Messages from Our Leaders

Basic policy on governance, the governance system, and approach to information disclosure

Q First, could you provide an overview of corporate governance at i-PRO? As a company that is unlisted yet operates globally, how do you ensure transparency and accountability?

A i-PRO has established a basic policy of building the necessary corporate governance systems to ensure timely and transparent management. More specifically, the Board of Directors, which is tasked with management decision-making and supervision, plays a central role, and we have also established an Audit and Supervisory Committee that includes outside directors to perform checks and balances functions over management. We appoint independent experts as outside directors and have them participate in management from the perspective of third parties. We have also established an Internal Audit Department directly under the Representative Director, which periodically verifies the appropriateness of business processes and effectiveness of internal controls. While we are not a publicly listed company, we have voluntarily established a governance system equivalent to that of a listed company to satisfy the transparency and accountability demanded by investors and business partners.

Q I would also like to ask some specifics about internal controls and the compliance system. What sort of code of conduct or systems has i-PRO put in place, and what education do you provide to employees?

A i-PRO has put in place the i-PRO Code of Conduct, which applies globally. The Code of Conduct defines the standards for ethics and legal compliance to be observed in our business activities, and also aligns with the Ten Principles of the United Nations Global Compact (UNGC) covering the areas of human rights, labor, the environment and anti-corruption. We became a signatory to the UNGC in June 2023, and with the formulation of this Code of Conduct, we made an internal and external commitment to practice corporate ethics aligned with international principles. The Code of Conduct covers a wide range of matters, from respect for human rights, environmental considerations and compliance with labor standards to competition law and anti-corruption. All employees are made thoroughly familiar with this Code of Conduct through induction training when they join the company and periodic e-learning thereafter, and we also offer compliance education that incorporates case studies.

We have also established a whistleblowing system. We have set up internal and external contact points that allow employees to anonymously submit reports or seek consultation when they discover violations of internal rules, laws or ordinances, and after investigating reports that are received, we take swift corrective action. We prohibit taking any disadvantageous action against those who submit reports or who have cooperated with an investigation, and their confidentiality is also thoroughly protected. This system also caters to consultations regarding human rights and the environment. For example, we have also set up similar hotlines to deal with environmental and human rights policies, and we explicitly state that retaliation is prohibited. We make every effort to prevent violations from happening and discover them early if they do occur, by building an environment that allows each employee to speak up with peace of mind.

Q As a manufacturer of security products, it is also important to deal with product quality and safety risks. How do you position quality, product security and information management at the core of governance?

A As you mentioned, managing product quality and security is one of the most important areas of risk in our governance activities. i-PRO has been providing high-quality video equipment backed up by technological capabilities that have been cultivated for more than six decades. Since becoming independent, we have dramatically increased the number of product lineups we deal with, and the speed of technological innovation has also risen, including collaboration with AI-oriented companies. Operating under this environment, we have continued to strengthen our internal quality management system under the philosophy that “quality drives everything we do.” Specifically, we have a stringent quality testing program based on in-house standards, and we operate a PDCA (Plan-Do-Check-Action) cycle that utilizes feedback on bugs and defects after shipping in the development of future products. Information security and measures against cyberattacks are also key management issues. i-PRO has acquired ISO/IEC 27001 (information security management) certification, and we have a dedicated department that takes the lead in providing multi-faceted protection to our internal systems and conducts 24-hour monitoring. We have systems in place so that when an incident occurs, a crisis response team is instantly launched to prevent the spread of damage and determine the cause.

In terms of product security, we have also thoroughly adopted a “security by design” approach to both hardware and software. We incorporate the latest encryption technologies and vulnerability countermeasures from the development stages, while also maintaining safety with the provision of regular firmware updates after a release. We recognize the vital importance of protecting our own products and services from cyberattacks, which is why we implement security measures that cover the entire product lifecycle. As a company responsible for handling the valuable video data of our customers, we place information management, quality assurance and security at the core of our governance framework.

A distinct initiative unique to i-PRO: AI ethics and AI governance

Q Next, I would like to ask you about governance in relation to the use of AI technologies. With the rise of surveillance cameras equipped with AI and other advances, what major risks are you aware of in your capacity dealing with governance, and what is your policy for dealing with them?

A I am mainly focused on three main risks related to the use of AI. The first is the issue of bias due to AI. Due to biases in their training data, facial recognition and behavior detection algorithms could make incorrect judgments that are discriminatory on the basis of race or gender. Another risk is misrecognition or misdetection. Due to the accuracy or limitations of AI, it could miss an abnormality that should have been detected, or conversely, mistakenly alert to and detect something that turns out to be harmless. In security applications, as these “false negative” and “false positive” detections can have a significant impact on society, improving technical accuracy and assessing risks is essential. Another concern is privacy intrusions. As the video data collected by an AI camera could include personal information, there is a risk that an individual’s right to privacy or human rights could be violated due to the improper usage or inadequate management of that data. Facial authentication and similar technologies in particular, if handled improperly, could lead to a surveillance society, which is why they need to be handled with special care.

To address these risks, i-PRO has built a comprehensive governance system that advocates “responsible AI development and utilization.” First, in December 2023, we established the i-PRO Ethical Principles for AI to serve as guidelines when dealing with AI technologies internally. This clearly stated ethical standards regarding AI, including respect for people, respect for privacy, fairness, and accountability. In addition, we established the i-PRO AI Ethics Committee as a cross-functional organization directly under the CTO. We lead the industry in terms of establishing a dedicated internal AI ethics review body, and behind that was a management decision based on the idea that “since the social impact of AI is so great, let’s put in place proper internal checks.” The committee works closely with legal affairs, quality assurance and business planning, discussing and providing recommendations on the ethical issues and risks that are inherent to AI projects. In terms of its specific roles, the committee has developed and helps operate an ethical check process for AI development projects, identifies risks, reviews corrective measures, and also plans and implements AI ethics education for employees. We have already introduced a workflow where AI algorithms undergo checks by this committee ahead of releases, and we have started to implement systems to make improvements after bias assessments and privacy impact assessments have been conducted.

Q Why did you pioneer the industry in terms of developing ethical principles for AI and setting up a related committee? In addition, how did you incorporate this into actual business processes?

A As I mentioned earlier, the sense of crisis regarding the risks was the biggest reason. Legal and regulatory trends were another concern. For example, AI governance has become increasingly strict globally, such as with EU AI regulations (the “AI Act”) being established in May 2024 as comprehensive AI-related legislation in Europe. As i-PRO’s products are used around the world, we need to put in place systems that anticipate new regulatory requirements in various countries and regions. Fortunately, since we had implemented edge AI technologies at an early stage, we had already accumulated some knowledge, and we built a framework early on out of top management’s strong desire for i-PRO to “play a guiding role on the ethical front as well, as a leading company in the industry.” To coincide with the launch of the AI Ethics Committee, we began operating an ethics checklist to use as part of our AI development practices.

Q I would like to ask about ISO/IEC 42001, which is an international standard for AI governance. I heard that i-PRO had acquired this certification, and I would like to know what significance this holds and what effects it has, both internally and externally.

A Yes, i-PRO acquired ISO/IEC 42001 certification in May 2025. ISO/IEC 42001 is an international standard for artificial intelligence management systems (AIMS), and defines a framework for risk management, transparency and accountability in the design, development and operation of AI. We were the first company to obtain this certification in the world in the security surveillance industry. It took a lot of work internally to develop the systems required to obtain the certification, but we made progress in establishing internal rules on AI governance and documenting operational processes. There are two key points that speak to the significance of this ISO certification. The first is the development of advanced internal processes. Through the third-party certification process, we were able to identify weak points and build a management system that operates the PDCA cycle. AI risk assessment procedures and education plans were also standardized, and we established mechanisms to ensure that internal controls will function even as we launch new AI projects in the future. Another point is improved external trust. ISO/IEC 42001 is a new standard for which few companies have been certified, and to be among the first to do so despite that sends a strong message that “i-PRO is a company able to properly handle AI.” As security cameras are products that support social infrastructure, holding international certifications for quality assurance with respect to AI will increasingly be one of the reasons for which customers choose us. In the future, we expect that holding ISO/IEC 42001 certification will also be a factor that gives us an advantage when bidding for overseas contracts.

Future governance strategy and medium- to long-term outlook

Q I would like to look back at the evolution of governance from when i-PRO became independent to the present day. Since i-PRO carved out from Panasonic in 2019, how have the establishment of governance systems and changes to corporate culture been utilized in management?

A When we first became independent in 2019, to be honest, we got off to a start by inheriting the systems in place at our parent company largely as-is on the governance front. However, with the expansion of our business activities globally after gaining independence, there was growing momentum to “create a governance model that suits i-PRO,” and since several years ago internal reform efforts have got into full swing. To start with, we worked to adopt a diverse range of views in the Board of Directors with the appointment of independent outside directors and non-Japanese directors. Currently a majority of the 12 directors on the board are non-executive outside directors. In addition, four of the 12 directors are directors who are Audit and Supervisory Committee Members. The insight of financial strategy and M&A provided by these outside directors, and perspectives on global markets provided by non-Japanese directors, have dramatically enhanced the quality of discussions in the management team. Similarly in terms of organizational culture, when i-PRO first became independent, a lot of decision-making was still based on following precedent or the whims of specific individuals, but in the process of strengthening governance, this has transformed into “rule and dialogue-based management.” For example, by establishing a cycle for management to openly discuss whistleblowing reports and proposals to drive improvements, we have made it easier for employees working in the field to speak up with a sense of trust in the process.

Q In terms of investor relations, what level of governance is expected? What sort of monitoring of ESG indicators and engagement (dialogue) are you pursuing?

A Investment funds, which are our major shareholders, place a very strong emphasis on governance. At the board meetings, the management team will often be asked, “How is that in terms of governance?” and we are also expected to be continually mindful of international best practices from an ESG perspective. In more specific terms, investors advise us to maintain standards that are on par with those of listed companies in terms of the process for making resolutions on important matters in board meetings, ensuring the independence of internal audits, and the transparency of executive compensation. Personally, I am always looking at the future possibility of the company going public, so I am working to ensure that we have established internal systems that align with the intent of the Corporate Governance Code while there is still time.

In terms of monitoring ESG indicators, the materiality KPIs I touched on earlier are reviewed at Executive Committee meetings on a quarterly basis. We confirm our progress on each item, including CO₂ emissions, occupational safety indicators, data privacy compliance status and the percentage of managerial positions filled by female, and if there is a divergence from our targets, we have the manager of the department responsible report on the cause and the action taken. We also report on our ESG initiatives and obtain feedback at annual meetings with our main shareholders. Fortunately, our participation in the UNGC and our pioneering efforts on AI ethics have been positively received, and we have received feedback suggesting that “it is outstanding for an unlisted company to go this far.” In dialogue with stakeholders, we take feedback seriously, even when it is hard to hear, and continuously work to improve our governance level by building upon improvements.