One aspect of risk management is the proper handling of crises if and when they arise, and the proper preparation for such crises. Sony's crisis management and business continuity activities predominately occur at the business and operational level closest to the events the Company may encounter. Since some events can have a significant impact on the entire Sony Group as a whole, Sony has established a Group crisis management procedure to enable a swift and organized Group-wide response to crises as needed. Under this system, crises are evaluated and classified into three levels to ensure dynamic and appropriate responses. Level 1 is defined as a crisis with the possibility of significant impact on the Sony Group, and the possibility of serious negative impact on the business of the Sony Group or its reputation, and will be handled under the direction of the CEO. Level 2 is a crisis that is determined not to be Level 1, but still has the possibility of widespread impact within the Sony Group, and will be addressed by a cross-functional committee composed of headquarters executives relevant to the issue. Level 3 is a crisis that the Corporate Executive Officer in charge of the subject area determines may be resolved within his/her authority.