To achieve the goal of corporate sustainable development and be aligned with the important aspects that clients are concerned about and international trends, Primax has established a risk management system to regulate the management mechanism of risk management in accordance with the requirements of corporate risk management, there by improving the operational efficiency of risk management.
Primax has established a risk assessment team through the authorization of the Boardof Directors, led by ESG Office, and assigned various functiona lunits to form risk assessment teams. At least once a year, we conduct risk and opportunity identification meetings to address operational, sustainability, and climate change risks. The scope of risk identification in 2022 includes our major operating locations such as Primax Electronics Taipei Headquarters/Taipei R&D Center, Primax Dongguan, Primax Chongqing, Primax Kunshan , and Primax Thailand, but excludes subsidiaries.
The risk assessment team evaluates the sources, items, and indices of risks, identifies significant risks and opportunities that may impact operations, and proposes relevant response strategies. The team provides an enterprise risk management report to the Risk Management Committee and reports to the Board of Directors at least once a year, as convened by the Chair of the Risk Management Committee.
Risk management process
Primax has established a Risk Management Committee. ESG Office serves as the convener, driver and implementer for Risk Assessment Taskforce. Members of the Risk Assessment Taskforce convene the risk and opportunity identification meetings at least once per annum, to identify risks in corporate operation, sustainability and climate change. The sources of corporate operational risks come from business risks, financial risks, strategy risks, legal risks and other risks. Climate change risks are based on transition risks and physical risks suggested by the TCFD guidance. Also taken into account are the issues of concern for stakeholders, corporate development strategies, regulatory trends and relevant initiatives domestic and overseas. The members compile and establish the “Primax Electronics Risk Integration Questionnaire" to conduct risk assessments for each risk item during the meetings.
The assessment team follows the "Corporate Risk Management Policies and Procedures" to conduct risk assessments. The evaluation criteria include three main factors: "likelihood," "impact," and "vulnerability." These criteria are measured against the defined scoring scales for impact, likelihood, and vulnerability, as outlined in the company's impact scale, likelihood scale, and vulnerability scale. Likelihood measurement considers the probability or frequency of the risk occurring based on past occurrences. Impact measurement primarily focuses on quantifying financial impacts and is supplemented with qualitative descriptions such as operational disruptions, customer loss, or reputational damage. Vulnerability measurement assesses the organization's resilience to each risk item by evaluating the completeness of preventive and response measures, response time, and post-disaster recovery capabilities. The assessment is conducted based on three timeframes: "short-term (1-3 years)," "medium-term (3-5 years)," and "long-term (5-10 years)." During the assessment, the expected occurrence timeframe for each risk item is determined to further discuss corresponding strategies for short-term, mediumterm, and long-term risks. This serves as a basis for regular review and adjustment.
The risk classification of our company is determined based on the factors of "likelihood" and "impact." The risk levels are determined by multiplying the scores of these two factors and locating the position on the risk and opportunity matrix. This helps identify the risks that need to be addressed. The management team develops risk mitigation plans for high-risk items and ensures ongoing monitoring and improvement. The audit unit then incorporates important action plans into periodic inspections under audit plans.
Regarding climate change opportunities, the company also refers to the TCFD sources of opportunities. A questionnaire for opportunity identification related to climate change issues is developed, considering the aforementioned scale framework. The evaluation of climate change opportunities is conducted based on the criteria of "likelihood" and "impact." ESG Office decides on the list of risks and opportunities associated with climate change based on assessment results and after discussion. This is followed by responding strategy formulation.
Risk Management Structure and and Responsibilities
Corporate Risk Management is divided into three organizational levels for operational efficiency:
| The first level | involves the heads of various operational units who are responsible for implementing internal risk management operations. This includes processes, record management, continuous improvement, and more. |
| The second level | is comprised of functional management units at the corporate headquarters. Their role is to oversee and supervise the execution of risk management by the operational units. |
| The third level | consists of the auditing unit, which independently conducts internal control and operational risk audits. |
- Each unit should monitor the risks associated with their managed operations. When the risk level exceeds the management objectives, they should report to senior executives and propose mitigation measures for improvement.
- The auditing unit should regularly report the annual audit plan and its execution results to the board of directors and the audit committee.
- At all levels of the organization, according to their management responsibilities and job requirements, risk awareness is required in the work plans and daily implementation of various procedural processes, ensuring completion of the PDCA (Plan-Do-Check-Action) cycle.
- The ESG Office should appoint an assessment team coordinator according to the plan and establish the risk assessment team for that specific risk assessment through communication with the execution team and the coordinator's assignment.
In 2022, the Risk Assessment Team held riskassessment meetings in June and November, reevaluating various corporate risks. The Enterprise Risk Management Report was presented to the Board of Directors in November by the convener of the Corporate Sustainability Office, Vice General Manager Ms. Chiang, Yan-Ying. During the year, a total of 68 risk factors were collected, and after going through the risk management process, the major enterprise risks identified for Primax include: ( 1 ) Challenges in the Chinese industrial upgrading, ( 2 ) Inflation, ( 3 )Global expansion, ( 4 ) Financial management, ( 5 )Increasing demand for green products, ( 6 ) Adoptionof low-carbon production technologies, ( 7 ) Mandatoryclimate information disclosure and reporting, ( 8 ) Noncompliancewith customer ESG requirements, and ( 9 )Widespread adoption of sustainability assessments.The corresponding risk response measures are shownin the table below【for detailed information on climatefor detailed information on climatechange risk, please refer to Climate Change】
