Issue Date:August 17, 2020
 

In facing the external challenges of ever-changing business environment and for the purpose of managing the internal and external risks that the Company may encounter, the Company has conducted risk factor identification to identify the relevant risks that may impact the sustainable development of the Company and the scope of risk management for the Company. In addition, the Company also monitors potential risks and adopts preventive measures according to the latest internal audit and guideline requirements, to reinforce enterprise risk management and enhance the capabilities to respond to crisis, increase benefits for shareholders, maintain competitiveness and the foundation for sustainable business operations for the enterprise.

Risk Management Team

In 2018, the Company reformed the risk management organization based on the organizational changes, and all of the risk management units were integrated into a “Risk Management Team”, which is affiliated to the CSR Committee. The chief financial officer leads the risk management team for conducting the identification and management of risk factors, to facilitate the organizational implementation of risk management and increase the efficiency of self-assessment and implementation.

Implementation

Since 2017, the Company has actively promoted and put into practice a risk management mechanism. Since 2020, it has reported its implementation to the Board of Directors once every year. The reporting was performed on July 27, 2020. The following shows the implementation from every year:

  • The scope, organization, and structure of the risk management were established in 2017.
  • The risk management organization was re-structured based on the organizational change in 2018. Each risk management unit was combined into a “Risk Management Team” that is subordinated to the CSR Management Committee and led by the Chief Financial Officer for identification of risk factors and risk control. This makes the command and control, self-evaluation, and operation of the risk management organization become more efficient.
  • The risk detection, analysis, and identification for the risk management had been continuously implemented in 2019. In addition, the emerging risk issues, such as the information security and climate change risk, were included in the management policies for effective control. The Company offered the risk management courses about quality, products, and information security. A total of 253 people attended them with a total of 114 training hours per person.
  • In 2020, the risk management policy of the Company has been developed and approved by the Board of Directors. The Company will continue the risk detection, analysis, and identification for the risk management to enhance the crisis response abilities to prevent and solve them and the ability to quickly recover after crises for effective risk control.

Risk Factor Identification

In order to implement the inspection, analysis and identification of the related risks in the risk management category, and to respond to the risks in global economy, finance, environment and business operations, Coretronic had identified a total of 35 risk topics at the end of 2018, based on the aspects of corporate, finance, information technology, business operations, human resources and external factors. In the first stage, the top 20 risk topics are obtained from the survey questionnaire of “the most significant risk,” “the risks that had countered in the past 12 months,” and “the top five risks that may counter over the next three years“ by 140 mid-level and higher level managerial officers. The 27 directors who participated in the high-level meeting of the Group then chose the top 10 risk topics of Coretronic from these 20 risk topics.
In 2019, we will evaluate the possible response proposals for the top three risk topics, as well as stipulate management strategies and implement risk management.

Top 10 Risk Topics
1 External factors – the rapid changes in technology and the industry
2 Enterprise – lack of innovation/unable to fulfill customers’ needs
3 External factor - economic downturn/slow recovery
4 External factor - increase of competition
5 Enterprise – implementation or strategy communication failure
6 Operations – discontinuity of the supply chain
7 Human Resources - difficult to attract and retain employees
8 Finance - exchange rate fluctuations
9 External factors - risk of product price
10 Operations - product recall

Risk Assessment

Topic Item Strategy
Environmental Energy The Environmental Safety Unit and Factory Affairs Unit have established the annual objectives, budgets, and plans based on the “Environmental Sustainability and Occupational Safety and Health Policies.” After they submitted them to the Environmental Protection Committee for review and approval, they follow the standards of the ISO 14001 Environmental Management System and ISO 50001 Energy Management System to perform the corresponding plans. For further information, please visit at "Energy Conservation and Carbon Reduction."
Emissions In response to the impact and challenges posed by the climate change and implement related control measures in accordance with the “Greenhouse Gas Reduction and Management Act,” the Environmental Safety Unit and Factory Affairs Unit have established the annual objectives, budgets, and plans based on the goal of the “Green Factory,” and “Environmental Sustainability and Occupational Safety and Health Policies” After they submitted them to the Environmental Protection Committee for review and approval, they follow the ISO 14064-1 GHG Emissions Inventories standards to perform the four green action plans. For further information, please visit at "Energy Conservation and Carbon Reduction."
Social Training and Education Based on the operational needs, the Company combines theories with practices, helps employees fulfill their potential and cultivates talents. Therefore, the Human Resources Center and Talent Development Center have developed and implemented the annual plan based on the five development directions “Company Culture, Youth Empowerment, Internal Talent Training, Smart HR System, and Employer Brand.” For further information, please visit at "Learning and Development."
Occupational Health and Safety For occupational safety, the Industrial Safety Unit has developed the annual objectives, budgets, and plans, and submitted them to the Occupational Health and Safety Committee for review and approval to verify the implementation of related strategies by the Occupational Health and Safety System based on OHSAS 18001. For occupational safety, the Health Management Department makes analyses of employees’ health problems based on the regular physical examination and plan appropriate health promotion activities. For further information, please visit at "ESH Management."
Governance Socioeconomic Compliance By establishing the governance organization and implementing the internal control mechanism, the Company ensures the compliance of all staff and their operations with related laws and regulations. For further information, please visit at "Governance."
Economic Innovation Management The outstanding R&D team continues to be innovative and dive into core technologies and key components. With the optical, electromechanical, thermal, software and system integration, and application capability, it provides innovative and comprehensive display system solutions for various applications. For further information, please visit at "Solutions."