ASEAN member countries—Thailand, Vietnam, the Philippines, Malaysia, Indonesia, Cambodia, Laos and Brunei—as well as the issues confronting them. NRI also drafted a plan to develop bond markets, and provide other support by proposing resolutions suited to each country’s individual circumstances to clarify issuance regulations and encourage institutional investors.

Coordination between a country’s central bank, ministry of finance and securities exchange committees, as well as the cooperation of the government officials that establish relevant legislation, are essential in developing bond markets. This is where NRI’s role comes into play, actively advocating the significance of bond markets by holding workshops attended by policymakers and the media.

The development of an Asian bond market would strengthen the countries’ fiscal and monetary bases and contribute to the future economic growth of Asia. However, it also has important implications for Japan.

First, Japanese companies expanding their businesses in Asia would be able to raise capital efficiently and at low cost by issuing bonds in the local currency, thus avoiding foreign exchange risks.

Second, Japan’s domestic financial assets would be invested in Asian bond markets. This would increase investment opportunities for Japan’s institutional investors and individual investors.

Third, greater opportunities for Japan’s insurance companies, which are particularly active institutional investors, to invest insurance premiums without foreign exchange risk. This would make it easier for them to enter local insurance markets.

Fourth, Japan’s financial intermediaries would have new opportunities to expand their business by providing local Japanese companies with ways to raise capital, promoting cross-border securities investment and setting up business infrastructure.

As such, the development of an Asian bond market would create a wide array of business opportunities for Japanese companies in Asia. NRI hopes to contribute to Asia’s sustainable economic and industrial development through such projects.

Building a strategy for the transportation and distribution hub in Chongqing

Construction of a comprehensive transportation and distribution hub is underway in China’s Chongqing city. NRI is assisting China’s industrial and economic development with its role in devising this strategy.

Client’s view

transportation and distribution infrastructure linking water, land and air, including water transportation on the Yangtze river, an extensive road network connected to ports and harbors, rail transportation and airports.

In 2006, the Chongqing city government worked with NRI to devise a strategy for creating a comprehensive transportation and distribution relay hub, a project that is extremely significant for Chongqing. NRI viewed this project as bringing together the particular skills of its experts in local

With a population of 30 million, Chongqing city is the only city in China’s western region that is under the direct control of the central government. As such, it takes the lead role in developing national policy for the western region and achieving a balance between China’s eastern and western regions. It would be no exaggeration to call Chongqing the frontier city of China’s west. In the light of its strategic location, in addition to the large-scale urban development currently underway in Chongqing, the city is building

Contributing to the economic and industrial development of Japan and Asia


decided to target companies in these areas.This work of encouraging companies to invest in

Taiwan will not achieve results in a short period, and must be continued over the long term. NRI visited each of the targeted Japanese companies individually to introduce Taiwan and interview influential persons at the companies about their views of Taiwan. In cases in which companies were not interested in investing, NRI even inquired as to their reasons. We utilized these Japanese companies’ views in devising Taiwan’s subsequent industrial policy and foreign capital inducement policies. Each year since 1994, NRI has produced results in bringing companies to Taiwan, with about 400 successes in total. Today Taiwan boasts a world-leading production capability in computers, semiconductors and LCDs. I believe that the concentration and consequent synergy in the semiconductor and LCD industries in Taiwan are due to the efforts we put in with NRI representatives.

Currently, NRI not only provides consulting services to private corporations in Taiwan, but also carries out projects on industrial policy and regional development. I have high hopes for the contributions NRI will make in the future to links between Taiwan and Japan’s economies, industries and societies.

Taiwan’s Ministry of Economic Affairs has worked with NRI since 1994 to attract Japanese companies in the high-tech industry to Taiwan. I have been responsible for this project since its inception.

Taiwan’s trade deficit with Japan has grown rapidly since the 1990s and has aroused social concern. Taiwan’s economy has always had strong ties with Japanese companies in a wide

range of industries, and Taiwanese companies rely on Japan for many of their raw materials, for key components and for manufacturing equipment.

Given this situation, we asked NRI to make use of its extensive relationships in Japanese industrial circles to work with us in encouraging Japanese companies to invest in Taiwan. Our focus was particularly on companies that manufacture these high-tech raw materials, key components and manufacturing equipment, items which are responsible for the trade deficit. We selected the products and technologies necessary for Taiwan’s industrial development from a wide array of fields such as machinery, electronics, biotechnology and chemicals and

Promoting Japanese business in Taiwan

NRI has supported the mutual development of Taiwan and Japan since 1994 by helping to attract Japanese companies to Taiwan as part of the Taiwanese government’s measures to eliminate its trade deficit with Japan.

Client’s view

Part 1 Growth in Asia and the NRI Group

Standing with our neighbors in Asia

Ho Mei-YuehChairperson,Council for Economic Planning and Development (CEPD),Taiwan

from an international perspective. In addition, NRI presented an overarching vision for urban development that went beyond the transportation hub strategy to lay out long-term goals for Chongqing as China’s fourth engine of growth.

NRI not only created this vision, but also provided support in realizing it. With NRI’s cooperation, a project based on establishing an industrial development strategy began in 2007 in Xiyong Microelectronics Industrial Park, a key development area for Chongqing. NRI is expected to make significant contributions to Chongqing’s industry, economy and society over the long term.

development strategy, urban development strategy and industrial development strategy and experts in the transportation and distribution fields from its headquarters in Tokyo and NRI Shanghai.

In addition to the conventional detailed surveys of transportation and distribution, formulating a strategy for a comprehensive transportation and distribution hub requires an understanding of and insight into, China’s macro- economic development trends, current development in the eastern region, Chongqing’s particular development environment and the outlook for the city and its industries. For the project’s duration of more than three months, NRI collaborated with a wide range of relevant government organizations and research institutions, and leveraged its total solution capacity to ensure the success of this project.

NRI’s support was not limited to devising a comprehensive transportation and distribution hub strategy

An NRI consultant gives a presentation at a symposium held by Chongqing city



Our relationship with NRI began in 2000 when my company sent one employee to Japan for three months to study system development at NRI in Japan. Full-scale exchange began in 2001, and now over 800 employees are involved in NRI’s operations. In December 2003 we became an e-Partner, building an even more solid relationship in which we can even freely discuss our wishes and frustrations.The work we receive from NRI is

systematic and continuous, stabilizing management and making it easy to devise plans. For example, with NRI’s cooperation,

we train future generations of leaders from a long-term perspective. Our employees are more motivated and inspired because they can utilize their experiences and advance their careers. This, in turn, further stabilizes my company’s management.

At the same time, NRI demands an extremely high level of project management in meeting quality targets and deadlines, as well as ensuring information security. However, I am confident that over the long term this rigor will contribute to my company’s growth and development. Indeed, in April 2006 we became the first Chinese company to be certified with ISO/IEC27001 for information security management, which I believe was due to our experience with NRI.

View of business partner in China

View of employees at Seoul Branch of NRI

Jae Nam Yoon

Hearing about NRI’s consulting services when I was a student encouraged me to enter the Seoul Branch of the company. When I worked with NRI employees in Japan in my second year, I was really impressed with the quality of the consultants and with NRI’s collective strength. When I was later posted to a position in Tokyo, I worked as a consultant for

Japanese companies, which has been a valuable experience for me. I hope to use these experiences to put Japanese knowledge to work for clients in South Korea and to provide consulting services to help them enter other markets in Asia.

Dong Hu Han

I see Asia’s positive attributes reflected in NRI. NRI not only takes a business-like approach to its projects, but it also adds a personal touch to solving problems. For example, NRI does not limit itself to the work stipulated in the contract, but does anything that it believes to be necessary for a successful outcome. And we can only be

pleased when the work we struggled with leads to the next commission. I want to gain experience in a wide range of areas for now, but in the future I hope to work as an expert with a deep knowledge of a single field, like the consultants in the Japan office.

My work on projects on market and resource development and corporate management innovations in Tokyo, Seoul and Shanghai has made me feel that I’ve contributed something to Asia’s economic development. When carrying out projects I try to fulfill the NRI Group’s mission of earning the client’s trust and making steady

progress together with the client, but it makes me realize how difficult this really is. I am proud and happy to be a member of the NRI Group, and want to strive to earn the firm trust of clients in South Korea and throughout Asia.

Hyuk Ryu

There was no training program at the Seoul Branch when I joined the company, so I gained experience on the job. When I was in charge of operation reform consulting for distribution companies in South Korea, the idea of consulting work became more appealing. Working together with clients to solve a problem and pleasing them was very

motivating. I was able to learn a lot about a wide variety of fields from consultants in the Tokyo office. These people have built up experience by working on projects that concentrate on a single area for a long period. Their insights and suggestions based on actual experience have also been enlightening.

Sang Hoon Han

NRI strives to build stable trusting relationships with potential for expansion with its business partners. To this end, NRI is strengthening its affiliation with partner companies in China to which it commissions some of its system development projects.

NRI provides a broad range of consulting services in South Korea. Many local hires proficient in Japanese help NRI to meet its clients’ stringent needs.

Wang XubingPresident,SinoCom Software Group Limited


With e-government, administrative organizations such as central government ministries and local governments computerize their internal operations and information disclosure, and citizens and corporations use the Internet to submit applications, notifications and other paperwork. E-government not only enhances the convenience of administration services for a country’s citizens, but is also crucial in making vast improvements in operational efficiency and creating effective and streamlined national and local government.

The Japanese government established the Program for Building e-Government in July 2003, based on IT strategies. According to this plan, measures were carried out to set up and augment administrative portal sites to increase one-stop services and to establish plans to optimize operations and systems using EA*1 methods. Such measures aim to provide user-oriented administrative services and to simplify government, while reducing costs.

Since 2003, the government has sustained efforts to move toward e-government. In August 2006, specific targets such as increasing the use of online services to over 50% by fiscal 2010 were set. In addition, the Plan to Promote Electronic Government was established, outlining steps for optimizing overall government and reinforcing implementation and evaluation systems.

Government ministries appoint CIOs*2 in accordance with the Program for Building e-Government to facilitate the development of e-government. In many ministries, this role is currently occupied by the director of the Secretariat. However, in addition to a deep understanding of administrative operations, carrying out this program requires a sophisticated knowledge of IT, of how to make use of it and of system optimization. It is difficult to find bureaucrats with the requisite skills. Accordingly, as part of its measures to strengthen the implementation system, the Program for Building e-Government proposes the active use of private-sector experts in devising operation and system optimization plans. In line with this, government ministries began appointing Assistant CIOs in fiscal 2003.

Many Assistant CIOs are former information system vendors and telecommunications experts or have worked in management and IT consulting firms. Their function is to work with the ministries’ IT departments in their role as experts and provide guidance, advice and support to facilitate the formulation of plans and their implementation. Aides from all government ministries participate in the Assistant CIOs Council. Exchange of information gives Assistant CIOs a perspective that extends beyond the individual ministries to improve government services across the board.

On the frontline of e-government

Currently, Japan is bringing government into the electronic age with the aim of utilizing IT to improve public services and create a more efficient administrative organization. To support such efforts, Assistant CIOs from the private sector who have expertise in IT and administrative reform are appointed to assist CIOs in government ministries. Several NRI employees have taken on this role, capitalizing on the knowledge and information built up in projects related to electronic administration services.

Assistant CIOs from NRI support government initiatives

Part 2 CSR through Navigation

Actively endorsing the move to electronic government

*1 “EA” stands for “enterprise architecture,” which refers to a method for designing and managing organizations that aims to improve operations and systems at the same time and is modeled on uniform operation and system methods for the entire organization.

*2 “CIO” is an abbreviation of Chief Information Officer.

Director of Management, Administrative Management Bureau, Ministry of Internal Affairs and Communications

It has been four years now since government ministries began using Assistant CIOs. There were 25 Assistant CIOs when the program first started in fiscal 2003, but as of May 2007 there were 42 Assistant CIOs, including five from NRI, active in the ministries. The primary responsibility of Assistant CIOs is to optimize operations and systems. Plans have been devised for almost all the operations and systems in 86 areas, and optimization has entered the implementation stage—in other words, design and development. As advisers and guides for

information systems on-site, Assistant CIOs are instrumental in the optimization process. Moreover, the ministries’ Assistant CIOs have set up a liaison conference and have met 36 times since February 2003. We have asked them to play a role that extends beyond the ministry to which they are assigned, and at these conferences Assistant CIOs consult on drafts of optimization plans and give advice.

In July 2007, the Basic Policy for Public Procurement of Computer Systems went into effect, with the aim of reforming IT procurement. These guidelines stipulate that Assistant CIOs review and confirm specifications. This demonstrates the crucial role that Assistant CIOs play in government information systems. Optimization is nearing a critical stage, and we ask all ministry Assistant CIOs, including those from NRI, to maintain their utmost effort.

Using IT to provide convenient and efficient administration services

Raising reform awareness using private-sector experts

Sadahiko Nakaigawa



In a Japan where government faces a serious fiscal crisis, e-government, which streamlines administration, is a key reform that will determine the success of future administrative and fiscal reforms. Having a background in cost-consciousness from their employment in private companies, Assistant CIOs are also expected to play a key role in encouraging a new way of thinking about IT investment and IT utilization in administrative divisions.

As the Assistant CIOs got to grips with the job, others recognized their effectiveness, and a decision was made to increase the scope of the aides´ functions at the Chief Information Officers Council in June 2005. Now, Assistant CIOs provide support and advice on budget requests, procurement, development and evaluation for information systems overall, with five working groups set to review and report on issues faced by the various ministries.

NRI quickly realized the profound impact that IT has on administration systems and business routines and the consequent need for it. In the Proposal for Information New Deal released in 1993, NRI proposed policies that anticipated the current concept of e-government and electronic local governments such as developing the central ministries’ intelligence infrastructure and digitizing operations, as well as improving local administrative services with a one-stop solution. At that time, the infrastructure was not yet available, and concern for these issues was limited to the few individuals directly involved,

but NRI continued to study and carry out research in this area. At that time also, government and other public offices still outsourced the bulk of their operations in the IT solutions services business to NRI. In addition to system development accommodating operation reforms, NRI took the lead in developing operations that would support the government.

Capitalizing on the knowledge and expertise it acquired in its pioneering efforts, NRI responded to requests from the ministries after the Assistant CIO system began, and currently has five employees working as Assistant CIOs in the Ministry of Health, Labour and Welfare, the Ministry of Agriculture, Forestry and Fisheries and the Board of Audit of Japan. NRI has also formed a backup team made up of experts in fields related to e-government, and sends in resident support staff, able to provide case studies in advanced initiatives, both domestic and international, as well as expertise where necessary. In this way, NRI systematically collaborates with the government’s efforts to achieve e-government.

Further, the Program for Building e-Government is heightening demand for IT systems consulting on studies to determine the feasibility of updating legacy systems, support in devising optimization plans, and process management for implementing optimization. Similar demand is spreading to independent administrative entities and local government bodies. NRI will remain actively involved in these operations and vigorously support Japan’s transition to e-government by providing human resources, expertise and consulting services in the hope that this will enhance people’s lives and contribute to society.

Views of Assistant CIOs from NRI

I strive to guide others in practicing the basic principles of system management and project management, such as preparing specifications that meet all requirements, encouraging the participation of users and other stakeholders, and carrying out adequate tests at every stage, without being misled by the sophistication of EA and other methodologies.

Many of the operations and systems in the Ministry of Health, Labour and Welfare require optimization, and I expect overarching, cross-ministry optimization, to have a significant effect in, for example, improving operations and reducing operation costs. It is crucial that we change the way employees think about using IT, and I will continue to work toward this goal.

As the Ministry of Agriculture, Forestry and Fisheries approaches a period of considerable transition, it is vital to optimize the operations and systems that underpin this transition. I will foster a positive attitude toward the reforms carried out in this process and continue to work closely with clients in a collaborative spirit to further enhance IT investment management.

Accumulating information and knowledge with a focus on e-government potential

Assistant CIO in Ministry of Health, Labour and Welfare(Business Process & IT Management Research Department, NRI)

Noboru ShiomiAssistant CIO in Ministry of Agriculture, Forestry and Fisheries(Policy & Industry Consulting Department, NRI)

Satoshi KubotaAssistant CIO for Board of Audit of Japan(IT Management Consulting for Social Sector Department,NRI)

Hideo Yamazaki


THE STAR’s merits for customers’ securities operations

*2 STP: Straight Through Processing is a system that automatically links multiple systems so that the processes involved in a securities transaction from contract through settlement are executed without any intermediaries.

Cost reduction

Higher revenue

Cost structure reforms Reforms to compliance and risk structure

• Mobile phones• Brokerage business

• Call centers• Internet • ATMs

• Minimize and concentrate indirect divisions using STP*2

• Shift from processing operations to operations requiring judgment

• Measures ensuring compliance with investor regulations at time of transaction• Cash and certificate settlement between securities companies via settlement

organization

Sophisticated servicesExpanded channelsExpanded product line• Wrap accounts • Bond repurchase

agreement

• Stock certificate loan transactions

• Global instruments

• Bond loan transactions

• 24-hour services• Additional services using

strategic cards

• Diversified settlement methods

Securities companies rely on both front office and back office operations. The front office is responsible for pro-cessing sales and purchasing orders from sales offices and online trades, while the back office system plays a major role in administrative work such as entering into contracts with securities exchanges, based on information from the front office, issuing forms, settling accounts, changing names on documents and preparing transaction reports.

Starting with its multi-user systems in 1966 and continuing with STAR-I (1974), STAR-II (1985) and STAR-III (1995), NRI has developed a series of comprehensive back office systems that meet the needs of the day. These systems have a solid track record with many securities companies. THE STAR, which began full operations in May 2003, is a next-generation back office system that capitalizes on the achievements and expertise that NRI has built up over a long period. Its system platform and applications were completely revamped to meet the industry’s future needs for a speedy approach to new products and to settlements, for advanced services and for cost structure reforms.

For THE STAR, NRI adopted UNIX/Linux-based open architecture,*1 which boasts excellent extensibility and interoperability, for its system platform. The hardware was also changed from the previous structure, which was centered on the host computer, to a diversified system running on function-specific servers. This not only provided

the flexibility to add functions and products, but also made it possible to improve maintenance efficiency and make dramatic cuts in operating costs.

Based on regulations, industry rules and the clients’ needs, this system platform introduces a front compliance check function that checks orders in real time against the individual customer’s credit line, purchasing capacity and general appropriateness, as well as against the degree of risk of the particular product. The platform also adapts quickly to changes such as the digitization of a series of marketable securities. In addition, the function-specific servers align data with the comprehensive database and the basic database in real time, which makes it possible to manage collateral and capital in real time, and will make the settlement time shorter. This system makes significant contributions to reforming securities companies’ cost structures and to reinforcing their risk management.

When building THE STAR, NRI developed about 70% of the operation application software with its business partners in China. It would not have been possible to develop such massive applications on a tight schedule with development staff in Japan alone. Accordingly, the Securities System Services Division collaborated with the Partner Promotion Department and other departments related to legal and accounting functions to identify software development companies in China with highly skilled technicians. Currently, two of these have become e-Partners (see page 34).

At the time of THE STAR’s development, the information service industry’s outsourcing in China

Since 1966, when it introduced multi-user systems, NRI has been developing and operating back office systems for securities companies that anticipate the needs of the day, and has been contributing to the evolution of the securities industry. Building on these achievements, in May 2003, NRI launched its next-generation system THE STAR, which brings securities operations to new levels of sophistication and efficiency.

NRI has developed a next-generation back office system, advancing the securities business to new levels.

Part 3 CSR through Solutions

1. Comprehensive Securities Back Office System, THE STAR

*1 Open architecture: Design and specifications are publicly available. Hardware and software for information systems are adaptable, extensible and inter-operable because it is easy for anyone to participate in the design and manufacture. The cost is generally kept down.

Full-scale upgrades of system platforms and applications

Architecture with excellent extensibility and interoperability

Collaboration with partners in China



Client’s view

Business partner’s view

Toshihiko TakaishiManaging Executive Officer, Management Planning Underwriting Credit Evaluation Information Technology, Ichiyoshi Securities Co., Ltd.

Qiu Wei XinVice General Manager and Chief Information Officer, Shanghai Chuwa Software Co., Ltd.

THE STAR

consisted of commissioning programming work to take advantage of the lower costs. However, NRI believed that productivity would be higher if Chinese companies were commissioned to take on the entire development, from the upstream processes before detailed design through programming, even if the commissions were small-scale. Of course, NRI staff visited the sites frequently and provided technical guidance and quality management in conformity with local laws to maintain and improve development quality.

As a result of this project management and the unstinting efforts of business partners both in Japan and abroad, system development took only two years and three months from kickoff.

THE STAR can be used in three forms: outsourced as a system exclusive to the client; STAR-IV, an application service provider (ASP) service that allows several companies to jointly use one system; and partially, using only the necessary functions, taking advantage of the features of the function-specific server structure.

Since it began operating in earnest in May 2003, THE STAR has been highly praised for the diversity of the forms in which its services are offered, for the significant improvements to administrative efficiency that are enabled by real-time processing, and for the advanced functions such as the front compliance check function. The system has been used by over 70 companies, the equivalent of about 40% of the value of securities transactions by private individuals.

THE STAR’s role as a crucial part of the security industry’s infrastructure means that any breakdown in service would have a major impact on society at large. Accordingly, NRI has enhanced the system’s availability and reliability by multiplexing the system, and has established procedures to quickly and reliably restore service in the event of a breakdown. The system is operated from the data center (see page 16), which is virtually disaster-proof, but there are plans to run the system from a backup site as well in the near future, to prepare for the contingency of a wide-area disaster.

Further, NRI rigorously manages its information security to prevent and control fraudulent access to customer information and illicit use.

NRI will continue to provide IT solution services that are tailored precisely to customer needs and to contribute to the security industry.

Approximately 40% share of trading by private individuals

Toward systems with high-availability*1 and excellent reliability as social infrastructure

Ichiyoshi Securities uses STAR-IV, THE STAR’s ASP service. I am particularly impressed with the system’s functionality, such as its real-time processing. The operating system is very reliable: STAR-IV has exceptional usability, it can adapt flexibly to frequent institutional changes in transactions and settlements, and it comes at a reasonable price.

I expect my company’s business environment to continue changing as stock certificates are digitized and the Financial Instruments and Exchange Law is implemented. I am confident that NRI will also further improve and develop THE STAR, and I hope that NRI goes beyond its own system operations to provide continuous support and proposals for new functionality that capitalize on THE STAR’s consulting functions.

Shanghai Chuwa Software worked on the development of THE STAR from the design stage, building three servers from September 2001. Prior to this my company had only had experience with relatively small-scale projects, such as programming based on detailed specifications. THE STAR was the first project for which we were in charge of opera-tions from the upstream stage, and we really struggled to meet the required quality level and the deadlines. This experience helped all employees grow tremendously.

My company became an e-Partner in December 2003, but before then, as now, I was convinced that NRI and Shanghai Chuwa Software are perfect partners. I hope that we can strengthen this partnership even further.*1 High-availability: A certified technician ensures that information and

information systems can always be accessed without service interruption, whenever necessary.


NRI supports multi-user systems, setting industry standards and revolutionizing automobile liability insurance and automobile liability mutual relief.

2. e-JIBAI, a Multi-user System for Automobile Liability InsurancePart 3 CSR through Solutions

The launch of e-JIBAI in October 2004 took the computerization of automobile liability insurance and liability mutual relief to new levels of sophistication. NRI has taken the lead role in running this social infrastructure, which is used jointly by 12 non-life insurance companies and one organization.

The requirement that all automobiles and motorcycles driven on public roads have to have automobile liability insurance and automobile liability mutual relief insurance is for the benefit of the public. The provisions of insurance and mutual relief and the administrative procedures to be followed are strictly laid out, depending on the country. Under the “no loss, no profit” principle, these operations must be operated at an appropriate cost so that neither profits nor losses are generated. Document management procedures and settlement deadlines are all rigidly stipulated, making for a tangled bureaucracy. Naturally, insurance companies and organizations as well as insurance and mutual insurance agents share an interest in reducing administrative work.

In consequence, six non-life insurance companies launched the e-JIBAI project in 2003 as a joint project to create a multi-user system that would introduce IT into automobile liability operations at low cost. After the insurance companies had reviewed the proposals that they had requested from several companies, in July 2003 NRI was put in charge of designing an overall scheme for the project, of supporting the project team, including the insurance companies’ staff, and of running the system after it had been developed, while Hitachi, Ltd., was made responsible for system development.

Currently, e-JIBAI is used by 12 non-life insurance companies that have a 99% share of direct insurance in the Japanese automobile liability insurance market (in terms of both the number of cases and insurance premiums). e-JIBAI has essentially become the industry standard.

The basic concept behind e-JIBAI was to standardize non-life insurance companies’ automobile liability

insurance operations, and to develop a multi-user system that would support a broad range of functions, including the creation of automobile liability insurance certificates, certificate registration, data entry on the companies’ host computers, relations with information processing institutions and cashless settlement.

However, although they all work with automobile liability insurance, each company has its own administrative procedure, and the companies made a variety of requests at the coordination stage. If all of these requests had been incorporated, the system would have ballooned and the merits of sharing costs would have been lost. Moreover, a failure to set a standardized operational process would have made it less convenient for the insurance agents handling insurance for multiple non-life insurance companies.

Accordingly, in its role of supporting the project team NRI consolidated the views and know-how of the participating companies from its neutral perspective and drew up a blueprint of the ideal system early in the project, and obtained the agreement of the companies. Reaching a consensus between companies, while maintaining this fundamental vision, ensured that the project proceeded smoothly.

The launch of e-JIBAI in October 2004 precipitated a major revolution in automobile liability insurance operations for non-life insurance companies and insurance agencies.

It resulted, for example, in the achievement of one of the industry’s long-held objectives: a shared format for the certificate/voucher form. As a result, non-life insurance companies and insurance agents no longer had to worry about the expiration of forms, which had generated a heavy workload in the past. In addition, data input, relations with affiliated institutions, and computerization of settlement procedures were all automated and this has

Joint project by six non-life insurance companies

Participating companies’ views are coordinated from neutral standpoint

Sharp decline in clerical work for automobile liability insurance operations

Insurance and mutual aid agencies

Certificates given

e-JIBAI System Ministry of Land, Transportation and Infrastructure

One Stop Service (OSS)

Money transfer

Data on money received

Settlement system

Settlement processing

Agencies’financial

institution

Insurance companies andmutual relief organizations’

financial institution

Certificate,receipt

Polic

yho

lder

Non-life insurance companies and mutual relief organizations12 companies and 1 organization participate

Agents’ systems and e-JIBAIsystem issue certification

Summary chart data prepared and instructionsgiven to pay insurance premiums and refunds

General agencies, automobile dealers, maintenance shops(connected to 55 machine shop systems)

Data on issuance of certificatesCertificates

preparedData on non-settlement

Data on money to be transferred

Data on confirmation of money received

Host computer

Data is entered intohost computer

Directed to prepare certificates

Directed to pay

Settlement amount confirmedSummary chart data prepared

(processingsettlement)

Insurancepremium

and refundacceptance



e-JIBAI Team, New Project Development Department

Client’s view

NRI staff’s view

Currently, our team gathers the clients’ opinions from our neutral perspective, and responds to additional requests for e-JIBAI and makes improvements. We strive to propose guidelines in advance so that discussions stay on course when we consolidate the clients’ views.

We understand the need to continually strengthen the system and to augment services to continue providing secure, quality services, as e-JIBAI handles a growing number of cases and it gains in importance as part of the social infrastructure.

Kikuo HiragaGeneral Manager,IT Strategy Planning Department,Sompo Japan Insurance Inc.

NRI met all of our expectations in its role as a neutral player directing the progress of this joint project involving multiple companies. For example, data from the systems of the various insurance agencies, which were different from company to company, had to be standardized for e-JIBAI’s data. Initially, we thought the process would have to be customized for each company to connect its system to e-JIBAI, but NRI created a pattern from several types of connection methods and the systems were connected without difficulty.

I expect e-JIBAI to become increasingly popular as it becomes connected to more external systems. I am confident that, with such management expertise, NRI will continue to run the system securely and will also develop attractive new proposals.

sped up the clerical work involved after contracts are signed. At the same time, the standardization of entry formats, which had previously differed greatly from company to company, reduced the administrative burden for insurance agencies that handle products from multiple non-life insurance companies.

Initially, e-JIBAI was used primarily by general insurance agencies, but in September 2005 automobile dealers also began to connect their operational systems. This meant that almost all manufacturer-affiliated dealers in Japan were able to use the system. A link to the government’s One Stop Service (OSS),*1 which began full-scale operations in December 2005, made it easy to complete all of the formalities involved in car ownership online. In addition, e-JIBAI has been connected to the operational systems at maintenance shops. Currently, e-JIBAI can be used with 55 of the estimated 200 types of systems for maintenance shops.

As a result of these efforts, more insurance agencies are switching to procedures using e-JIBAI, with the number of agencies using the system totaling 144,000, including general agencies and eight manufacturer- affiliated dealer agencies. e-JIBAI was used for about 40% (based on number of cases) of automobile liability insurance procedures as of March 2007.

Some organizations that run automobile liability mutual aid, which accounts for 10% of the overall automobile liability market, have been attracted to e-JIBAI for its convenience and cost merits, and are also now using this system.

e-JIBAI is a system that supports automobile liability insurance and automobile liability mutual relief, programs that are very beneficial for society. A suspension of the system would have a significant impact on car deliveries and car inspections. For this reason, e-JIBAI uses high-availability system technology to ensure that, even if one server breaks down, another server will take over. The system is run from NRI’s data center (see page 16), which has adopted the same basic construction method used for nuclear power facilities. NRI also plans to begin operating a back-up site in early fiscal 2008. NRI strives to run e-JIBAI securely as a key component of social infrastructure.

NRI ensures stable operation of e-JIBAI as social infrastructure

e-JIBAI adopted by manufacturer-affiliated automobile dealers and automobile liability insurance relief agencies

*1 One Stop Service (OSS): This is one of the electronic services that the government introduced as part of the e-Japan concept. This service allows all the documents required to own a car to be submitted over the Internet, including certification that inspections have been completed, certification of automobile garaging or parking, tax payment information and automobile liability insurance certificates.


Information systems go through innovations in the blink of an eye, and companies handle an ever-increasing volume of information. This means that companies are increasingly likely to need highly functional equipment and software that can efficiently process large quantities of information. To fulfill this need they often have to mix and match equipment and software from different vendors. Operating such systems requires sophisticated technology and skills. Companies want to address this issue while keeping their focus on their main businesses. Thus, more and more companies outsource their system operations.

Recently, many companies have been learning lessons from major natural disasters and have begun to establish the Business Continuity Plan (BCP).*1 The plan features measures put in place to protect system operations and data centers in the event of a disaster. In the financial field, an area that NRI emphasizes, the accuracy of the BCP determines the reliability of a business, and it is even being used as an offensive tool to differentiate one company from another. As a result, demand for outsourcing of system operations is picking up rapidly.

As demand for outsourcing has increased and customer needs have grown more sophisticated and diverse, NRI has had to provide something more than just a stable operations environment.

NRI has separated its system development and operations functions ever since the age of mainframe computers, and has created a corporate culture in which development and operations propel each other forward. However, in April 2006, collaboration between the systems operation and the development functions was strength-ened, and NRI merged with NRI Data Services, Ltd., a systems operations company that had been split off from NRI. The objectives were to (1) attract more clients for systems operation outsourcing, (2) design operations appropriately from the systems development stage and (3) reinforce internal controls such as compliance with the J-SOX Law.*2 This collaboration was highly praised by the market, and NRI’s system operations service business has expanded steadily.

NRI has data centers in Yokohama, Hiyoshi, and Osaka, all of which have earned ISO 9001 and the Privacy Mark.

The Yokohama and Osaka data centers have also acquired ISMS certification (see page 22), and are adopting operation procedures conforming to Information Technology Infrastructure Library (ITIL)*3 practices to provide high-quality operation services.

Employees specializing in data center infrastructure, such as certified architects, review and improve the facilities on a daily basis. In addition, important data and programs are backed up in remote areas as part of disaster recovery efforts (see page 26) to enhance the system’s ability to withstand disasters. This has contributed to clients’ BCP.

In July 2006, NRI started building a new data center in Yokohama to provide high-quality and secure

3. Systems Operation Service Business

Features of new data center in Yokohama

(1) Facilities meeting the highest classification (Tier IV) in the guidelines of the Uptime Institute, Inc.,*4 a global standard;

(2) Improved earthquake resistance (use of the spread foundation method for stronger base, a basic quake-absorbing structure, aggressive use of special materials that reduce vertical shaking);

(3) Advanced security measures (X-ray inspection equipment, 3D holographic scanner; see page 25); and

(4) Environment-friendly measures (obtained highest rank of “S” from Yokohama’s Comprehensive Assessment System for Building Environmental Efficiency (CASBEE*5)).

In addition, the new data center meets the following basic requirements:•Built on site with firm ground that is very resistant to flood damage from

earthquakes;•Full array of social infrastructure (communications and power lines can be

multiplexed; and •Located within one hour of the center of Tokyo and can be accessed by

multiple forms of public transportation.

The new data center will have the following features, with the aim being to enhance reliability, availability and security at a highly functional center able to respond flexibly to diverse needs:

Part 3 CSR through Solutions

Capitalizing on an impressive track record that stretches back to the age of mainframe computers, NRI now provides high-quality system operation services that meet the diverse and advanced needs of its clients. Particular praise has been given for NRI’s systems’ interoperability, reliability, availability and security, as well as the company’s cutting-edge data center and automation.

In its tradition of focusing on operations, NRI provides advanced system operations to meet cutting-edge needs.

Outsourcing demands for accelerating system operations

Vigorous efforts to ensure high-quality operations

New data center provides cutting-edge service



Takashi KomoriExecutive Officer and General Manager,Information Systems Unit, Logistics Unit,Ryohin Keikaku Co., Ltd.

Yukio HanaiYokohama Data Center Business Department II, Data Center Quality Management Department

next-generation operation services, with completion slated for September 30, 2007.

The new data center is set up so that it is highly functional and can flexibly meet diversified needs. With this goal, the center conforms to Tier IV, the highest rank in the guidelines of the Uptime Institute’s standards for facilities, and has strengthened its reliability, availability and security by enhancing its earthquake resistance and adopting rigorous security measures. NRI believes that such steps will be increasingly valued in complying with the Sarbanes-Oxley Act (SOX Law) and the J-SOX Law.

Clients demand operation services that are commendable in both quality and efficiency, as well as being inexpensive. NRI has reinforced its facilities, functions and other infrastructure, and has also begun devising measures to improve the efficiency of its operations.

One of these measures focuses on reforming the operation business by automating the data center. There has been great progress in automation in the United States, where unmanned operation is already possible. However, in Japan manned operations are sought by customers for the sense of security they provide. NRI runs three shifts at its data centers, but plans to encourage automation in the future in the expectation that this will not only improve efficiency but also reduce operational risks.

Moving ahead with automation requires specialized employees able to work in small teams to resolve breakdowns. Consequently, NRI is endeavoring to train employees who can support an advanced service system. NRI has already established an internal credentialing program for operations using Senju Family, an operation management tool that the company developed in-house. NRI also plans to augment its education program and credentialing program to train personnel who will pursue high value-added operations.

*1 BCP: Business Continuity Plan; this is a plan, including managerial methods, by which a company avoids interruption of important operations and decline in corporate value in the event of a natural disaster or other incident that may damage the company’s facilities and equipment.

*2 J-SOX Law: The official name is the Financial Instruments and Exchange Law. This is the Japanese version of the SOX Law that was established in July 2002 in the U.S., with the objective of improving the transparency of corporate accounting and strengthening internal controls. This law will be adopted from the fiscal year beginning April 2008 in Japan.

*3 The ITIL systematically standardizes the operational processes and methods for operating and managing systems. It is beginning to be used both in Japan and internationally for guidelines when setting and revising internal corporate regulations and procedures.

*4 Uptime Institute’s guidelines: Tier Classifications Define Site Infrastructure Performance established primarily by European and U.S. financial institutions as standards assessing and ranking data centers for the redundancy of their infrastructure and other factors.

*5 CASBEE Yokohama was developed in a joint project among industry, government and universities with the support of the Ministry of Land, Transportation and Infrastructure. CASBEE Yokohama is the city of Yokohama’s compilation of the CASBEE for New Construction (abridged version) for use in environment-friendly buildings.

Client’s view

NRI staff’s view

Data center is automated and personnel trained to provide next-generation operation services

Previously, Ryohin Keikaku hired separate companies to develop and operate each system, such as logistics and store management. This meant that each company had different operating systems, and it took a long time to resolve system malfunctions.

Accordingly, we began consolidating our operating systems, and asked NRI to standardize our infrastructure and operations. We also moved our system to NRI’s Yokohama data center. This not only improved operational efficiency, but also strengthened our system risk management.

We hope that NRI will give us advice and proposals from a variety of perspectives to facilitate relationships with development vendors and improve operational efficiency.

NRI began to standardize, automate and improve the efficiency of its processes in 2001. This led to great improvements in the quality of the operations business. However, many operations still require people, a requirement that cannot be skirted with the current system. After reflecting on this issue, we collaborated with the development division to design and develop a system enabling unmanned/automated operations. Once we are able to monitor and manage multiple systems in a centralized manner via a network, customer services can be consolidated and we will be able to anticipate system malfunctions.


independent auditors and the Internal Audit Department to rigorously audit the directors’ execution of operations.

Deliberations on appropriate execution of operations by Senior Management Committee

To ensure overall coordination and consensus on operations, NRI convenes a Senior Management Committee once a week. This meeting is attended by the president, two senior executive vice presidents, corporate vice presidents and corporate auditors. A total of eight committees, including the Internal Control Committee, the Crisis Management Committee and the Disclosure Committee, have been set up under the Senior Management Committee to deliberate on specialized projects when necessary.

Building an internal control structureAt the Board of Directors meeting held in May 2006, NRI decided on the Basic Policy on Constructing an Internal Control System. Based on this policy, employees must comply with all relevant laws and regulations, and NRI is working to build a structure that will ensure appropriate information management and risk management, as well as effi cient Group management.

The Companies Act implemented in May 2006 expanded the freedom given to corporate management, but required that companies redouble their efforts to strengthen corporate governance and to promote internal control. The NRI Group is ensuring thorough corporate governance and compliance, and is also setting up an appropriate internal control structure.

Basic principles of corporate governanceThe NRI Group believes that the objectives of corporate governance are to make prompt and accurate decisions on operations and to achieve transparent and highly effi cient management, the end result being enhanced corporate value. The following policies have been put in place.

Adding value to the General Meeting of Shareholders

NRI strives to hold its General Meeting of Shareholders earlier than the norm, and has also introduced electronic voting so that more of its shareholders can participate in the shareholders’ meeting. NRI also presents briefi ngs by the appropriate people in charge immediately after the shareholders’ meeting with the aim of deepening understanding of the company.

Clarifying management responsibilities of Board of Directors

As of the end of June 2007, there were 11 directors on the Board of Directors, including two external directors. The board members have terms of one year, which encourages a prompt response to changes in the management environment, and also ensures that management responsibilities are clarifi ed each fi scal year.

The Board of Directors Meeting is held once a month in principle, at which time decisions are made about the basic conduct of operations, and these operations are monitored. The board members appoint corporate vice presidents to be in charge of conducting operations, and these corporate vice presidents carry out their operations in line with the company policies decided at the Board of Directors Meeting and with the directions of the president.

Reinforcing the auditing function of corporate auditors

As of the end of June 2007, NRI had fi ve corporate auditors, of which three were external auditors. At their monthly audit meetings, these auditors express and shape their views and make decisions on important auditing issues. The auditors also attend the Board of Directors meetings, the Senior Management Committee meetings and other important meetings, and they collaborate with

Corporate governance

Internal Control

Organization structure for internal control

Supervision

Ris

k-sp

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tees

Audit

Senior Management Committee

InternalAudit Department

ComplianceCommittee

CorporateAuditors

Accounting auditors

Directors,Board ofDirectors

President

Board ofCorporate Auditors

Chief InternalControl Director

InternalControl

Committee

Div

ision

s/Dep

artm

ents

CorporateAdministration/

Quality Management

Division

Business divisions

Group subsidiaries

Advice, support,

monitoring

Advice,support,

management

Promotion of internal controls

A representativedepartment isassigned to

address each risk

InternalControl

Department

Internal ControlPromotion Sub-committee

Adm

inist

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artm

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divi

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Representative departments

(As of April 2007)

AuditorDepartment

Advice,support,

management

General Meetingof Shareholders

RewardAdvisory

Committee

Disclosure Committee

CrisisManagement

Committee

CapitalInvestmentAppraisal

Committee

SystemsRelease

Committee

SystemsDevelopmentCommittee

SupervisionSupervisionSupervisionAccounting Accounting auditaudit

Accounting audit

NRI is strengthening its corporate governance and establishing an internal control structure, including thorough compliance, to ensure highly transparent and effi cient management.

Strengthening Corporate Governance, Internal Controls and Compliance


Reporting hotline set up and “Compliance Whistle” information cards distributed

Employees must report any actual or suspected ethical, legal or regulatory violation discovered in NRI Group business activities to either their immediate supervisor, the departments in charge of such matters, the internal hotline linked to the Secretariat of the Compliance Committee or the external hotline connecting to the company’s law fi rm. Employees can use the hotline to report and consult anonymously, thus protecting the identity of the whistleblower.

In fi scal 2006, the new whistle-blowing regulations expanded the use of the compliance hotline to employees of partner companies and temporary employees. A leafl et entitled “Compliance Whistle,” which describes the purpose and procedures for the contact points for reporting and consultation, was distributed to all NRI employees, to employees of partner companies and to temporary employees.

Ensuring compliance through training and educational activities

The NRI Group ensures thorough compliance by providing training courses on accounting, fi nancial and legal compliance, as well as e-learning on topics such as “Compliance and Individual Responsibility,” “Preventing Leaks of Private Information on Individuals and Insider Trading,” “Insider Information Management and Preventing Insider Trading” and “Preventing Sexual Harassment.”

For NRI employees, including new hires, training on corporate ethics, human rights, legal compliance and information security tailored for specifi c employee groups is given when the employee is promoted. Sales persons are also given training in contracts and confi dentiality management, and personnel responsible for internal expenditure in all departments are given training in accounting and fi nancial compliance.

In March 2007, particularly important behavior rules were selected from internal regulations and compiled as the essential rules that all executives and employees must follow. This was intended to raise NRI Group employees’ awareness of compliance issues. These rules were compiled as a pamphlet for distribution to all employees.

The NRI Group will continue to ensure the compliance of all employees and strive to improve understanding of compliance.

In fi scal 2006, NRI strengthened information security in all divisions, inspected work contracts and improved software management.

Internal controls established for fi nancial reportsThe Financial Instruments and Exchange Law mandates that, from the fi scal year starting in April 2008, managers of listed companies must assess the effectiveness of internal controls related to fi nancial reports, and disclose the results.

In fi scal 2006, NRI began to assess its company-wide internal controls, and worked to document and assess internal controls on the operational process.

Revisions to internal regulationsThe Companies Act requires that companies establish a framework ensuring that employees comply with laws and regulations. In line with this, beginning in fi scal 2006 the NRI Group revised its internal regulations and launched a major revision.

Basic compliance policies and implementationIn addition to complying with laws, the Ethical Code of the NRI Group and the Code of Business Conduct of the NRI Group represent its basic policies on compliance. Responsibility for compliance is clearly delineated and the ultimate responsibility rests with the chief ethics offi cer, a role played by the president, and the chief compliance offi cer, a role played by the person who holds the two posts of corporate executive vice president and director of the Compliance Committee.

Compliance CommitteeThe Compliance Committee was established as an advisory body to NRI’s Board of Directors in 2000 to guide on ethical and legal compliance. The Committee works with the Secretariat of the Compliance Committee and with the departments in charge of compliance to investigate and prevent legal and ethical violations.

Compliance regulationsThe NRI Group established compliance regulations in 2003 to ensure absolute compliance with ethical codes and laws and to raise society’s confi dence in the company. These regulations require that employees sign a compliance contract when they join and leave the company and as necessary. Compliance regulations were revised, and regulations governing whistle-blowing and protecting whistle-blowing employees were established to comply with the Whistleblower Protection Act, which went into effect on April 1, 2006.

Compliance

Fundamental Rules for Executive Offi cers and General Staff


Quality policy in NRI-QMSAs a company that dreams up the future for society, we add to customer satisfaction through continual quality enhancement activities.

Quality enhancement structure on system development

Divisions

General manager

Person in charge ofquality management

in departments

Employees

Division manager ofQuality Management Division

General manager ofQuality Management

Department

Person in charge of qualitymanagement in divisions

Division manager

General managers of theBusiness Planning Department,

and the OperationalAdministration Department

Quality management review

Division qualitymanagement review

DepartmentsDepartmentsDepartments


In light of the substantial responsibilities on the shoulders of the information service industry, NRI has made its commitment to quality a key component of management and it strives to make continual quality enhancements.

Key Management Issues

1. Quality Management

In the modern world a wide variety of information is linked in complex networks. Information systems form an important framework underpinning public life. The NRI Group recognizes the gravity of its responsibility as a company providing the IT solution services that are required to develop and run such advanced information systems, as well as providing the consulting services intimately connected to the client’s management and general business activities. Accordingly, NRI focuses its efforts on ensuring and enhancing the quality of its services.

Commitment to quality plays a key role for NRI management

Since it was founded, the NRI Group has made its commitment to quality a key component of management. This commitment is predicated on the responsibility of each business division to ensure quality when providing services and implementing projects. In addition, NRI has set up departments whose role is to enhance quality company-wide.

Currently, the Quality Management Division plays a central role in these efforts, and has developed an organizational structure to support quality enhancement in each division from the start of a system development project through to its completion. This project support involves establishing rules and standards for the quality of processes and deliverables. One way of providing this support is by developing quality management systems and formulating standardized guidelines, while giving advice and guidance by departments in the Quality Management Division.

In fi scal 2006, a Quality Enhancement Committee was established. It is made up of the employees in charge of quality management in all divisions and is headed by the deputy division manager of the Quality Management Division. This committee has redoubled efforts to reduce system failures company-wide and is seeing meaningful results.

Quality enhancement through NRI-QMSIn April 2001, NRI developed NRI-QMS,*1 a quality management system consolidating rules and procedures for operational processes. This system is based on the knowledge that has developed and accumulated over the years through NRI Group quality enhancement activities. In January 2002, NRI acquired ISO 9001*2 certifi cation for system development projects over 100MM.*3

The Quality Management Division takes the central role in applying NRI-QMS, and a broad range of initiatives is in place to promote quality enhancement activities throughout the company. This structure is facilitated by the people in charge of quality management in each division. The Quality Management Division analyzes and evaluates information on project track records, system failures and customer satisfaction (see page 32), and uses these results to revise NRI-QMS. This ensures that project quality enhancement activities are implemented on a continual basis.

*1 NRI-QMS: NRI Quality Management System*2 ISO 9001: This is a set of standards for quality management systems maintained by the International Organization for Standardization (ISO). A company must

meet these standards to certify that it has a quality management system in place, and that the system is utilized and improved upon.*3 MM: Man Month, the quantity of work expressed as the number of workers multiplied by the number of months.

Quality management in system development


Development Committee under the Senior Management Committee (see page 18). The Systems Development Committee is chaired by the division manager of the Quality Management Division with the support of the division manager of the Advanced Information Technology Division as vice chairman, and the participation of the general manager of the Project Assessment Department, the general manager of the Quality Management Department, and NRI certifi ed personnel (see page 38). The Systems Development Committee has met regularly since August 1987 and it met 137 times in fi scal 2006.

Promoting project assessment activities to monitor and support projects

Making sure of the success of large, sophisticated, high-risk projects requires compliance with NRI-QMS and other rules. It also requires a framework for systematically supporting projects whenever necessary.

To this end, the Project Assessment Department plays a central role in monitoring system development projects in individual divisions and in providing situational support for project managers. Quality analysis experts objectively evaluate the quality of the development process and deliverables and provide guidance in making improvements.

Sharing development methodologies and expertise using the NRI Standard Framework

The NRI Standard Framework stipulates the guidelines for the activities, operations and deliverables that are an integral part of the NRI Group’s system development process. These guidelines incorporate specifi cations as well as other templates and helpful components that can be used in system architecture development, as well as practical know-how related to design, development and project management in conformity with NRI-QMS. The application of the Framework can be customized to fi t the specifi c attributes of individual projects and can be shared across the entire Group via the intranet, thus helping to improve project quality and productivity.

Monitoring project progress and risk in review committees

Under NRI-QMS, the course of a system development project is governed by internal review committees.

These review committees, which are set up in all divisions, identify and assess project progress and risks, provide guidance to those involved in the project, and report results of meetings to management. Projects that require company-wide examination due to their scale or particular characteristics are reviewed by the Systems

* PDCA cycle: A series of actions consisting of plan, do, check and act; the results of the process are utilized in subsequent plans.

Quality enhancement in system development

Sales, proposal andproject planning

Implementing system development projects

• Survey and analysis of customer satisfaction

• Collect data, analyze and evaluate project performance

• Analyze system failure

Offering IT solution services

Standard guidelines

• Defines standards for operations and deliverables in system architecture

• Provides templates and components, and accumulates and shares expertise

Review committee• Confirms progress and assesses risks at each major

project milestone• Provides advice on projects and reports to management

Project assessment• Ongoing project monitoring• Expert quality assessment, advice and support

Quality management system• Defines processes, develops systems and rules• Process measurement, analysis and improvement

(PDCA cycle*)

* ISMS: The Conformity Assessment Scheme for Information Security Management Systems certifi ed by the Japan Information Processing Development Corporation.


1. Quality Management


Enhancement InitiativesIn system development, even after a system has been launched, quality and performance must be maintained, while improving functions, to adjust to changes in customers’ needs, to the operating environment and to other requirements. The NRI Group emphasizes this kind of enhancement work, which goes beyond mere system maintenance and requires a high level of expertise and a profound knowledge of operations.

The NRI Group is introducing innovations to its enhancement work in order to improve quality and productivity. As part of these efforts, NRI started an Enhancement Innovation Committee in April 2005 to share information across divisions and discuss issues. To optimize visualization, procedures and standardization as well as share outcomes, in April 2006, the Enhancement Innovation Department was established.

Acquisition of ISO 9001 certifi cation, ISMS and Privacy Mark

NRI has provided system operation services with consistent quality, 24 hours a day, 365 days a year, for many years. The quality management system developed through this experience was recognized in 2001 with the acquisition of ISO 9001 certifi cation.

NRI believes that the security of information systems and data centers is a crucial part of the quality of its system operation service, and accordingly obtained Privacy Mark certifi cation in 1999 and ISMS* certifi cation in 2001 (see page 25).

Proprietary tools improve operational qualityNRI has developed proprietary tools for its system operation service to ensure quality by preventing system failures and responding quickly to system malfunctions. With these tools, in the event of failure, e-mail notifi cations are automatically sent and the procedures to be followed are automatically displayed. The program for the tools can also be automatically registered by and incorporated into the work fl ow.

Quality policy in system operation serviceWe promote continual quality improvement activities in our system operation service 24 hours a day, 365 days a year, to further enhance customer satisfaction.

A proprietary NRI product named Senju is a comprehensive operations management tool that automates system operations, saves energy and minimizes errors. In addition, collaboration between the product developers and the operators optimizes system operations.

Stringent measures to prevent recurrence of system failures

At NRI, divisions responsible for system development and divisions working on system operations work together to investigate and fi nd the causes of system failures, such as processing delays due to spikes in data volume or operator errors. The divisions then take appropriate measures to address these problems. At the same time, NRI also applies these measures to other similar services and systems that have experienced failures in order to prevent any recurrence. NRI gathers and compiles information on the causes and outcome of failures and analyses patterns so that they can be used to improve operational processes.

Tailoring quality improvement activities to specifi c project characteristics through the PDCA cycle

NRI’s Consulting Division and Systems Consulting Division provide consulting services on business management, policy making and systems development to companies and government agencies in a wide range of industries and business sectors. NRI’s customers work in a broad array of business domains, and the challenges they face grow more complex every year. Therefore, quality management must be tailored to the particular project’s attributes and executed with appropriate timing.

To achieve this objective, the Consulting Division convenes the Planning and Development Committee at the planning and proposal stage, and at the completion of the project the Consulting Division organizes the Project Review Committee and a customer satisfaction (CS) survey (see page 32). Further, as part of its ongoing efforts to increase the level of quality in consulting services through the project’s PDCA cycle, NRI collects insights from these activities and incorporates them into its Knowledge Management System for use in its own research, planning and proposal activities in the future.

The Systems Consulting Division holds a Review Com-mittee and conducts CS surveys. To continually improve quality, the information gleaned from these efforts is con-veyed to employees via division meetings and the intranet.

Quality management in system operation services Quality management in

consulting services

*1 CMMI: Capability Maturity Model Integration. CMMI, CMM and Capability Maturity Model are all registered trademarks of SEI.*2 SW-CMM: Capability Maturity Model for Software. This was the fi rst capability maturity model that SEI announced, and was later integrated with CMMI.*3 EVM: Earned Value Management; a technique by which the gap between estimates and actual results is always identifi ed to assess a project’s progress.

All NRI’s divisions take responsibility for ensuring the quality of their services and projects. In line with this policy, in April 2001 the Public Insurance Systems Project Department began working on project management in accordance with Capability Maturity Model Integration (CMMI).*1 In May 2006, the department went through an appraisal to assess the achievement of all components and in June 2006, notifi cation was received that it had achieved maturity level 5.

CMMI is a process model based on software best practices developed by the Software Engineering Institute (SEI) at Carnegie Mellon University in the United States. The maturity levels, which indicate the level of achievement, are measured against a scale of fi ve (staged representation), with level 5 be-ing the highest. In addition to staged representation, CMMI’s maturity levels include continuous representation. CMMI has been adopted by organizations such as the U.S. Department of Defense, NASA and The Boeing Company that demand an extremely high level of quality in their software. As of June 2006, only about 20 companies in Japan had attained level 5.

The Public Insurance Systems Project Department develops and runs an extremely large multi-vendor system that links three vendors’ mainframes to six vendors’ dedicated terminals of 10 different types. To increase preparedness for disasters, there are duplicate systems in eastern and western Japan. Over 1,000 people are involved in this system, including customers, business partners and NRI employees. Such a large collaboration makes a shared project management methodology absolutely essential to maintaining and improving the quality of development and operations. In this respect, CMMI is ideal: it is popular, intelligible and has a high status worldwide. CMMI could also be easily incorporated into NRI-QMS.

NRI’s customers, the government and other public offi ces began to make CMMI levels a condition for bidding on

software development projects. Accordingly, after considering the issue from many perspectives, in April 2001 the Public Insurance Systems Project Department decided to adopt CMMI (known at the time as SW-CMM).*2

To pursue CMMI certifi cation, the Public Insurance Systems Project Department set up a team separate from the usual project system to establish processes and develop projects in conformity with CMMI. CMMI emphasizes a systematic training strategy, and two team members earned credentials as instructors for the CMMI introductory course so that the project participants could be effi ciently instructed in basic process improvement activities. The department also developed its own training curriculum aligned to the needs of participants.

Under this promotion system, the department set progres-sive targets and continued to improve its processes, fi nally achieving SW-CMM level 2 in March 2002, SW-CMM level 3 in November 2003 and CMMI level 5 in June 2006. Progressively attaining objectives meant that participants were fully aware of the outcome, while signifi cant results were achieved as operations gradually became streamlined.

In specifi c terms, quantitative quality management using the defect removal rate and control charts throughout, from the upstream process to the test process, has made it possible to accurately forecast the nature of the next process. Also, NRI is now able to obtain detailed updates on the progress of each operation on a daily basis while adopting the Earned Value Management (EVM)*3 concept, which allows delays to be identifi ed quickly and personnel to be added to the job to keep things going according to a plan. Moreover, replicating such improvements throughout the organization decreased actual failures to about one-seventh of the rate before CMMI was introduced.

CMMI maturity levels Level 1 Initial: Processes are usually ad hoc and the organization usually does not provide a

stable environment.Level 2 Repeatable: Successes can be repeated and individual projects are managed.Level 3 Defi ned: Standard processes are defi ned, clearly addressed by the organization

and organization looks ahead to future; processes are used consistently across the organization.

Level 4 Managed: Projects are managed using quantitative and statistical data.Level 5 Optimizing: Improvements are continually repeated and always optimized.


Example of quality management in Public Insurance Systems Project Department: efforts to achieve CMMI Level 5 certifi cation

Certifi cate on achieving CMMI Level 5


2. Information Security Management


NRI strives to improve security with a sophisticated security management framework that will earn the trust of customers and society and serve as a model for the corporate sector.

The NRI Group fully understands the social role that it should play as a company providing information services. As such, the NRI Group is working to become a corporate group with a sophisticated security management framework that will earn the trust of customers and society and serve as a model for the corporate sector. In fi scal 2006, in addition to staff e-learning, NRI established a special area on a portal on its intranet that provides simple, one-point lessons in information security to spread awareness and knowledge of information security among employees.

Promoting organizational effortsAt NRI, the chief information security offi cer (a corporate executive vice president) is in charge of information security, and is responsible for all planning, promotion, adoption, confi rmation, implementation, and education related to information security. Under the chief information security offi cer, the Security Management Section takes the leading role in drafting, planning and promoting information security, and works to systematically improve the level of security. Also, the Information Security Sub-committee, consisting of executives and general managers concerned with information security management, reviews activities related to information security. The committee members discuss security issues and actions and make improvements.

When drafting and implementing measures, NRI utilizes security technologies and knowledge from NRI SecureTechnologies, Ltd., a member of the NRI Group that specializes in information security, and from the Advanced Information Technology Division, which conducts surveys, research and evaluation of advanced technologies. NRI also works with the Information System Planning & Control Department to run and maintain information security infrastructure.

For individual projects such as system development and system operation, division managers, the people in charge

of information security in each division, general managers, those in charge of security in each department, and project leaders all work together to manage information security in conformity with the policies and in-house rules of NRI.

In fi scal 2006, NRI conducted an information security audit targeting all NRI divisions. This audit ascertained operating conditions and identifi ed problem areas, and NRI is working to make improvements. NRI will continue to conduct information security audits every year and to address problem areas.

Information security management system Declaration of Information Security Measures

Akihisa FujinumaPresident, CEO & COO

Nomura Research Institute, Ltd.Revised July 2006

Nomura Research Institute, Ltd., and its group companies (hereinafter collectively referred to as the “NRI Group”) declare that the NRI Group shall observe all applicable laws and ordinances and shall fully recognize the roles that companies offering information services should play. The NRI Group has established a framework of advanced information security management that can serve as a social model to enable its companies to continue to be worthy of customer and public trust.

1. The NRI Group shall promote organizational, personal, technical and physical information security measures by establishing a group-wide management structure for information security under the supervision of the chief information security offi cer.

2. In conducting its business activities, the NRI Group shall plan and implement appropriate measures for managing information security in accordance with the risks inherent in each information asset.

3. The NRI Group shall provide all of its personnel with comprehensive education in information security, thereby ensuring that all employees conduct business activities with suffi cient information security literacy.

4. The NRI Group shall continually improve its procedures to maintain information security in response to any changes that might occur in applicable laws and/or ordinances as well as in the social environment, and/or to any changes in the risks regarding information security. At the same time, we shall strive to maintain and improve security measures in concert with our customers.

Information security management structure Planning

andpromotion

Support

Practice

Corporate Administration (Legal Department,Corporate Communications Department,

Information System Planning &Control Department, etc.)

Advanced Information Technology Division

NRI SecureTechnologies, Ltd.

NRI Shared Services, Ltd.*

NRI Learning Network, Ltd.

Chief information security officerInformation Security Sub-committee

Person in charge of informationsecurity in each division

Person in charge of informationsecurity in each department

Security Management Section

Division manager in charge

Department general manager

Staff

* The company name was changed to NRI Workplace Services, Ltd., in October 2007.


Information security regulations in placeNRI has established management regulations governing information security, confi dential information and personal information in compliance with laws on information security, changes in social conditions and advances in information technology. These regulations are revised when necessary.

NRI refers to the guidelines devised and issued by government offi ces when setting these regulations and rules to ensure that it achieves the high level of security demanded of companies in information services.

In fi scal 2006, NRI laid down the Ten Commandments of Information Security, based on society’s expectations and on case studies from the past few years. The Commandments highlight the ten most important rules for preventing accidents and errors in everyday operations, and are designed for use in employee education.

Internal education provided via intranetThe NRI Group has created a security-related portal on its intranet to ensure that all employees are knowledgeable about regulations and rules, know-how and information security issues. In addition, employees are educated about new and revised regulations through briefi ngs and e-learning programs.

In fi scal 2006, NRI set up a special page on the portal that provides simple, one-point lessons in information security. This innovative channel for disseminating concise information and educating employees uses video clips and can be easily accessed by anyone in the company. One of the lessons, for example, was designed to examine the functions of “Crypto-bin,” a registration-based Internet mail service, and promote its usage. Using just a Web browser in a process similar to e-mail, fi les being sent can be encrypted to ensure secure delivery.

Reinforcing doorway monitoringNRI prevents fraudulent incursions at its main offi ces with two sets of security gates between the building entrance and the workplace. In addition, each NRI data center is implementing measures to prevent fraudulent access and fraudulent use, including requiring authorization for access to networks, encrypting portable media,

designating security areas and monitoring entrances for computer storage media brought into or taken out of the facility. In addition, 3D holographic scanners and X-ray devices have been installed at data center entrances to enhance inspection and security clearance for people entering and exiting the facilities.

Developing an information security infrastructure

NRI in principle prohibits employees from taking important information such as confi dential data relating to clients out of corporate facilities. The hard drives of every laptop PC used outside the company are encrypted for those situations that require taking such information outside the company to perform a given task.

In fi scal 2006, NRI reinforced the functions of its PC security tool, “SecureCube/PC Check,” which was introduced in all PCs in fi scal 2005 by restricting the use of USB memory and other external memory devices. NRI plans to use operation logs to record fi le access and printing, thus further enhancing information security. In addition, NRI has installed lockers at the Marunouchi Center to prevent the loss of laptop computers and confi dential documents outside the offi ce.

Acquiring certifi cations for information security and protection of personal information

All businesses at NRI SecureTechnologies and some of NRI’s businesses have received ISMS certifi cation, a set of standards for information security management. Further, NRI, NRI Network Communications, Ltd., and NRI Data iTech, Ltd., are certifi ed under the Privacy Mark. In line with this, NRI’s basic guidelines on private information collected and used by the NRI Group—“Personal Data Protection Statement” and “Privacy Policy”—are published on the NRI website.

In fi scal 2006, the NRI Group used e-learning to provide training in the Privacy Mark system to further disseminate the importance of the Personal Information Protection Law and types of information that employees must protect.

3D holographic scanner and X-ray device

One-point lessons in information security

Privacy Mark

Reinforcing information security

*1 BCP: Business Continuity Plan; this is a plan, including managerial methods, by which a company avoids interruption of important operations and decline in corporate value in the event of a natural disaster or other incident that may damage the company’s facilities and equipment.

*2 Disaster recovery: Measures to recover from computer system failure in the event of a disaster.

Crisis management promotion structure

Emergencyheadquarters

Onsite emergency headquarters

Secretariat

Employees

Executives, division managers,general managers, etc.

President and vice presidents

Chairman of the CrisisManagement Committee

Crisis Management Committee(held jointly by the Group)

Establishing procedures and policies and reinforcing NRI’s crisis management structure to ensure that business operations are not interrupted by crises.


3. Crisis Management


The potential impact of natural disasters, system failures and information security breaches has increased exponentially as a result of globalization and extensive corporate networks. This has prompted the NRI Group to reinforce its crisis management structure.

The NRI Group formed a Crisis Management Committee in April 2002 and devised a crisis management policy in response to the Y2K issue and the 9/11 terrorist attacks in the United States.

In July 2003, NRI established a Contingency Plan laying out its initial response procedures as well as specifi c action guidelines in the event of earthquake and other natural disaster, large-scale system failure, information security breakdown and other serious accidents. The plan has been revised as necessary.

Taking steps to ensure business continuity in the event of a crisis

In April 2006, the NRI Group’s commitment to preparing for contingencies encouraged it to set up a Crisis Management Section to strengthen security management, including the reinforcement of internal controls. This section produced the NRI Group Business Continuity Plan (BCP)*1 and disaster recovery plans,*2 and began to prepare BCP guidelines. These guidelines are intended to increase NRI’s ability to respond to specifi c crises that it might face. Based on scenarios of crises such as large-scale earthquakes, the section assesses the impact of such crises and sets practical, company-wide prevention measures, as well as measures from initial response to recovery.

Raising awareness of crisis management and making emergency communication policy more robust

The NRI Group gives all employees a copy of the Contingency Handbook, which lays out action guidelines in the event of a disaster. NRI also strives to foster a sense of awareness of the need for crisis management throughout the company through disaster prevention training.

Further, NRI has developed a procedure to contact all employees by e-mail or phone to confi rm their safety in the event of an earthquake or other major disaster. In fi scal 2006, this reporting process was revised, and the company set a target time by which safety would be confi rmed, and then conducted a training session concerning rapid confi rmation of employee safety.

In addition, NRI incorporated training in the use of automatic external defi brillators (AEDs) into the disaster prevention training. NRI also began holding regular meetings to exchange information on initial response and BCP measures with the management companies of major offi ce buildings that it will be working with to ascertain conditions in the event of a disaster.

Building up emergency suppliesA serious disaster may prevent many employees from returning to their homes. To prepare for this possibility, NRI has pre-positioned stockpiles of emergency supplies suffi cient for 13,000 people, enough to cover temporary staff, employees of its business partners stationed in NRI’s offi ces and all employees of the NRI Group.

Measures to prevent infection by new fl u strainConcern over infectious diseases such as the avian fl u that broke out in Japan and in other countries increased in fi scal 2006. Accordingly, the NRI Group began to prepare guidelines for measures to take in the event of social chaos due to the spread of an infectious disease, and stocked up on masks preventing infection and on disinfection kits.

Crisis management strategy and signifi cant related efforts

Personal emergency supplies stocked in NRI Group offi ces

Example of R&D project: Survey of 10,000 consumers analyzing such things as confi dence in the economy and spending habits

Since 1997 NRI has conducted a “Survey of 10,000 Consumers” every three years. The results of the survey analysis are used in NRI’s own argumentation and recommendations, and are widely used by government agencies and companies as raw data employed to interpret changes in public sentiment and behavior on a time line from a multi-faceted perspective.

The survey conducted in July 2006 demonstrated that more people were optimistic about economic trends and their own income in comparison with the 2003 survey. For example, 18.3% of respondents believed that the economy would improve from 2006 through 2007, which was a record high.

Further, the public’s tendency to make fi rm long-term plans is increasing. In response to a question asking whether they assumed that their incomes would increase or decrease when planning their lives, 22.1% answered that they assumed their incomes would be lower. As in the 2003 survey, this was more than the proportion of respondents who believed that their incomes would be higher. Moreover, many people were worried about future tax hikes and the social insurance system, with 33.0% of respondents reporting anxiety that taxes and social insurance premiums would increase. This has been on an upturn since 2000.

In addition, NRI conducted a survey on changes in spending habits and buying channels, and used this survey to analyze changing consumer trends and make corresponding recommendations.

NRI views R&D as its most important investment, and pursues it with diverse viewpoint.

4. Research and Development


Research and development (R&D) is a crucial area for investment for the NRI Group. It ensures that NRI introduces, encourages and builds on innovation, while adding to corporate value. The NRI Group conducts R&D projects in information technology focused on advanced, fundamental and development technologies. These projects are aimed at enhancing NRI’s competitiveness, while at the same time improving quality of life and giving something back to the development industry and society.

Encouraging R&D, meeting business demand and social needs

The NRI Group pursues R&D that:

1. Continually generates new competitive business and business areas

2. Enhances and adds value to existing businesses and services

3. Presents sophisticated solutions to both Japan and the world at large

R&D activities are conducted by the Advanced Information Technology Division, which oversees R&D in the IT fi eld, at the Center for Knowledge Exchange & Creation, which functions as a think tank, and in individual divisions, which are responsible for developing businesses and products according to their respective functions. These groups either conduct R&D that has a direct effect on bolstering revenue or take a medium- to long-term perspective on exploring research areas that will potentially meet social needs or that have implications for the entire industry.

R&D themes chosen from a range of perspectivesNRI’s R&D activities fall into three categories:

1. Research into information technologies, both advanced and fundamental, and into production and development technologies

2. Research into developing new businesses and products, feasibility studies, prototype development, and experimental trials

3. Surveys and research on new social systems

When choosing R&D activities, the Research and Development Committee examines the submitted recommendations on the basis of their value, uniqueness, level of innovation and necessity.

Promoting research activities based on an R&D strategy

In March 2005, the NRI Group developed an R&D strategy built around a medium- to long-term perspective that prioritized four themes: fi nance, distribution and service, China and other Asian countries, and information technology. Based on this strategy, in fi scal 2006 NRI conducted research on system solutions for fi nancial institutions’ services for wealthy clients and research on network services using radio-frequency identifi cation tags (RFIDs).

NRI also conducted joint research on China’s socio-economic situation with Tsinghua University. In April 2007, the Nomura Research Institute – Tsinghua University China Research Center was established.

R&D and concerted efforts

NRI Group develops intellectual property businesses

As part of its consulting business, NRI provides support in developing corporate intellectual property strategies and in drafting policies.

In addition to the patent information service on the Internet, NRI Cyber Patent, Ltd., provides services related to intellectual property such as consulting on functions to share information on patents throughout a company, tie-ups with management systems, and patent analysis and evaluation.

0

40

80

120

160

FY98 FY02FY01FY00FY99 FY03 FY04 FY06FY05

20

2 4 5 10 1522

44

63

23

62 61

103 106

121

140

NRI patent applications and registrations

Unit: case

Patent applications (total for year)

Patent registrations (accumulated total)

73

33

Proposals for role of intellectual propertyGiven the volatile environment surrounding intellectual property, NRI presents a wide range of opinions and proposals in light of anticipated social trends and modifi cations to the legal system, with the aim of developing future intellectual property systems.

In fi scal 2006, NRI published several papers on intellectual property rights, including the “Proposal for an Innovation Platform to Protect Intellectual Property in Japan” and “Toward a Reliable Patent System: New Phase for Software Patents.”

Further, in May 2006, the legal issues committee of the Japan Information Technology Services Industry Association (JISA) recognized the general manager of the Intellectual Property Department, Junichi Inoue for his achievements in educating the information service industry about intellectual property rights. NRI will continue to promote activities that popularize the intellectual property system in the information service industry.

NRI works actively to acquire patents and raise the profi le of the role of intellectual property in light of social trends.


5. Intellectual Property Management


Intellectual property is becoming increasingly important in corporate management. The NRI Group is therefore reinforcing its stance on intellectual property: aggressively acquiring intellectual property, preventing the violation of others’ intellectual property rights and making recommendations on its long-term role in the information and software sector.

The Intellectual Property Department manages the NRI Group’s intellectual property. In the planning and R&D phase of a new business, this department supports divisions by helping to identify new ideas and ways to avoid disputes provoked by the violation of others’ intellectual property rights.

The department appoints a member of staff to each division and maintains close communication with the person in charge on site throughout its work. The department also publicizes intellectual property guidelines and the most recent news in the fi eld of intellectual property via the corporate intranet.

Increasing patent acquisition in the securities, fi nance and distribution sectors

The NRI Group aggressively identifi es inventions generated in R&D or system development projects and applies for patents for them. Recently, NRI has been focusing on acquiring patents in the securities, fi nance and distribution sectors so that its clients can make confi dent use of high value-added information systems and services.

NRI also fosters a corporate climate that encourages innovation by involving intellectual property staff in patent briefi ngs and on-site discussions.

In fi scal 2006, the number of patent applications rose from 121 during the previous year to 140, doubling over fi ve years. The total number of patents that were registered in fi scal 2006 increased to 63, 19 more registrations than in the previous year (see fi gure at right).

The NRI Group’s incentive program rewards inventors with fi nancial incentives at three stages: when the patent is applied for, registered and commercialized. The incentives for commercialization are based on the potential profi t from the patent and the contribution of the patent to the value of the product or service.

Efforts related to intellectual property

Environmental targets and performance at NRI data centers (fiscal 2006)

Efficient use of electricity

Reduction in paper use

Separation of waste

Environmentally conscious activities

Other activities

1% reduction (compared to FY05)






Separation by type

Recycling of paper waste

Green purchasing of office supplies

Use of natural energy

Street clean-ups in the community

Develop human resources to promote environmental awareness

Increased by 3.1% (compared to FY05); Medium-term achievement: No fluctuation (average in FY04-FY06)

Decreased by 5.2%; Medium-term achievement: Decreased 4.6% (average in FY05-FY06)

Decreased by 12.4%; Medium-term achievement: Decreased 19.1% (average in FY05-FY06)

Increased by 0.7%; Medium-term achievement: Decreased 18.8% (average in FY04-FY06, compared to FY03)



Separated by type in conformity with local government ordinance and changes in ordinances

All paper is recycled after being shredded

Green purchasing of office supplies

All-night lighting on wind-solar power installed (Yokohama Data Center, September 2005);Solar-powered wireless loudspeaker installed (Osaka Data Center, October 2005)

Clean-up at Yokohama and Osaka Data Centers

4 internal auditors were accredited with ISO 14001 (FY06) for a cumulative total of 18 (FY04-FY06)

Target

Yokohama Data Center

Hiyoshi Data Center

Osaka Data Center

Yokohama Data Center

Hiyoshi Data Center

Osaka Data Center

All three data centers

All three data centers

Action Data center Performance

NRI’s data centers actively pursue environmental policies, while its offi ces strive to reduce their environmental impact.

6. Environmental Protection


Note: Medium-term achievements are for the three years beginning fi scal 2004. However, the Hiyoshi and Osaka Data Centers obtained ISO 14001 certifi cation in fi scal 2005, so their medium-term achievements are for fi scal 2005-2006.

All the NRI Group’s data centers have obtained ISO 14001 certifi cation. The Group will continue to reduce its environmental impact by reducing the use of natural resources and energy at its offi ces, as well as at its data centers.

ISO 14001 certifi cationIn principle, the information service industry’s environmental impact is believed to be less than that of the manufacturing industry. Nevertheless, large-scale data centers do consume a large volume of electricity.

The NRI Group obtained ISO 14001 certifi cation for its data centers in Yokohama, Hiyoshi and Osaka for ensuring appropriate management of electricity consumption and garbage management. There are plans for the new data center just completed in Yokohama to obtain ISO 14001 certifi cation in late 2007.

Reducing environmental impact at data centersThe NRI Group strives to reduce its environmental impact from a variety of perspectives. An example is by regularly checking the data centers’ own electric power generation facilities to prevent noise pollution in the surrounding areas.

Participating in “Team Minus 6%” campaignSince fi scal 2005, NRI has been involved in “Team Minus 6%,” a global warming prevention campaign promoted by the Japanese Ministry of the Environment.

As part of this campaign, the NRI Group is striving to reduce the use of electricity by introducing energy-saving offi ce equipment, enforcing a lights-out practice for meeting rooms when they are not in use, and requiring employees to turn off their PCs when leaving the offi ce. In addition, NRI encourages water conservation and advocates Cool Biz and Warm Biz Styles, government-led campaigns that encourage management to give employees the option of wearing lighter clothing in summer, or heavier clothing in winter, and to reduce the use of air conditioning.

Reducing environmental impact at offi cesThe NRI Group thoroughly separates waste in its commitment to recycling. NRI is making more offi ce equipment and supplies eligible for green purchasing and uses recycled paper in almost all NRI Group departments. The Paperless Work Promotion Sub-committee was set up in 2005 to reduce the use of paper in offi ce work.

ISO 14001 registration certifi cate

Measures taken at data centersMeasures taken at offi ces

Pursuing sound and sustainable growthThe NRI Group adheres to a basic policy of pursuing sound and stable growth and achieving profi t targets through effi cient use of business resources in order to meet the expectations of its shareholders and investors.

Since it was listed on the First Section of the Tokyo Stock Exchange in December 2001, NRI’s earnings have steadily increased, with both sales and operating profi t reaching record-high levels in fi scal 2006.

In fi scal 2006, NRI increased dividends and split its shares. It also increased the disclosure of fi nancial information.

Increasing dividendsNRI’s general policy on dividends is to make consistent and appropriate dividend payments, while at the same time building up internal reserves for long-term business development. Accordingly, NRI aims for a consolidated dividend payout ratio of 30% based on its operating revenue and cash fl ow.

NRI increased its annual dividends from ¥140 per share in fi scal 2005 to ¥180 per share in fi scal 2006 (amount per share before the share split effective on April 1, 2007).

Reductions in stock investment unitsWith the goal of creating conditions more conducive to investing in NRI, on April 1, 2007, NRI subdivided the shares of its ordinary stock held by the shareholders recorded in the shareholders’ registry and the benefi cial shareholders’ registry as of March 31, 2007. The sub-division was carried out at a ratio of fi ve shares for each existing share. In addition, NRI reduced the investment unit price for its shares.

The NRI Group believes that communicating with its shareholders and investors is crucial for deepening understanding of the company. In keeping with this belief, NRI actively discloses information, as described on pages 30 and 31.

Ensuring mutual understanding with shareholders

NRI endeavors to make general shareholders’ meetings more convenient for the participants. Accordingly, meeting notifi cations are sent by e-mail to those shareholders who have agreed to this method, and shareholders are also able to exercise their voting rights via the Internet.

Moreover, to assist shareholders in understanding the business operations of the NRI Group, briefi ngs by the appropriate people in charge are held as soon as the general shareholders’ meetings are concluded. These meetings provide an opportunity for NRI to directly report to shareholders on the current business environment surrounding the Group and on its future actions.

NRI also invites all its shareholders to the annual Dream up the future Forum (see page 42). In September 2006 this forum was held in Tokyo, and moved to Nagoya for the fi rst time in March 2007. In the Letter from NRI, its quarterly newsletter for shareholders, a semi-annual survey is conducted to more accurately ascertain their views.

Breakdown of shareholders

Others 9.5%

Companies incorporated outside Japan 21.0%

Companies incorporated in Japan 41.8%

Private individuals9.6%

Financialinstitutions

16.2%

Securities firms1.9%

Total: 16,987

(Based on the number of shares held as of March 31, 2007)

Engagement with Stakeholders

NRI strives to meet shareholder and investor expectations by reviewing capital policies and enhancing corporate value.

1. Engagement with Shareholders and Investors


Basic policy and major efforts in fi scal 2006

Capital policy

Augmenting communication and information disclosure

Increasing fi nancial information disclosureTo optimize the transparency of its management and ensure accountability to shareholders, investors and the market, NRI proactively discloses information in a timely manner and continually builds on its IR activities. In addition, NRI established the Disclosure Committee to improve the credibility of the materials it releases. The Committee reviews the procedures for preparing fi nancial statements, accounts and documents and ensures that the information provided is accurate.

As part of these efforts, NRI posts the Letter from NRI, annual reports (in Japanese and English) and posts briefi ng materials prepared for institutional investors and security analysts (also in Japanese and English) in the “Investor Relations” section of the company’s website (http://www.nri.co.jp/ir/english/). NRI endeavors to disclose useful corporate information to all shareholders and investors promptly, including quarterly releases of fi nancial results and supplements to fi nancial reports. In March 2007, NRI augmented its fi nancial information disclosure by issuing a brochure and holding briefi ngs for private investors, as well as by releasing information on a special section for the private investor on its website.

In addition, NRI conducts IR activities such as briefi ngs and small meetings for institutional investors and security analysts in and outside Japan, and holds interviews with a total of about 400 institutional investors and analysts every year.

As a result of these efforts, NRI has been highly praised for its commitment to IR, for its fair disclosure and for the information it discloses on corporate governance. This has resulted in NRI’s nomination by security analysts for the Awards for Excellence in Corporate Disclosure (Computer Software category) at the Security Analysts Association of Japan for the last four years.

NRI will continue to work to improve communication with shareholders and investors and upgrade its information disclosure.

NRI added to global social responsibility investment index FTSE4Good

In September 2006, NRI was added to the FTSE4Good, a global socially responsible investment (SRI) index. This was based on NRI’s Ethical Code and guidelines for corporate behavior, which outlines its basic stance on social responsibility, its policy and structures for addressing social and environmental risks and its other CSR activities.

The FTSE Group is a British provider of stock market information and associated data services. Previously, investment in corporations was assessed based on purely fi nancial information, but recently corporate performance has begun to be measured in terms of the environment and social responsibility. The SRI is used to assess investments in companies with impressive achievements in this area, and it is particularly valued in Europe and the United States. There are several SRI funds in Japan as well, and as of March 2007, NRI had been included in the Daiwa SRI Fund, the Chuo Mitsui Trust Socially Responsible Investment Fund, the Fukoku SRI Fund, the AIG/Resona Japan CSR Fund and the AIG/Hirogin Japanese CSR Fund.

Results of shareholder survey

Survey conducted from November 2006 to January 2007(Number of valid responses: 685 shareholders)

10.4

0 60 804020

(Unit: %)

7.8

Purpose of shareholding (multiple choices allowed)

Long-term holding

Sell when the share price rises

Buy additional shares

71.4

0 120906030

121

16

41

17

(Unit: Number of people)Expectations of NRI (free response)

Distribute profits, share splits, offer preferential

treatment for shareholders

Exhibit a strong corporate performance and

business expansion

Provide information to shareholders and briefings

on business

Share price measures


Website for private investors

Services with integrity and commitment to client satisfaction

The NRI Group achieves its corporate mission of earning the client’s trust and making steady progress together by following its basic policy of conducting business activities with integrity, fulfi lling contracts concluded with its clients and satisfying clients with its services.

In fi scal 2006, as in the previous fi scal year, NRI empha-sized compliance with client specifi cations and improved services to refl ect the recent client satisfaction survey.

Managing fi duciary responsibility and risksNRI decides to accept an assignment from a client only after due consideration of its responsibilities as a contractor. These responsibilities include meeting quality standards and deadlines, as well as accepting the legal, ethical and business risks of the project. This process involves credit screening using information provided by credit rating agencies and other analysts in Japan and abroad, as well as deliberations by the Senior Management Committee and meetings held in each division. Using materials such as plans, proposals and estimates, a decision is made on whether to take on a project from a comprehensive assessment that considers the project’s possibilities, growth potential and social impact.

Honoring contracts through full compliance with client specifi cations and quality management

NRI honors its contracts with clients by ensuring full compliance with all client specifi cations, and by providing a management team that is vigilant about potential

quality issues, matters of information security and risk management (see pages 19 to 26).

NRI conducts client satisfaction surveys (CS surveys) for all of its projects to ensure that valuable insights from clients lead to better service. NRI uses survey methods and analytical procedures that take a multifaceted approach to assessing client satisfaction. This includes examining the levels of satisfaction with those aspects that the client prioritizes and the client’s future intentions, in addition to overall satisfaction.

NRI contrasts the client’s evaluation with its own evaluation, and also quantitatively analyzes and evaluates the survey results. An understanding of the organizational problems and issues this process identifi es is used to devise measures to improve quality and to add value in other areas.

NRI holds forums for clientsThe NRI Group holds New Year Forums and Dream up the future Forums (see page 42) addressing management and social issues in a timely manner to assist the clients in meeting their objectives. In fi scal 2006, many clients attended the New Year Forums held in Tokyo and Osaka and the Dream up the future Forums in Tokyo and Nagoya.


Responsibility to clients

Working to improve client satisfaction

Flow of NRI’s CS survey

Implement improvementactivities and

monitor progressResponsesDistribution of survey sheets

Plan measures toimprove client

satisfactionFollow-up with clients

who expresseddissatisfaction

(client visits, etc.)

CS evaluation● Evaluate satisfaction scores● Evaluate priority items● Evaluate items based on

client expectations

2. Engagement with Clients

NRI Group’s mission of earning the client’s trust and making steady progress together puts it on course to provide services that enhance clients’ corporate value.



New Year Forum

Voice of the Customer (VOC) study sessions—striving for improved customer satisfaction

Today, business methods and business models constructed around the voice of the customer (VOC) are in the limelight in a wide range of industries. In addition, the utilization of IT to improve customer satisfaction is spreading rapidly, as demonstrated by call centers used to collect customer opinions and by the proliferation of customer surveys and questionnaires conducted via the Internet. However, while these methods are certainly an effective way of canvassing many opinions, there is a risk that customer satisfaction would actually decrease if a company fails to completely address the complaints. Companies that are serious about improving customer satisfaction are uncertain about the following points:

1. How to train employees with responsibility for CS and build up expertise

2. How to utilize the results of their company’s analysis of customer opinion

3. The lack of a forum in which to discuss CS and scrutinize case studies across industries

In light of these uncertainties, in September 2001 NRI launched TRUE TELLER, a text mining analysis tool that is helpful in effectively collecting and analyzing data on customer opinion, in developing and improving products and services, and in marketing. Currently, the tool is used by more than 250 companies. NRI holds VOC study sessions for employees with responsibility for CS at companies from a wide range of

industries that have adopted TRUE TELLER or are considering adopting it. In an effort to strive for improved CS together with customers, NRI exchanges information and discusses ways to utilize customer opinion at these sessions.

At the fi rst VOC study session held in November 2006, 31 employees with responsibility for CS from 18 companies participated in a discussion on collecting, analyzing, utilizing and sharing customer opinion. The second VOC study session, held in February 2007, was particularly productive. To satisfy a request from participants in the fi rst study session to learn more about examples from other companies’ experience, two participating companies introduced their organizational structures to utilize customer opinion, methods of sharing information internally, examples of product development using customer opinion, and associated issues. The subsequent discussion gave rise to a series of questions on a case in which a customer complaint led to the development of a new product.

NRI plans to continue hosting these study sessions in fi scal 2007, holding one session every two to three months.

CS surveys in the Consulting Division

The Consulting Division strives to improve client satisfaction by engaging in direct dialogue with clients, as demonstrated by visits to all clients who have responded to NRI’s surveys.

The survey results are reported at weekly strategy meetings and monthly general manager meetings in the Division. These meetings provide an opportunity to assess trends in client satisfaction, to identify clients’ issues and their expectations of

NRI and to take the necessary measures in response. The Division also analyzes clients’ evaluations every six

months or annually and refl ects the analyses in its business plan for the next term and fi scal year. In addition, the Division rewards project members whose performance is consistently rated highly by their clients.

Major items in CS survey conducted by the Consulting DivisionAccuracy in identifying issues and needs; appropriateness of perspective and approach; price level

Project leader’s expertise and management skills; composition and expertise of project members

Enthusiasm and commitment; timely review of client needs asproject progresses; observance of schedules and commitments; quality of operation of meetings and study sessions, professional proposals to clients; joint work and communication with clients; dialogue with client's management; completion of projects on time

Usefulness of information provided; well-formed and logical contentions behind analysis; validity of analytical methods; concise nature; specificity and detail; advice and proposals on use of survey results

Suitability of report content; easy-to-understand and easy-to-use reports and presentation materials; clarity and cogency of presentation materials

Submission of proposal to client

Writing reports and reporting to clients

Analysis and proposals

Project organization

Project management and implementation

Top five items which clients described as important in CS surveyPrivate sector projects Public sector projects

FY04 FY05 FY06 FY04 FY05 FY06

Well-formed and logical contentions behind analysis

Easy-to-understand, easy-to-use reports

Usefulness of information provided

Excellent, professional proposalsSpecificity and detail

Concise nature

Appropriateness of perspective and approach

Advice and proposals on use of survey results

Suitability of reporting content

Accuracy in identifying issues and needs


First VOC study session

Working for solid relationships built on trustThe NRI Group believes that the cooperation and support of its subcontractors, suppliers and other business partners is essential. Accordingly, NRI upholds a basic policy of building connections with its business partners that are benefi cial for both parties, while conforming to sound business customs and to the law.

In accordance with this basic policy, the NRI Group has continued to engage in activities with its business partners with the aim of increasing the added value of its services and improving productivity.

In fi scal 2006, NRI made progress in ensuring the proper chain of command in work subcontracted out to partner companies.

Comprehensive assessment of new partner companies

NRI works with partner companies that take on some of the projects that the Group is commissioned with. Smooth business relationships with these partners are a key component of the Group’s product and service quality, as well as being crucial to the continuity and expansion of the Group’s business. When NRI considers embarking on a relationship with a new partner company, it performs a comprehensive assessment of the potential partner. This comprises an assessment of technical capabilities, the quality, delivery time and cost of its products and services, its staff and organizational structure, its fi nancial profi le, and its compliance with the law and information security measures. NRI conducts an additional review of potential partners outside Japan, as required by the Foreign Exchange and Foreign Trade Control Law and other Japanese laws. NRI does not permit partners outside Japan, to subcontract its work to the partner’s own subcontractors.

NRI enters into one of two types of contract with business partners, depending on the longevity and volume of their track record with NRI. The fi rst type, the ‘individual’ contract, is specifi cally intended for one-time projects, while the ‘general’ contract is employed for a series of projects. All contracts are reviewed to ensure compliance with applicable laws and regulations, as well as conformity with what society expects.

In the NRI Group’s IT solution business, it forms accredited e-partnerships with companies with the most suitably specialized operational expertise and the most

impressive IT skills. While working on projects, NRI liaises closely with these companies to systematically reinforce human resource development and management of quality standards and information security. Futhermore, in order to consistently provide clients with the highest quality services, NRI strives to establish a business model and a structure that benefi t both its partners and itself.

Outsourcing costs for the Group’s IT solution business in the fi scal year ended March 31, 2007 amounted to ¥96.7 billion, up 17.1% compared with the previous fi scal year. Total costs for the projects NRI outsourced to Chinese companies were ¥12.4 billion, up 23.8% over the previous fi scal year. This brought the total of Chinese transactions to 21 companies in seven regions as of March 31, 2007. NRI has accredited e-partnerships with nine Japanese companies and two Chinese companies as of March 31, 2007.

Rules and framework to ensure equitable relationships

To establish fair and sound business relationships with business partners, every month the NRI Group confi rms with all project leaders that the company is in compliance with the Act Against Delay in Payment of Subcontract Proceeds, etc. In addition, NRI notifi es business partners that it will never accept gifts or any other improper incentives.

Beginning in April 2006, NRI extended the use of the Compliance Hotline (see page 19), set up in tandem with the Whistleblower Protection Act, to employees of its partner companies.

Reviews of contract with partner companiesIn recent years, the problem of fraudulent contracts has become a society-wide issue in Japan. To address this problem in particular, the NRI Group began reviewing the subcontracting operations of its partner companies in October 2006.


Building strong business connections Breakdown of NRI's business partners

e-Partners

Companies undera general contract

Companies under an individual contract

NRI strives to establish equitable and constructive business connections and to build solid and mutually benefi cial partnerships with the potential for expansion.

3. Engagement with Business Partners



agreements and memoranda on the handling of personal information, as well as confi dentiality pledges signed in advance by all partner company employees.

In fi scal 2006, taking on board current information relating to breaches of confi dentiality, NRI reinforced its security rules, and further requested that its partner companies cooperate by also improving their security. Carried over from fi scal 2005, NRI surveyed e-Partners in Japan on the progress they had made in educating employees on information security and in carrying out internal audits on information security. NRI collaborates with Nomura Research Institute (Beijing), Ltd., and NRI SecureTechnologies, Ltd., to audit the information security of its Chinese partners. As a result of this research and the audits, NRI has requested that its partner companies resolve those issues identifi ed in these surveys and cooperate as necessary.

Supporting human resource developmentTo assist its business partners in conducting projects smoothly and achieving high-quality results, NRI supports their human resource development. Based on its own expertise in training its employees, NRI provides business partners with methods for project management and system development, as well as with systematic and practical training in information technology for employees. NRI held nine courses and 19 training program sessions in fi scal 2006.

NRI Group Management Seminar held annuallyIn the interest of exchanging views on management and strategies and promoting close communication, NRI holds an annual NRI Group Management Seminar for senior managers from its business partners.

In fi scal 2006, the seminar was held in July and attended by approximately 260 senior managers from approximately 130 of NRI’s partner companies in Japan and overseas.

Approximately 10,000 employees from its partner companies are involved in IT solution services for the NRI Group, and in many cases they in turn subcontract a proportion of this work. While a project is in progress, NRI Group employees and those of its partner companies work from the same offi ce. Communication intensifi es as the project progresses. Unfortunately, in such an environment the chain of command is subverted, and there is reason to fear that the project will veer away from its slated objective and from its contractual obligations.

To prevent projects from losing their focus, in October 2006 the NRI Group established the Guidelines for Work undertaken by Subcontractors. Along with case studies and an FAQ, these guidelines are posted on the intranet so that all employees can access them. In addition, each business division appointed an employee to be in charge of promoting such activities, and awareness campaigns were conducted. NRI also ensures that contracted work is carried out within the ambit of the law by holding briefi ngs for partner companies.

NRI provides favorable business environmentWhen employees of partner companies are posted to NRI offi ces, NRI strives to provide an appropriate work environment in accordance with offi cial guidelines by providing a personal work space, equipment and Internet access, as well as partial access to the internal systems.

In fi scal 2006, NRI provided a better work environment for partner companies at the Yokohama Center by fully updating the IT equipment used by partner companies’ employees.

Working together to improve qualityWhen outsourcing project work to business partners, both in Japan and overseas, NRI holds regular joint meetings with project managers, as well as with others responsible for the project, to confi rm and share information concerning the project’s overall status, attendant risks and other issues. NRI also holds meetings attended by chief quality offi cers from both NRI and the partner company to ensure quality and facilitate improvements.

Ensuring information security and strengthening collaboration

NRI requests that its business partners comply with its Information Security Management Policy and regularly checks on the policy’s implementation. Further, as operations require, NRI concludes confi dentiality

Human resource development, and management of quality and information security

Dialogue with business partners


Informal gathering after the NRI Group Management Seminar in 2006

Basic policy governing engagement with employees

The NRI Group provides employees with a safe and healthy working environment, and respects their diversity and individual rights. Employees are evaluated on their performance and ability.

Basic policy on human resources managementThe NRI Group’s human resources management structure is well-suited to a corporation employing professionals. In 1994, NRI was one of the fi rst enterprises in Japan to adopt an assessment and human resource development plan. Under this plan, employees manage their work themselves, and their supervisors assess how well the employees attain their own goals. NRI also introduced a discretionary work style that allows employees themselves to determine the best way of proceeding with their work and to allocate their time accordingly. Beginning in April 1999, NRI reinforced its efforts to ensure that specialists are assessed on their performance, results and abilities in the interest of a human resource approach that is dedicated to equality, fairness and impartiality.

The NRI Group’s human resources management structure is based on three pillars: assessments based on performance, results and ability, the discretionary work style and the assessment and human resource development system. NRI strives to hire and train professional personnel who are committed to personal development.

Basic policy on human resource developmentNRI believes that employees with high levels of expertise are essential to providing clients with high added value.

To foster such professionals, the NRI Group offers its employees a human resource development program comprising three components. The program is constructed around on-the-job training (OJT) to enhance skills and knowledge, while the employee works in a variety of roles within the company. OJT is combined with the other two components, off-the-job training and self-development.

Appropriate assessment of ability, expertise and skills

The NRI Group has made a commitment to employ and compensate employees on the basis of an appropriate

evaluation of an individual employee’s various abilities, expertise and skills, without discriminating on the basis of gender or age.

In addition to recruiting new graduates, NRI hires mid-career candidates and people with disabilities. In its briefi ngs on the company when hiring new personnel, NRI presents factual information based on the concept of a realistic job preview (RJP).*1

Job categories at NRINRI classifi es employees as specialists, trainees, operations staff, general staff, administrative staff, special staff and senior employees*2 (introduced in April 2006). Specialists are further categorized as senior specialists, designated specialists and specialists. New graduates are hired as trainees. Depending on their role, senior employees are classed as professional senior, senior staff and senior support.

Specialists, trainees and professional seniors include people on career paths such as consultants, researchers, applications engineers, technical engineers, marketing and other staff. Hiring is carried out separately for employees on different career paths.

Basic policy

Employment practices

* The number of total employees increased due to the addition of employees from NRI Data Service, Ltd., on April 1, 2006.

*1. RJP refers to attempts to present both the positive and the negative aspects of job responsibilities, working environment and corporate climate to prospective employees to as large an extent as possible.

*2. Senior employees: This category was established in accordance with NRI's senior employee reemployment program in compliance with the revised Law Concerning Stabilization of Employment of Older Persons.

Employment numbers for the NRI Group

Total number hired annually

FY03

4,791

438

FY04

4,848

276

FY05

5,013

439

5,303

493

FY06

(Number of people)

Total number of employees

(Number of people)Breakdown of employees at the NRI

Total number of employees

Women

Specialists and trainees

Women

Senior specialists

Women

Employees with disabilities

Employees with disabilities (% of total)

New hires for the year

Women

FY03

3,393

549

3,071

307

1,101

11

55

1.6

298

66

3.5

9.6

9,851

40.6

FY04

3,426

535

3,105

304

1,170

12

58

1.7

194

40

3.7

10.1

10,308

42.3

FY05

3,554

554

3,218

314

1,257

16

64

1.8

301

63

4.1

10.5

10,796

46.3

4,407

655

3,842

355

1,480

29

72

1.8

350

72

3.3

11.1

10,925

53.4

FY06*

Annual paid leave usage (% of the maximum number of days that could be taken)

Average salary (thousand yen)

Average employment period (years)

Turnover (% of total)

To develop employees with a highly specialized expertise and a strong sense of responsibility, NRI strives to create a work-friendly environment and to evaluate its employees fairly.

4. Engagement with Employees



Reforming the human resources structure to produce professionals

In fi scal 2006, NRI began considering reforms to its human resources structure. The company had three goals in mind: tailoring compensation to performance and results, restructuring young employees’ career progress in line with their growth, and setting up a rotation scheme whereby employees are moved from division to division to enable them to gain a breadth of experience. NRI adopted a new structure on April 1, 2007.

This structure includes, for example, a system devised for senior specialists that better refl ects their performance and results in their compensation. The structure is also tailored for specialists and for trainees, enabling NRI to restructure an employee’s career stages, and to ascertain an employee’s development and career goals, by holding at least two interviews for promotion to the rank of senior specialist. Previously, a new graduate hire was in principle promoted to specialist rank three years after joining the company, but this was reduced to two years on the rationale that after two full years of employment an employee can supervise themselves and work under their own direction. Starting salaries were also raised in conjunction with this change.

Creating a women-friendly working environment

The NRI Group actively works to hire female employees, to develop their abilities and to promote them to management positions. As of March 31, 2007, a total of 355 women were employed as specialists and trainees, accounting for 9.2% of such positions, and 29 of these women were managers.

These efforts are helping to increase the number of female employees playing important roles at NRI. However, the company did not begin to hire female new graduates for specialist positions in substantial numbers until 1990, and women still do not comprise a large enough proportion of NRI’s trainees, specialists, or managers.

Accordingly, the NRI Group established various maternity and child care support provisions to enable women to maintain their careers after having children (see page 39). This will allow employees with a broader range of values to contribute to the NRI Group, and the Group will continue to strive to create a working environment that is more conducive to women’s needs.

Commitment to employ people with disabilitiesThe NRI Group proactively employs people with disabilities, as demonstrated by additional three people with disabili-ties hired in fi scal 2006. This means that the proportion of such employees is equivalent to the legal requirement: 1.8% of the workforce. NRI will continue to commit to the employment of people with disabilities by, for example, at-tending conferences on employing people with disabilities.

Setting objectives and assessing performance in dialogue with employees, and supporting skill and career development

In the Challenge and Act (C&A) program, managers meet regularly with specialists and trainees to set individual goals and review and assess achievements. The purpose is to support employees’ objectives and develop skills. Performance goals are set at the beginning of the fi scal year and again six months later, while skill development goals are set only at the beginning of the fi scal year. These goals are continuously reviewed during each six-month period, with supervisors guiding employees in achieving their goals.

Under the C&A program, supervisors and their subordinates meet with the aim of supporting employee growth in accordance with the individual’s aspirations and character. This, in turn, enables the organization to achieve impressive results.

In fi scal 2006, NRI introduced a Career Record Sheet in the C&A program on which employees regularly note the operations with which they have experience. This sheet can be referred to by employees in the same department.

In addition, NRI supports its employees’ career development with its Assist, Human Expertise, Ability and Development (AHEAD) program, an internal diagnostic survey of human resource training in each department, and an aspiration program in which each employee assesses their own career objectives with the general manager of the Personnel Department.

Employee skills are developed with a focus on OJT

The NRI Group uses the C&A program and supports employees in developing their skills in a self-initiated and organized manner to ensure that OJT—the core of human resource development—is effective and effi cient.

● Instructor program to support new hiresIn the instructor program, NRI assigns an instructor to each new employee entering the company upon college graduation to provide guidance over a one-year period. These instructors have approximately fi ve years of work experience and have received training in coaching so that they can properly train and guide new hires. Both the new hire and the instructor take a survey on their activities, the results of which are applied to the program for the following year.

Career and skill development

Supporting employees’ skill development


Start-up training for Asia-based employees

In fi scal 2006, NRI invited consultants employed at its branches based in other Asian countries to Japan for its start-up training for Asia-based NRI Group employees.

This training was intended to give an overall picture of the NRI Group, to share NRI’s corporate philosophy and behavior guidelines, and to build a network with Asia-based employees through personal interaction.

The fi rst training session was held over two days in Marunouchi (Tokyo) and Yokohama, with seven participants from the branch in Seoul, six from the Taipei branch, fi ve from NRI Shanghai and one from the Manila branch, making a total of 19 participants.

After the training session, the consultants asserted that it had helped them truly understand the sheer magnitude of NRI and that they had extended their network with people from other branches.

“Build your own Dreams” workshop to consider future career

In fi scal 2006, the Insurance and Public System Services Division held a “Build your own Dreams” workshop for specialists who had been employed at NRI for about fi ve years to help them consider their future careers.

In a training session held over one night and two days, participants were encouraged to look back on the dreams they had when they fi rst joined NRI and consider the society they hoped to create through their work. They also re-examined their role in their division and clarifi ed their role in the society they hoped to create. Participants then devised a specifi c action plan that would direct their growth so that they could fulfi ll this role.

The participants felt that they were able to take a fresh look at themselves from a perspective they could not attain in their ordinary work and that it was an extremely useful period because they were able to consider what they wanted to accom-plish and the issues that need be overcome to achieve their vision.

The Insurance and Public System Services Division plans to continue holding this workshop.

Practical training to satisfy diverse business needs

The NRI Group provides a great deal of training through lectures and discussions. In recent years, NRI has expanded training programs that use a discussion style to ensure that participants can make the optimal decision in a given situation. This is intended to improve NRI employees’ ability to adapt to real-world business where there is not necessarily a single right answer. Past projects are selected to provide a focus for the discussion, and an experienced staff member participates as evaluator so that participants get the opportunity to learn practical skills.

In addition, the Human-Resources Development Department works together with an employee from each division who has responsibility for human resource development to conduct various training programs and courses and to introduce external training programs.

Aid to obtain certifi cation for self-developmentThe NRI Group encourages employees’ self-development by supporting them in their efforts to obtain any of more than 50 publicly certifi ed qualifi cations and licenses, including those closely associated with their work such as information processing engineer’s certifi cation and Chartered Membership of the Security Analysts Association of Japan (CMAs). NRI also runs an NRI certifi cation scheme for employees with highly specialized skills, as described in the column to the right.

● NRI certifi cation scheme for professionalsThe NRI Group has established the NRI certifi cation scheme to certify professionals with a high level of expertise in fi ve areas, including business analysis and system analysis. This program serves as a heads up for specialists and trainees to map out their future careers. As of April 1, 2007, 227 employees had been certifi ed through this program.

An organization and work environment supportive of maternity entitlements and child care

The NRI Group has introduced a variety of measures to create a worker-friendly environment in compliance with the provisions of the Next Generation Nurturing Support Measures Promotion Law (the Next Generation Law) and the amendment to the Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave.

In April 2006, the NRI Group launched a variety of programs, including extending maternity leave. The Group also made an effort to limit nighttime work after 10 p.m. and urged employees to take substitute holidays: for each day an employee works on the weekend or on other holidays he or she should take an additional day’s holiday

Creating a comfortable working environment

“Build your own Dreams” workshopAsia-based employees undergoing the start-up training




Certifi ed as in compliance with the Next Generation Law

In April 2005, NRI submitted the specifi c action plan required under the Next Generation Law, and since that time the company has worked to implement this plan. As a result, NRI achieved the targets laid out in the plan and met the required standards, earning certifi cation as a company complying with the standard laid down by the Next Generation Law in April 2007.

Next generation certifi cation seal

in order to make the workplace more supportive for employees’ child care.

● Introduction of paid special leave for pregnant employeesIn April 2006, NRI adopted special leave for pregnant employees that gives employees an additional 10 days of paid leave before the day on which they plan to start their actual maternity leave. In fi scal 2006, fi ve employees took this paid parental leave.

● Shorter work hours and longer vacation time for child careBeginning in April 2006, NRI extended the period of time during which employees can shorten their working hours to take care of children. The period is no longer from the end of maternity leave until the child reaches three years of age, but until the end of the fi rst year in elementary school (seven years of age). After this change was adopted, the number of employees taking advantage of this program steadily increased so that parents could drop off and pick up children at day-care.

In addition, NRI extended the period during which employees can take childcare leave by six months: from the end of maternity leave until the child is two years old.

● Adoption of half-day leave optionUnder the previous program, employees lost a full day of paid leave even if they needed only a half day in order to participate in their children’s school events or to make visits to the doctor. This was one factor that made it diffi cult for employees to take vacations, and as a result NRI adopted the half-day leave option in February 2007.

From fi scal 2007, NRI publicized its child care leave and paternity leave (paid leave coinciding with spouse’s maternity leave) programs for male employees. In addition, NRI intends to adopt leave provision on an hourly basis both of which help employees to return to work after childbirth and keep their job while raising children.

NRI is also working to establish its family medical care leave provisions and to create an environment that will encourage more employees to take advantage of these provisions.

Preserving employees’ mental and physical health

The NRI Group strives to ensure that every employee can maintain a healthy body and mind and work without undue stress. All employees undertake annual health examinations and are instructed to undergo an examination if they work later than 10 p.m. more frequently than the company’s advisories. In addition, major offi ces have full-time nurses on site, and Health Management Offi ces are set up so that employees can consult doctors in internal medicine and in psychosomatic medicine.

NRI has also introduced PraNet (Professional Assist Network), a consultation service on a wide range of issues, including mental health, job-related ethical and compliance issues, job and career development and the working environment.

Dialogue with NRI Labor UnionNRI retains a union shop contract with the Nomura Research Institute Labor Union. The union has 2,571 members as of March 31, 2007. During collective bargaining and informal meetings, NRI discusses a broad range of issues with the union, including compensation, human resources management and the working environment. In fi scal 2006, discussions with the union focused on reforms to the human resources structure.

The union conducts an annual employee awareness survey of all members to ascertain their views and the actual status of working conditions. In addition, in December 2006, the union conducted a survey on the working environment. The issues identifi ed in these two surveys are reported to company management for use in improving the working environment.

Number of employees who took child care and other types of leave*

Special leave for pregnant employees (paid)

Maternity leave (paid)

Child care

Men

Family medical care

-

15

14

1

0

-

18

16

0

0

-

18

16

0

0

5

19

24

3

1

FY03 FY04 FY05 FY06

(Number of people)

* Counted at the time when they started the leave


Long working hours have become the norm for many companies as the information service industry expands. NRI is trying hard to address this problem by encouraging employees to restrict their overtime work, to hold meetings during regular business hours and to take substitute holidays. Nevertheless, there has been no signifi cant improvement in the use of substitute holidays in exchange for weekend work, or in overtime working—even to the extent of employees working past 10 p.m.

Making further efforts to deal with this culture of excessive working, NRI has run a Smart Work Style Campaign since August 2006. This campaign is an attempt to overhaul the working practices at NRI and to create a people-friendly environment in which work is rewarding, while sustaining the company’s growth. The campaign has addressed themes that are crucial in building a foundation supporting sustainable development, such as balancing child care and work, employees’ health care, fi nding enough time to upgrade skills, and raising productivity. Activities were designed based on these themes. As a result, both employees’ approach to

Smart Work Style Campaign appropriate for NRI’s business operations

Topic

people-friendly working practices and the work environment are steadily improving.

Objective 1: Employees leave work by 10 p.m.NRI has adopted a discretionary work system for its specialists. Working after 10 p.m. does not fall within the discretionary work hours. For this reason, and in the interest of employee health, NRI decided it would work to reduce the number of employees working past 10 p.m. As a result of these efforts, the percentage of employees remaining at work past 10 p.m. went down 4.8%, to 20.2% in April 2007 from 25.0% in April 2006, according to the employee entry and exit logs.

NRI will not be able to completely eliminate nighttime work as it must conduct system tests and releases at night, but the Group intends to minimize the number of employees working past 10 p.m. as far as possible.

Objective 2: Hold meetings during regular business hoursNRI intends to persuade employees to hold meetings during regular business hours (8:40 a.m. – 5:10 p.m.) whenever feasible. This will assist employees in using their working hours and their free time most effectively, and also assist in the creation of a working environment that is friendly toward employees who have time restrictions due to child care and nursing care.

Three objectives for the Smart Work Style Campaign in fi scal 2006

Navigation Award

Publishing Project on the “Proposing Japan’s future toward 2010” Campaign

Security Survey by NRI SecureTechnologies, Ltd.

Concepts behind Smart Work Style

Time is made available for employees to upgrade their skills on a continuous basis.

Working practices should be conducive to fostering healthy employees.

Working practices should not compromise the future of our business.

By improving working practices, productivity and quality are also enhanced.

Working practices should allow employees to do their jobs comfortably while raising children. Practices should be aimed at achieving a reduction in environmental impact.

Human resource development

Health care

Business sustainability

Productivity and quality

Social responsibility

Dream up the future Award

NRI initiated the Dream up the future Award in 2004 for NRI Group employees who achieve results consistent with the NRI Group’s corporate philosophy, “Dream up the future.” The Navigation Award is given to projects publicizing information that increase the Group’s prestige, and the Solution Award is given in recognition of teams that develop new businesses, services or technologies.

In the third year of the award, NRI reviewed projects carried out from January to December 2006 and chose a total of six teams: two teams winning each of the Navigation Award, the Solution Award, and for the fi rst time, the Special Award was given to two teams.




Objective 3: Ensure that employees take substitute holidaysIn discussions with the Nomura Research Institute Labor Union, beginning in fi scal 2005 NRI decided to step up efforts toward urging employees who work on the weekend or on other holidays to take a substitute holiday. As a result of NRI’s efforts in promoting one of the most important goals of the campaign, the number of substitute holidays not taken has steadily decreased for the Group as a whole, from a peak of 8,288 days in January 2005 to 3,804 days in March 2006 and 1,243 days in March 2007.

This campaign remains ongoing in fi scal 2007. New objectives include ensuring that all employees make active use of annual paid leave: “refresh” holidays (fi ve consecutive days of leave that must be taken by all employees every year to rejuvenate both physically and mentally), anniversary holidays (holidays coinciding with birthdays or wedding anniversaries in the family), “good job” holidays (leave on completion of a project) and paternity leave, and ensuring the promotion of employees’ health.

In fi scal 2006, NRI’s internal communication website “NRI Wave,” featured the Smart Work Style Campaign to disseminate the objectives behind the campaign among employees.

This feature included a message from the chief personnel offi cer, examples of improvements in working practices in some departments, as well as a roundtable discussion among employees on working practices and ways to improve work effi ciency.

Awareness activities via company intranet

Special AwardSolution Award

Asset Investment Solutions for Affulent Retail Market

OpenStandia Team Judges and School Visit Team for NRI Student Essay Contest

Attaining CMMI Level 5 in Public Insurance Systems

Comments from participants of roundtable discussion on Smart Work Style

The Securities Systems Division instituted an Early Leaving Campaign to encourage employees to leave by 6 p.m. on Wednesdays. If the exit log shows that we left even one minute past 6 p.m., we are given a warning the following day, and are penalized if the tardy leaving persists. Some people thought this was excessive at fi rst, but I think it provided a good opportunity to think again about the way we work.

Akiyoshi Tokunaga (fi fth year at NRI)Securities Systems Department III

Thanks to this campaign, I can devise a schedule based on my own requirements before I move on to what I should be doing next. I can still ensure that I work effi ciently and that effi ciency is also enhanced for customers and project members.

Kenichiro Fukukai (tenth year at NRI)New Distribution Systems Department

Now the working environment allows me to work more at my own pace. And as a team leader, I try to suggest to partner companies’ employees and temporary employees with whom I work that we stop for the day.

Koichi Nakajo (sixth year at NRI)Social Information System Services Department

* Division names and number of years at NRI are current as of roundtable held in October 2006.


In line with its corporate philosophy, “Dream up the future,” the NRI Group compiles insights on society, industry, management and IT that will contribute to the development of a society for the future. NRI transmits this information to society at large through a variety of programs.

The NRI Group publishes the results of its research activities in the form of books, periodicals and reports. The Group also provides information through the media and by giving lectures.

The NRI Group holds seminars and forums on current management issues and social issues to propagate information directly to shareholders, customers and the general public.

In 2005, NRI set up a corner “NRI Solutions” on its offi cial website: http://www.nri.co.jp/nriss/ (in Japanese only) to introduce a range of solutions with the words from its clients.

In June 2006, NRI began offering the “NRI Podcast” by podcasting*2 free of charge. In these podcasts, lasting about 10 minutes, NRI’s consultants and system engineers discuss business themes that are relevant for society at large. So far NRI has podcasted programs on “Research on the Market Scale of Otaku,” “Management in 2010,” “The Outlook for Asset Management in the Affl uent Market” and so on. The NRI Group will continue to podcast on such signifi cant topics.

Release of research results

Holding seminars and forums

Propagating information via the website and by podcasting

*1 PV: Page views; this refers to the number of times a website has been accessed. Each visit to a Web page counts as one page view.*2 Podcasting: A method by which images and music can be downloaded from the Internet using a portable music player.

Periodic observation surveys

Some of the books published in fi scal 2006

Informational activities

Number of columns provided to newspapers and magazines

Speeches and Lectures

Appearances on TV

Number of page views (PV) on NRI’s website

Number of news releases

247

545

47

About 13.4 millionPV*1 per month

116

257

552

69

About 15.5 millionPV per month

108

FY05 FY06

Seminars and forums held regularly

IT Roadmap Seminar: Spring 2006 (May 2006)Basics of Web 2.0 / Devices and Network Technology for the Web 2.0 ageNew Developments for Rich Client and Information Search Technology

Dream up the future Forum 2006 (September 2006)Finance and Distribution Industries in 2010 that will be changed by IT2010: Future of IT that will be changed by PeoplePanel discussion, “2010: Relationship between IT and People”

IT Roadmap Seminar: Autumn 2006 (November 2006)Changes on IT by Web 2.0 and its Impact on Enterprises TechnologyConsumer IT Gaining Ground in Enterprises TechnologyFirst Stirrings of SaaS (Software as a Service)Collaboration IT and Styles in Organizations in the Web 2.0 Age

New Years Forum 2007 (January 2007)Outlook for Japanese Economy: Is the Current Economic Expansion Sustainable?Using Collective Creating Powers in Management

Dream up the future Forum 2007 (Nagoya, March 2007)2010: Japan in the WorldJapan's Economy: Issues Preventing a Full-Fledged RecoveryPanel Discussion: Nagoya in 2010: "Moving Beyond Manufacturing"

Contribution to Society

1. Propagation of Intellectual Assets

NRI continues to propagate its intellectual assets to develop a society for the future.

Prescription for Strengthening International Competitiveness: Recommendations for Japanese ManufacturersMarch 2007, Nomura Research Institute, Ltd.

The Basics of Internal ControlDecember 2006, Nomura Research Institute, Ltd.

2007 White Paper on BlogsCo-edited by Nomura Research Institute Blog Survey Team and Six Apart, Ltd.December 2006, RBB Press

The Economics of Yin and Yang: Bubbles and Balance Sheet RecessionsDecember 2006, Toyo Keizai Inc.

History of Government Bonds: Past and Future Condensed in Interest RatesJuly 2006, Toyo Keizai Inc.

China's Third Wave: Impact of the Binhai New Area and Tianjin Economic and Technology Development Area (TEDA)June 2006, Nikkei BP Planning, Inc.

IT Market Navigator (Five-year outlook for expansion/contraction and trends in the information and communications market from current point in time: annual)

Survey of 10,000 Consumers(Report analyzing Japanese values and consumer behavior: conducted in 1997, 2000, 2003 and 2006)

IT Roadmap(Five-year technology forecast predicting progress of IT: twice a year)

Survey on IT Utilization at Japanese Companies (annual)

Survey on Information Security in Corporate Sector (annual)

Survey on Internet Users’ Awareness of Information Security (annual)


In September 2005, the NRI Group launched its “Proposing Japan’s Future toward 2010” campaign. The campaign offers proposals for Japanese society and industry in 2010 and beyond.

Thus far, the campaign has presented issues that will likely face Japan in 2010 and has proposed solutions. Those issues include population decline, the mass retirement of the baby boom generation and intense competition from other countries, especially those in Asia.

These proposals have been published as a book in ten volumes. Information about the proposals is propagated at every opportunity: in forums and seminars, in the company newsletter “Dream up the future,” in the monthly research reports “Knowledge Creation and Integration,” in advertisements and press releases.

In September 2006, the “Dream up the future Forum 2006” was held for NRI’s customers, business partners & shareholders, and the results of the research and proposals from the campaign in the past year were announced.

In March 2007, the “Dream up the future Forum 2007” was held in Nagoya to present these results to a wider audience. The forum attracted an audience of more than 1,200 people, including those who are new to NRI.

NRI Student Essay ContestIn summer 2006, NRI held a NRI Student Essay Contest. The theme was “The future of Japan and myself in 2010.” University and high school students who will begin taking a full role in society in the decade beginning in 2010 were invited to participate, encouraging them to think about Japan’s future.

University students wrote on the subject of the relationship between IT and people in the era of ubiquitous networking, while high school students were given the topic “Motivation Crisis.” In total, 133 essays were sent in from around the country. Employees from the NRI Group volunteered for the fi rst screening, and the second screening was done by an internal judging committee consisting of six people including Teruyasu Murakami, NRI chief counselor, as well as journalist Akira Ikegami as the guest judge.

The essays were of a high standard, and many presented serious proposals based on the participant’s own experiences as well as original ideas for building a bright future for society.

The grand prize was given to one university student and one high school student. There were also three second prizes and one special prize given by the guest judge in each category.

“Proposing Japan’s Future toward 2010” campaign

Dream up the future ForumPamphlet of the contest (in Japanese only)

Series of books published in the campaign

Japan in 2010: from Employment-based Society to Entrepreneurial SocietyDecember 2005, Toyo Keizai Inc.

IT Road Map toward 2010December 2005, Toyo Keizai Inc.

What Will Happen in the Information and Communications Market?: IT Market Navigator 2006December 2005, Toyo Keizai Inc.

Nanotech for Business: Visualizing the Nanotech Market for 2010/2015August 2006, Nomura Research Institute, Ltd.

Business Currencies in 2010: Point Economy in the Googlezon*1 AgeSeptember 2006, Toyo Keizai Inc.

Invisible and Co-Creative Financial Services in 2010September 2006, Toyo Keizai Inc.

Reforming the Distribution Industry by 2010September 2006, Toyo Keizai Inc.

Research on Affl uent Market—Financial Market Strategy on Neo-richOctober 2006, Toyo Keizai Inc.

Asia's New Growth Mechanisms Toward 2010 and Beyond—Suggested Strategies for Japanese CompaniesNovember 2006, Toyo Keizai Inc.

Japanese Management in 2010—The Road to Visionary Excellence in Management Through StorytellingNovember 2006, Toyo Keizai Inc.

*1 Googlezon is a scenario in which the media landscape will be radically different: Google, as a search engine, will merge with Amazon, with its vast database of customer profi les.

Campaign logo


The NRI Group contributes to the development of society in a number of ways. The company carries out pioneering surveys and research into the themes which characterize the outlook for the future. NRI also provides a framework for a future society, and the wherewithal and strategies needed to realize this society.

The NRI Group is a member of a number of business organizations, including the Nippon Keidanren (Japan Business Federation), Keizai Doyukai (Japan Association of Corporate Executives), and the Japan Information Technology Services Industry Association. NRI participates in and cooperates with these organizations’ activities aimed at creating a better society.

In fi scal 2006, 145 NRI Group employees sat on committees related to central government, local government and independent administrative entities, where they assisted in designing organizational structures and implementing policy in information communications, corporate management and local economies.

Recently, the concept of a ubiquitous network, which originated in Japan, has been attracting attention. In a ubiquitous network, devices such as computers, televisions, game consoles, mobile phones and radio-frequency identifi cation tags (RFIDs) are all connected in a network so that anyone can exchange information anywhere and anytime. “Ubiquitous” comes from the Latin “ubique,” which means “everywhere.” The term has been in use since 1988, when the concept of “ubiquitous computing”—an environment in which everything is equipped with computers—was fi rst espoused in the United States.

In Japan, the Ministry of Internal Affairs and Communications set up the Policy Roundtable for Realizing a Ubiquitous Network Society in March 2004, as part of the review of the e-Japan Strategy aimed at helping Japan to be in the vanguard of the world’s IT nations. In December 2004, this was followed by the establishment of u-Japan policies to create the ubiquitous network society.Interest in ubiquitous networks has also been increasing rapidly in other Asian countries. South Korea proposed the u-Korea Promotion Strategy in 2004, and put greater efforts into establishing network infrastructure and

developing new IT services under its u-IT839 Strategy. There is also a growing trend to incorporate the ubiquitous network concept in IT strategies in China and Taiwan.

NRI was at the forefront of this trend. In 2000, it became the fi rst company in Japan to conduct surveys and research on ubiquitous networks with the publication of books and papers forecasting the ubiquitous network society. Since then, Teruyasu Murakami, as chief counselor and other members of the Center of Knowledge Exchange & Creation from NRI have carried out surveys and research and make recommendations to popularize this new IT paradigm.

Specifi cally, NRI has been involved with the government’s IT Strategic Headquarters in discussing the e-Japan Strategy, aiming to establish IT infrastructure and the e-Japan Strategy II, which advocates IT utilization. Mr. Murakami serves as chairman of the Policy Roundtable for Realizing a Ubiquitous Network Society for the Ministry of Internal Affairs and Communication. In addition, NRI helped to establish the Vision for the Information Economy and Industry, and the new IT policy that the Ministry of Economy, Trade and Industry devised in 2005.

NRI’s efforts to create the ubiquitous network society are not limited to Japan, but are also having an effect in other countries. In South Korea, Mr. Murakami held a television debate with the Minister of Information and Communications at an international conference on ubiquitous computing sponsored by the government, and NRI Seoul Branch held a related seminar. In China, NRI has been active in disseminating information, for example at the Symposium on Ubiquitous Network and China’s IT Strategy Development held in Beijing.

NRI has also participated in the World Summit on the Information Society (WSIS) held by the United Nations and in the Global Business Dialogue on Electronic Commerce (GBDe), an international collaboration of leading CEOs and board members of e-commerce companies in Japan, the United States, Europe and Australia. In this way, NRI has assumed global leadership in helping to create the ubiquitous network society. Mr. Murakami also gave the keynote address at the WSIS in 2003 and 2005 for workshops held by the Japanese government.

As a result, the term ubiquitous network was used in Chapter 28 of the Tunis Commitment, a UN document from the 2005 World Summit on the Information Society, although the term was barely recognized at the summit in 2003.

NRI expects rapid advances in the full range of technology development, including the networks, devices, platforms and solutions that support the ubiquitous network society in Japan. This trend is certain to be replicated around the world. The NRI Group will continue its activities to create the ubiquitous network society.

Contributions to business communities and support in planning public policy

Efforts in the name of the ubiquitous network society

2. Development of Society

NRI works to create a framework for a better society both for Japan and for the world at large.

Contribution to the Society


Promoting new methods of administrative reform, “classifi cation of operations” and “allocation of business to the private sector”

Central and local governments have launched an administrative reform policy proposing to entrust the private sector with those services and operations, currently handled by government, that the private sector could take on instead, in order to improve effi ciency and quality. The fi rst step in this administrative reform is classifying operations, which has already been started by local governments. In this process, a third party fi rst classifi es public services and operations provided by central and local governments as “necessary” or “unnecessary,” and then decides whether those operations deemed to be necessary would be best carried out by national, prefectural or city governments, or by the private sector.

The second step is referred to as “allocation of business to the private sector.” Those operations classifi ed as eligible for outsourcing to the private sector from the fi rst step, are allocated to local organizations, NPOs and private companies, when possible, so that business is kept local and benefi ts the local community. NRI is conducting joint research with Shiga University and some local governments in Shiga Prefecture on operation classifi cation and allocation of business to the private sector.

As part of this research, “innovation for local community business through operation classifi cation and allocation of business to the private sector” was chosen as the theme for fi scal 2006 at Shiga University Public Management Evening School. The project was led by Ryoichi Ishii of NRI’s Policy & Industry Consulting Department, who is also a guest lecturer at Shiga University’s Joint Research Center. The local governments of three cities, Ritto, Koka and Azuchi, classifi ed their operations and allocated their businesses to the most appropriate organization in the private sector. The school and NRI consultants participated as coordinators. Beginning with Nagahama and Moriyama cities in Shiga Prefecture and Kameyama in Mie Prefecture, these activities will be extended throughout the country from fi scal 2007.

Grounded in the results of ongoing research, NRI will continue to support the spread of classifi cation of operations and to work towards transferring business to the local community and to the private sector as a new method for administrative reform.

Consultants working to popularize the classifi cation of operations and allocation of business to the private sector

Ryoichi Ishii Junji Koike Takahiro Yamaguchi

Masatoshi Senoo

Policy & Industry Consulting Department

Supporting a new form of communication in society with the distance learning system 3D-IES

As information technology, as typifi ed by the Internet, rapidly develops, communication in cyberspace is becoming the primary medium in which the world exchanges information.

At NRI, Toru Hamabe from the Advanced Information Technology Division has taken a leading role in developing the 3D Interactive Education System (3D-IES). This is a distance learning system using three-dimensional cyberspace that enables communication as well as visual recognition between multiple users in distant locations.

This system enables users to take classes and hold conversations through avatars, characters that users create to represent themselves on the Internet. The avatar’s expressions and body movements change automatically depending on the degree of familiarity with the other person. This makes it particularly suitable for use in university foreign language programs, as it enables realistic communication in cyberspace. It is also used in demonstrations and experiments for mental care for cancer patients.

In 2006, 3D-IES was used for the NHK (Japan Broadcasting Corporation) TV program “Let’s Speak in English Tonight” in an attempt to integrate broadcasting and communications. Viewers actually participated in the program as avatars in cyberspace.

NRI will continue to support new forms of communication in education, broadcasting, medicine and in other fi elds through 3D-IES.

3D-IES image

Toru HamabeAdvanced Information Technology Division


The NRI Group uses the know-how it has built up to provide executive education and to develop the potential of people around the world.

The Nomura School of Advanced Management (NSAM) has worked on research into corporate management issues in Japan and abroad from a global perspective. This research is grounded in the results of NRI’s research and studies and NRI contributes fi nance and staff for the school. Capitalizing on its achievements, the NSAM interacts with distinguished universities, business schools and other educational institutions around the world to provide high-quality management education, either jointly or by establishing an affi liation.

Since the establishment of the NSAM in 1981, a total of 4,646 managers and executives have completed courses at the school, as of fi scal 2006. One of these courses, the Advanced Management Program (AMP), is concerned with business strategies for top management; it is held in affi liation with Harvard Business School. In a typical year, about 40% of the participants on this course are executives and about 60% are managers. Over the past 26 years, 1,796 people have participated in the AMP course, 113 have become chairmen or presidents of listed companies (41 are currently chairmen or presidents as of end March 2007). This testifi es to the fact that those completing the course are highly successful in the industry.

Offering affi liated courses at universities and appointing lecturers

The NRI Group appoints its consultants and system engineers to serve as lecturers on affi liated courses. Including these affi liated courses, in fi scal 2006 NRI sent 70 employees to teach 43 university courses.

NRI donated a prize for Keio University’s Town-Building Idea Contest

NRI was an award sponsor in the Town-Building Idea Contest for the SFC Open Research Forum 2006 held by Keio Research Institute at Shonan Fujisawa Campus (SFC) in November 2006 in Tokyo. NRI hoped that this NRI Regional Innovation Award would encourage the development of human resources who promote the ubiquitous network society of the future.

Since 1996, the Keio Research Institute at SFC has been holding an annual forum to release its research results. The Town-Building Idea Contest attracted ideas for services, communities and businesses for a twin city promoting the concept of a model for environmental coexistence in Kanagawa Prefecture.

NRI awarded the NRI Regional Innovation Award to a comprehensive idea that introduces local e-currency. Two factors were taken into consideration: the most effective utilization of ubiquitous networks and the creation of new values using the region’s diverse resources.

NRI provides training for teachersIn August 2006, NRI provided training to eight teachers sent from the Metropolitan Foundation for Private Schools (one teacher each from an elementary school, high school, college of technology, two from vocational schools and three from kindergartens).

This training has been provided by the Japan Institute for Social and Economic Affairs since 1983 to give teachers experience with corporations and training which can be used in education.

The training consists of an introduction to the NRI Group and its businesses, lectures including “Ideas that NRI Transmits to Society,” “Social Changes Caused by IT”

Nomura School of Advanced Management helps train managers

Human resources trained in affi liation with educational institutions

NRI Group affiliated courses at graduate schools

Academic department Name of lecturer

Hokkaido University Graduate School

Noboru Shiomi

Hitotsubashi School of International and Public Policy (HSIPP), Hitotsubashi University

Naoki Ikezawa, Hiroyuki Nitto

Michio Kitamura, Takeshi Nomura, Junichiro Miyabe

International Media, Communication, and Tourism Studies

Graduate School of Decision Science and Technology

Public economics program

Graduate School of Information Science

Graduate School of Economics

Graduate School of Informatics

Graduate School of Business Administration

School of Knowledge Science

Tokyo Institute of Technology Graduate School

Kazuchika Asano, Kana Takahashi

Nagoya University Graduate School

Hideaki Nakamoto, Ken Matsumoto

Shiga University Graduate School

Haruo Nakayama, Hisami Mitarai, Naoji Kumagai, Taku Ogata, Keiichi Kusano, Takeshi Murakami, Manabu Fukuchi

Kyoto University Graduate School

Makoto Yokozawa, Takafumi Kinoshita

Kobe UniversityGraduate School

Chikashi Shimura, Takeshi Murakami, Kenji Yamada

Japan Advanced Institute of Science and Technology Graduate School

Lecture at the NSAM

3. Development of Human Resources

NRI supports the training of managers, and fosters young people who will shape the achievements of the world’s next generation.



and “Information Security,” and a tour of the Yokohama Data Center. A discussion was also held on the social responsibility of schools.

NRI supports the activities of the Network for Economic Education, aiming to augment economics education in schools from elementary level

NRI supports the activities of the private organization Network for Economic Education, along with the Yomiuri Shimbun newspaper and Chuo Mitsui Trust Holdings, Inc. The Network was established in June 2006 to share information with academics involved in economics education, elementary, junior high and high school teachers and corporations and to collect and propagate information on economics education.

In November 2006, the Network and the Yomiuri Shimbun held the Workshop on Economics Education in Tokyo. Two consultants participated in the workshop, advocating in “Lesson Recommendations from Industry” that teachers put more emphasis on communication skills, as well as focusing on the vision and mission that will motivate students.

Visits from universities and high schoolsNRI welcomes student visits from universities and high schools to help foster young people of the next generation. Recently, there are more and more visits from high schools to NRI. These are designed to create opportunities for students to think about their future careers. NRI strives to help students understand what it is like to work when they visit the company by having NRI employees who graduated from the same school talk about their own experiences. In fi scal 2006, students from three universities and six high schools visited NRI.

Comments from the participants

Comments from high school students who visited NRI

• Hearing graduates from my school who work at NRI made me realize how diffi cult it is out in the real world, and gave me a sense of responsibility toward work.

• I realized that our growth is not just limited to childhood and our school days, but that even after we become adults, we grow emotionally through work.

• The visit made me feel that fi nding a job, which I’d thought was something in the distant future, is actually just around the corner.

• I learned that the life that we live is actually sustained by a great many people—something I hadn’t given much thought to previously.

• I was encouraged because I was told that I should fi nd something I like doing, that I will fi nd my way.

• The words of the old boys about their high school and university experiences help me in my current situation.

• The company environment seems more casual and fl exible than I had anticipated. This probably leads to innovative business strategies.

Comments from employees who talked to students from their alma maters

I most wanted to impress on these high school students the importance of thinking, deciding and acting independently. I wanted to give them an opportunity to think about whether they were satisfi ed with their decisions, and so I talked about personal issues like deciding which school and company I applied to. This was also an opportunity for me to look back on the past, some ten years after I’d graduated.

Toshio Ishii Industrial System Business Department II(Graduate of Maebashi High School in Gunma Prefecture)

Teachers participated in training at NRI

• Training in a different fi eld gave me a different perspective from that I’d gained during the training I’d participated in thus far, and was an excellent learning experience.

• This was a really fulfi lling three days, thanks to the relevant subject matter and the diversity of the programs.

• Listening to the lecture given by the general manager of Human-Resources Development Department, I really felt that this was a company that brought together talented employees and trained them well.

• It was a very valuable experience to tour the data center and learning center, which are places I don’t normally have a chance to see.

• Interacting with teachers from other schools ranging from kindergartens to a college of technology made me realize that we face the same problems.

• I’d like to use some of the techniques and information from private corporations in my school.

When I talked to the students, I tried to motivate them. I gave them group work in which they had to think of ways to raise a convenience store’s sales to attract a new customer base. I hoped that an actual business situation would make them realize that it was related to their lives in high school, and would also help them understand what is involved in consulting work.

Kohei UmezawaBusiness Strategy Consulting Department II(Graduate of Takasaki High School in Gunma Prefecture)


Visits by British MBA studentsIn September 2006, as in the fi ve previous years, MBA students from graduate schools of Cranfi eld University in the UK and from Kobe University visited NRI as part of their joint training program.

NRI employees gave lectures about changes in the environment surrounding Japanese companies and changes in human resource management in Japanese companies. The lectures were followed by active discussion.

Cooperation with China’s IT management training

As in fi scal 2005, NRI agreed to the Association for Overseas Technical Scholarship’s request and invited technicians and managers from IT-related companies in China to visit NRI in January 2007. This was an important opportunity for the company to introduce NRI’s business and CSR activities. The participants stated that it was very helpful to learn that NRI included CSR in its corporate philosophy, and that it was put into practice.

Cooperation with entrepreneur training for high school students from Saudi Arabia

In February 2007, for the fi rst time, NRI was visited by high school students from abroad. The visit was at the request of the Japan Cooperation Center for the Middle East, which ran the entrepreneurial experience program. Twenty high school students and two teachers, including the principal, from Dar Al Fikr School in Saudi Arabia visited NRI.

Support for international students learning in Japan

NRI participates in a program run by the Foundation of Corporate Friendship Network for Foreign Students to house international students in company accommodation. As of January 2007, nine students are staying in NRI’s company accommodations.

Support for developing human resources overseas

•Donation for relief after large-scale disasterThe NRI Group matched the donation of ¥2,448,000 collected from its employees for the relief of victims of the Java Island earthquake in May 2006 and gave a total of ¥4,896,000 (approximately US$45,000) to the Japanese Red Cross Society.

•Donations of used PCs to educational institutions

In April 2007, the NRI Group collaborated with T’s Future Co., Ltd., the company that disposes of the group’s used PCs, and donated the PCs it had used for work to the Salesian Polytechnic in Machida city, Tokyo. NRI plans to continue donating its used computers to educational institutions.

•Charity for disadvantaged childrenFor over ten years, NRI’s I-STAR System Services Department has supported Christmas charity activities for disadvantaged children sponsored by the major Canadian fi nancial group, Canadian Imperial Bank of Commerce (CIBC) Group. In fi scal 2006, the books and toys that NRI donated were sent to two institutions in Japan.

Other social contributions

Comment from a lecturer who led the students

NRI’s lectures were well suited to the objective of the training, which is to teach MBA students from Cranfi eld University about recent developments in the Japanese business world. Both Kobe University students and Cranfi eld University students were really pleased to visit NRI.

Yutaka FurutaniLecturerGraduate School of Business Administration, Kobe University

Comment from an employee giving a lecture

After the visit, a student from Cranfi eld University e-mailed me that she would like to write a paper on the challenges Japanese companies are facing, which is what we discussed when her group visited. I am so pleased that they are interested in the management of Japanese companies.

Chiho WakatomoManagement Consulting Department

Dar Al Fikr School students and NRI employees who gave lectures


3. Development of Human Resources


Inquiries to:Corporate Social Responsibility Department Nomura Research Institute, Ltd.Tower N, 1-5-15 Kiba, Koto-ku, Tokyo 135-0042, JapanTel: +81-3-6660-8400 Fax: +81-3-6660-8401Email: [email protected]

FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06

27.1 28.030.1

36.4

43.8

11.7 11.811.9

12.8

13.627.6 29.2

38.2

46.0

30.9232.7 238.0

252.9285.5

322.5

Consolidated Financial ResultsSales(Billion yen)

Ordinary profit(Billion yen)

Operating profit/Operating profit margin(Billion yen, %)

Sales by sector (FY06)

* Each fiscal year starts on April 1 and ends on March 31 the following year.

Sales by service (FY06)

Corporate Profile

Public sector28.2 billion yen (8.8%)

Other private companies37.6 billion yen (11.7%)

Distribution sector45.6 billion yen (14.1%)

Financial sector210.9 billion yen (65.4%)

Corporate name: Nomura Research Institute, Ltd.

Established: April 1, 1965

Capital: 18.6 billion yen

Employees: 4,407 / NRI Group: 5,303 (as of March 31, 2007)

Headquarters: Marunouchi Kitaguchi Building, 1-6-5 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan

Sales: 322.5 billion yen (consolidated) (fiscal year ended March 31, 2007)

NRI Group:[Japan] NRI Network Communications, Ltd.

NRI Learning Network, Ltd.

NRI SecureTechnologies, Ltd.

NRI Cyber Patent, Ltd.

NRI WEBrandia, Ltd.

NRI Workplace Services, Ltd.

NRI Data iTech, Ltd.

NRI Social Information System Services, Ltd.

Insurance System & Technology, Ltd.

Ubiqlink, Ltd.

[Overseas] Nomura Research Institute America, Inc.

Nomura Research Institute Europe Limited

Nomura Research Institute (Beijing), Ltd.

Nomura Research Institute Shanghai Limited

Nomura Research Institute Hong Kong Limited

Nomura Research Institute (Singapore) Private Limited

Note: NRI Data Service Co., Ltd., merged with NRI on April 1, 2006. NRI Garden Network, Ltd., was transferred to Argo21 Corporation in October 2006. NRI Shared Services, Ltd., changed its name to NRI Workplace Services, Ltd., in October 2007. In the same month, NRI Social Information System Services, Ltd., was founded.

Consulting services29.8 billion yen (9.3%)

IT solution services292.6 billion yen (90.7%)

Junichi Mizuo, Ph.D.COE Professor, the Graduate School of Science and Engineering, Tokyo Institute of Technology

Professor, the Graduate School of Surugadai University

Director, the Institute for Economic Research of Surugadai University

Third-party Opinion

Having gained an understanding of the NRI Group’s CSR activities from this report, my third-party opinion comes from the perspective of someone who has experienced putting CSR into practice and worked on the underlying theory behind CSR, and fused the two together for use in society.

NRI’s proactive and fundamental CSR, and the way in which they are incorporated in its business are well explained in the report

I was able to understand NRI Group’s engagement in supporting the information and social infrastructure by utilizing its core strengths.

For proactive CSR, first, NRI helps to establish an information infrastructure and to develop social systems in Asia. Second, NRI contributes to the creation of e-government by cooperating with Assistant CIOs in Japan. Third, NRI supports the establishment of infrastructure for both information and social systems, for example by developing and operating back office systems for securities companies, and by assisting with the development of e-JIBAI.

At the same time, fundamental CSR ensures that NRI has a firm business foundation, focusing primarily on internal control using IT in the areas of corporate governance and compliance.

The expertise and know-how NRI has built up in its business are incorporated in the Group’s proactive and fundamental CSR activities. Those approaches are then fully developed throughout the Group’s business, enhancing NRI’s CSR activities.

Suggestion: Promote a PDCA cycle inCSR activities

The processes of plan, do, check and act (PDCA) encourage employees to be more engaged in CSR.

The planning stage begins with listening to and understanding employees’ opinions, and then reflecting them in the plan. The organization of employees who facilitate CSR activities I proposed last year is one example of the “do” stage. At the “check” stage, it is important to factor in employees’ evaluation of CSR activities, and the way in which this report is utilized in employees’ sales, marketing and PR activities. Systematically organizing and disclosing this information in the “act” stage not only heightens awareness of CSR throughout the company, but revisions for the following fiscal year will lead to continuous improvements in CSR activities and more thorough coverage in this report.

Response to Third-party Opinion in CSR Report 2006

In last year’s Third-party Opinion, Dr. Mizuo stated that he would like to see more emphasis on the CSR activities that employees worked on together, and accordingly in fiscal 2006 we focused on ensuring the participation of as many employees as possible in several CSR activities.

For example, many employees participated in the NRI Student Essay Contest by earnestly calling for applicants from universities and high schools, and in the primary screening. Employees also took the lead in the Smart Work Style Campaign, in order to improve NRI’s work style.

On the internal CSR website, NRI actively introduced CSR activities and held seminars and briefings on CSR for employees.

The NRI Group plans to continue working together toward CSR with all of its stakeholders, beginning with its employees.

DisclaimerThis report is based not only on the NRI Group’s current and past situation, but also on plans and forecasts based on information available at the time of publication. Therefore, the actual status and outcome of future business activities may differ from these forecasts as a result of changes in the environment.

TrademarksCompany names, product names and other proper names used in this report are the trademark or the registered trademark of the company in question.


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