We put an emphasis on three aspects of corporate governance, environment conservation and social responsibility and try to identify the major potential risks present in the business operation, setting up a comprehensive set of management measures to respond to any risk so as to minimize the uncertainty in the course of corporate development.
|Category||Risk issue||Impact||Management mode||Response|
|Corporate governance||Strategic risk||Strategically, expand the scale of subsidiaries and human resources to improve product development technology and production capacity. Possible risks lie in the capital turnover, and the idle manpower due to sluggish market conditions.||Establish operation procedure for monitoring subsidiaries, and report the portfolio information of equity securities to the senior management team for review on a regular basis.||Through diversified investment portfolio to respond to potential price risks.|
|Credit risk||Default loss resulting from customers, suppliers, competitors or other business partners who are not able to perform contractual obligations due to their physical deterioration or other factors.||For business partners, the credit risk assessment system shall consider such standard factors as financial status, credit rating, previous transaction experience, current economic environment and our internal evaluation results. And some credit enhancement tools (such as advance payment) shall be utilized to reduce credit risk. Meanwhile, Financial Department is responsible for managing bank deposits, fixed income securities and other credit risks from other financial instruments.||All units follow credit risk policies and procedures to control and deal with credit risks.|
|Market risk||Unfavorable market price fluctuations may cause the balance sheet to face risks. Market price refers to interest rates, exchange rates, and stock and commodity prices.||
|Liquidity risk||May suffer losses due to the inability to realize assets or obtain financing.||Maintain financial flexibility through cash and cash equivalents, highly liquid securities and bank borrowings.||
|Information security risk||Intellectual property, business secrets and internal information security are jeopardized due to external hacker attacks or information disclosure.||Information security handbook||
|Environment||Climate change||To reduce the occurrence of extreme climates, the world pays attention to whether companies comply with various environmental protection standards.||Environmental protection procedure||Keep an eye on to the international protection trend, establish environmental protection measures in line with business needs, arrange internal education and propaganda for employees to be aware of the impact of climate change and participate in the implementation of environmental policies.|
|Flood, droughts, wind disasters and earthquakes resulting from climate change is jeopardizing business environment.||Sustainable business management procure||
|Society||Supply chains||Suppliers unable to provide raw materials or services, causing us to fail to continue services for customers||Sustainable business management procure|
|Infectious disease||The pandemic of infectious diseases cause personnel injuries and business interruptions due to manpower shortage or supply delays.||Sustainable business management procure|
In the event of emergent accidents, set up an emergency response command center, with the general manager or the highest supervisor as the commander-in-chief, and senior supervisors at various level as the members, to carry out disaster relief matters.