About Artery

Risk Management

Scope of Risk Management

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.

How to response to management risks?

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.
  • For exchange rate risk:
    Manage exchange risk through natural hedging and forward foreign exchange contracts, and use forward foreign exchange contracts for some foreign currency payments.
  • For interest rate risk:
    Our interest rate risk mainly lies in the fixed deposits with floating interest rates. The period of our fixed deposits is generally shorter, lowering cash flow risk.
  • For equity price risk:
    Our listed and unlisted equity securities and other investments are included in the categories measured at fair value through profit and loss and other comprehensive gains and losses at fair value. And we adopt diversified investment portfolio to control price risks arising from equity securities.
  • For exchange rate risk:
    The foreign currency accounts receivable and payable are done in the same currency to handle exchange rate risks.
  • For interest rate risk:
    Shorten the contract period of investment commodities with low liquidity.
  • For equity price risk:
    Submit the investment portfolio of equity securities to the senior management team for review and approval on a regular basis.
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.
  • Cash and cash equivalents maintain for at least of three-month operation capital.
  • Improve the collection rate and shorten the period of customer payments
Information security risk Intellectual property, business secrets and internal information security are jeopardized due to external hacker attacks or information disclosure. Information security handbook
  • Establish a comprehensive information security protection measures to avoid malicious hackers, computer viruses and blackmail.
  • Set up reasonable protection measures based on confidential level.
  • Arrange education and training for employees to enhance information security awareness.
  • Regularly asses the appropriateness and effectiveness of information security operations.
  • Set up a project plan to strengthen protection measures.
  • Employees sign confidential agreement.
  • Require customers or third-party partners to sign confidential agreement.
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
  • 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.
  • Establish a sustainable supply chain assessment system to put carbon, water risk management and material supply emergency response plan into this system.
  • Realize the globalization of supply chains.
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

Consistent Business Management Policy

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.