Issue Date:August 1, 2019

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.

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