Risk Management

The Sub-committee for Risk Management under the Sustainability Committee of the Board of Directors consists of five directors, including three independent directors. The list is as follows:

Title	Name
Chairperson	Tseng-Liu, Yu-Chih
Director	Huang, Wei-Jin
Independent Director	Chen, Hsiang-Sheng
Independent Director	Chen, Shi-Shu
Independent Director	Hsu, Sung-Tsai

Important Risk Assessment Item

Risk Control Unit

(unit in charge of the related affairs)

(1st mechanism)

Risk Review

and Control

(2nd mechanism)

Board of Directors and Audit Office

(3rd mechanism)

1. interest rate, exchange rate and financial risks

2. high-risk investments, highly leveraged investments, loans to other parties, derivatives transactions, financial investments

Finance

Top Management

Board of Directors

(making decision and being the final controller of risk assessment control)

Audit Office

(in charge of inspection, assessment, supervision, improvement tracking, reporting on risks)

3. R&D plan

4. changes of policies and laws

5. technological developments and industrial changes

6. corporate image change

7. investment, securities investment and benefits of mergers and acquisitions

Technology

CEO’s Staff Office

Plants

Sales

Finance

Top Management

8. safety of labors and plants

9. accident prevention and response

Safety & Health

Administration

Top Management

10. expansion of plants or capacity

11. consolidation of sales or purchases

Plants

Purchase 1, Purchase 2

Top Management

12. ownership changes of directors and major shareholders

13. managerial control

Stock Affairs, Board of Directors

Top Management

14. Litigious and non-litigious matters

15. Other Operating Matters

CEO’s Staff Office

Top Management

Risk Management Policy

In order to enhance risk management, the Company has revised the "Organizational charters of the Sustainability Development Committee" at the Board of Directors meeting on August 10, 2023, and established a sub-committee within it, which is one for risk management, to strengthen risk management by put it under supervision of the Board of Directors.

And on August 10, 2023, the Board of Directors approved the Company's "Risk Management Policies and Procedures" in accordance with the "S Risk Management Best Practice Principles for TWSE/TPEx Listed Companies". In the Company's "risk management policies and procedures", it is clearly stated that the Company's highest governance unit for risk management is the Board of Directors, which is responsible for approving risk management policies, procedures and frameworks, for supervising the overall implementation of risk management, and for ensuring the effective implementation of the risk management mechanism. At the same time, a sustainable development committee is established under the Board of Directors as the supervisory unit of the Company's risk management. It is responsible for reviewing risk management policies, procedures and frameworks, for determining risk appetite (risk tolerance), and for regularly reviewing its applicability and efficiency in order to ensure the effective implementation of risk management mechanisms and procedures. The committee shall report the implementation of risk management to the Board of Directors at least once a year.

And then the Company immediately conducted risk assessment in accordance with the "Risk Management Policies and Procedures". First, we compiled a full list of risk factors and allocated the potential business units in charge of dealing with those risk factors. And then we submitted the initial assessment to Top Management Committee to finish the final risk assessment matrix for the Company. After completing the first draft of the risk assessment matrix on November 16, each member of Top Management Committee reviewed the weights allocated to every specific risk factor again, calculated the final scores for every risk factor and ranked the risk factors by their final scores. The final risk assessment by Top Management Committee was completed and sent to each unit in charge of dealing with them for risk assessment on the level of operation before the end of November. In December, on the annual meeting for year-end review and next year planning, each operation manager was required to conduct risk assessment and countermeasures against the risk factors for each operating unit based on the above risk assessment matrix in addition to reviewing their results for the year and setting goals for next year. On January 18, 2024, top management presented the risk assessment results and responses to the Sustainability Committee. On January 19, top management made an implementation report of risk management to the Board of Directors.

At the same time, the Company has always been abiding by the "Regulations Governing Establishment of Internal Control Systems by Public Companies" issued by the Financial Supervisory Commission and internalizing internal control into the operational procedures of each unit in charge of risk management to carry out risk management in the Company’s daily operations. The Audit Office will formulate an annual audit plan based on the latest risk assessment results and legal requirements every year. The plan will be submitted to the Board of Directors for approval before implementation.

In addition, the Company ensures the suitability and effectiveness of the ISO 9001 quality management system, IATF 16949 automotive industry quality management system, TL 9000 communication electronics industry quality management system, IECQ QC080000 hazardous substance process management system, ISO 14001 environmental management system, and ISO 45001 occupational health and safety management system. etc. in order to achieve the Company's established policies and goals. The Company will formulate the procedures of internal audit and management review, and have the certification agencies to audit the implementation of those systems every year in order to to maintain the continued effectiveness of the systems.

Based on the assessed risks, relevant risk management policies or strategies are formulated as follows:

Material Topics	Risk Assessment Items	Remark
Environment	Environmental Impact and Management	l The Company complies with the requirements of ISO 14001, establishes an environmental management system, and fully considers such significant environmental issues as pollution (e.g. air pollution, water pollution, waste) and water and electricity consumption, etc. and takes into account hazardous substances that may be introduced in the manufacturing process. Therefore, we set up dedicated management units and personnel to prevent environmental pollution, such as air pollution, water pollution, and waste, and to manage energy and resources. l The Company regularly checks greenhouse gas emissions in accordance with ISO 14064-1 to review the impact on our operations. Based on the results of the greenhouse gas inventory, we will continue to implement carbon reduction measures to effectively reduce the risk of Scope 1 emissions and the indirect emissions of Scope 2 greenhouse gases caused by the use of electricity. The third-party assurance on greenhouse gas inventory has been completed in 2023, and the subsidiary in China and the parent company in Taiwan obtained assurance certificates in June 2023. The assurance for 2024 is also in progress. The subsidiary in China has obtained the assurance certificate in March 2024. The parent company in Taiwan is expected to complete the third-party assurance on greenhouse gas inventory in May and is expected to receive the assurance certificate in July.
Social	Occupational Safety	l Employees are the most precious assets of an enterprise. And ensuring the safety and health of employees is the most important responsibility of an enterprise. In order to make our commitment to labor safety and health, the Company has established an occupational safety and health management system to comply with occupational safety and health regulations and other requirements, to be in accordance with ISO45001 and to meet customers’ requirements. The goal of the system is to reduce any and all hazards and risks to our employees. We actively implement environmental and occupational safety and health policies and make sure that all employees can fully understand those policies through proper communication. We have been upholding the occupational safety and health policy of "compliance with laws and regulations, prevention first, safety first, and continuous improvement." l We commit to the following goals: 1. To provide safe working conditions and environment to protect the safety and health of employees. 2. To comply with laws, regulations and other relevant requirements and fulfill corporate social responsibilities. 3. To eliminate hazards and reduce occupational safety and health risks, and improve the working safety of all employees. 4. To continuously improve the occupational safety and health management system and improve the performance of safety and health management. 5. To enhance the communication channels, implement the consultation of workers and labor representatives, and participate in safety and health related activities.
	Product Safety	l The Company's products comply with relevant governments’ regulations and laws and with EU’s Restriction of the use of Hazardous Substance (RoHS). At the same time, in order to ensure the quality of customer service, we set up a customer service dedicated communication channel and actively conduct customer service satisfaction surveys on a regular basis every year to strengthen the collaboration with customers. l In order to avoid losses caused by a variety of risks, the Company has also taken various insurance policies, such as product liability insurance (the policy number is 0500-23APD0300068 and the insured coverage is USD 10 million.), etc., to ensure that we have sufficient capacities and resources to carry out the following recovery when risks occur, and indeed keep our commitments to customers.
Corporate Governance	Socio-economic Issues and Legal Compliance	l By establishing an organizing framework of corporate governance and implementing an internal control system, we ensure that all employees and operations of the Company comply with relevant laws and regulations. l The Company will apply for patents for the products developed by it to protect its rights and interests.
	Enhancement of the Functions of Directors	l We plan education and trainings on relevant topics for directors, and provide directors with the updated information on the latest regulations, system development and policies every year. l We have taken directors' liability insurance for directors to protect them against lawsuits or claims.
	Communication with Stakeholders	l In order to prevent stakeholders from having different perspectives with the Company, which may cause misunderstandings and lead to operational risks or litigation, the Company analyzes on a yearly basis the material topics which our stakeholders care about most. l The Company has established a variety of communication channels and been communicating actively to reduce confrontation and misunderstanding. We have set up the dedicated mailboxes and e-mail address for investors, in which the spokesperson is responsible for responding the received messages and opinions.