Risk Management
Risk Management Culture
In order to strengthen the effectiveness of Canghe's governance and establish a sound risk management system, Canghe has established "Risk Management Policies and Procedures" as the basis for implementing risk control operations, and clearly divided the risk management responsibilities of the management level, each business and management unit. To reasonably ensure the achievement of the Company's objectives. The effective operation of the Company's risk management process helps to cope with the highly uncertain market environment where the types and nature of risks are becoming increasingly complex, closely monitor risk management loopholes, and implement timely detection, correct identification, accurate analysis, strict supervision and control. Risk management process. In addition to avoiding financial losses caused by risks, we also seek more business opportunities to create higher value for the company and stakeholders, ensure the company's stable operation and achieve the goal of sustainable operation.
Risk Management Procedures
Risk Management Execution
In order to effectively implement risk management procedures, Canghe has established a clear three-level risk management division of labor framework to implement related operations, and internal auditors will conduct audits to verify whether the risk management is effectively implemented to ensure the implementation and compliance of the system.
| Risk Management Level | Risk Management Operations |
|---|---|
| First level of responsibility | The head of each unit or the person in charge of the business is the person responsible for the risk of the business they undertake. They must perform their business in accordance with the internal control system and internal regulations of the relevant business and serve as the direct unit for the initial risk discovery, assessment and control in the management link. |
| Second level of responsibility | Each functional/departmental supervisor or designated functional/departmental risk management personnel shall be responsible for the risk management of the relevant business and shall review the operating rules or operating manuals based on the actual business operations and shall pay attention to the latest regulations announced by the competent authorities. Relevant internal regulations may be amended or revised when necessary. |
| Third level responsibility | The General Manager's Office shall review the Company's major risk management mechanisms in terms of operations, finance, strategy, legal compliance and potential damage, and shall monitor the relevant risk control of each unit in accordance with this policy and relevant risk management methods. |
Risk Control Strategies and Practices
| Risk Type | Potential risks | Risk Management Operations |
|---|---|---|
| First level of responsibility | Interest rate risk | Canghe takes prudent and pragmatic management principles, pays long-term attention to global economic development and international interest rate changes, and maintains good credit cooperation with various banks. Canghe has an excellent financial structure and continuous net cash inflow. If there is no major capital expenditure, Canghe has sufficient operating working capital and the impact of interest rate changes on the Company is limited. |
| Exchange rate risk | Canghe manages foreign currency funds in a prudent and conservative manner, keeps track of potential international financial situations that may affect exchange rates, and asks correspondent banks to provide foreign exchange information and suggestions in a timely manner, closely monitoring exchange rate trends to determine the foreign currency positions to be held. If there are larger foreign exchange positions in the future, the company may engage in derivatives trading for hedging purposes in accordance with the derivatives trading rules in the "Procedures for Acquisition or Disposal of Assets" to minimize exchange rate risks. . | |
| Inflation risk | We keep abreast of changes in upstream raw material prices and maintain a good interactive relationship with suppliers, adjusting purchase prices in line with market fluctuations to reduce the significant impact of changes in raw material costs on the company's operations. | |
| Operational risks | High-risk, leveraged investment risks | In 2023, Canghe focused on the development of its core business and did not engage in high-risk or high-leverage investments, so the related risks were limited. Regarding derivatives trading, loaning funds to others, and endorsement and guarantee, Canghe has established the "Procedures for Acquiring or Disposing of Assets" and "Management Measures for Loaning Funds to Others and Endorsement and Guarantee" as the basis for Canghe to engage in related activities. The Company has engaged in annual warehouse operations and capital lending or endorsement guarantee transactions due to operational turnover needs, and has never engaged in derivative commodity transactions. However, if there is a need to engage in derivative commodity transactions in the future, the purpose will be to avoid market risks caused by exchange rate and interest rate fluctuations, and will not be used for arbitrage and speculation. |
| Risk of purchasing and selling goods | 1. Purchasing: Canghe’s main purchasing items are various meshes (wire mesh, polyester mesh), emulsions (wet emulsion and film) and others (such as negatives, aluminum frames, etc.). The above materials will be The purchase accounts for about 70% of the total purchase, and they all maintain more than two suppliers and maintain good relations with each other, hoping to stabilize the price and quality of raw materials with the purchase advantage and spread the supply chain risk. 2. Sales: Canghe is mainly engaged in Precision screen manufacturing and sales and screen printing consumables trading business. The screens are used in solar cells, passive components, printed circuit boards, touch panels, and biotechnology and medical testing strips. The sales customer base is mainly distributed in Taiwan, China, and Northeast Asia Compared with Southeast Asia and other regions, there is no excessive concentration of sales to a single customer that would have a significant adverse impact. | |
| Legal risks | Risk of policy and legal changes | Canghe pays attention to the potential impact of changes in international policies and laws related to products and application industries, and adopts appropriate business strategies to ensure that daily operations, new business development and industrial technology innovation are handled in compliance with relevant domestic and international laws and regulations. There is no significant impact on operations due to policy or legal changes in 2023 |
| Information System Risks | Security Risks | Canghe actively plans and deploys information security measures, reduces information security risks by improving the information security environment and enhancing the information security awareness of all employees, and combines various management measures such as risk management system and internal audit process to improve information security. Security protection architecture |
Climate Risk Management
According to the 10 major risk categories in the "2024 Global Risk Report" released by the World Economic Forum (WEF), environmental risks account for 5 in the next decade, namely extreme climate events, drastic changes in the earth system, biodiversity With the loss of species and collapse of ecosystems, natural resource shortages and pollution, it is clear that it is urgent for companies to develop proactive climate solutions. Therefore, Canghe refers to the Task Force on Climate-related Financial Disclosures (TCFD) issued by the Financial Stability Board (FSB) in June 2017, and uses the TCFD recommended disclosure framework to identify climate change. Weigh the opportunities and risks brought about by the situation and formulate corresponding measures.
Managing Climate Change Risks and Opportunities
| Risks/Opportunities | Category | Description | Impact | Financial impact | Management measures |
|---|---|---|---|---|---|
| Risk | entity | Extreme weather leads to natural disasters (such as typhoons, floods, etc.) | • The business location is affected by natural disasters, which will threaten the safety of colleagues and may cause loss of equipment • Equipment storage is damaged, affecting daily operations | Increased costs Revenue decline (Long term) | • 加強各營業據點防災演練• 添購防災設備 • 密切關注政府防災政策及動態消息• 重新考量倉儲位置 |
| Energy supply shortage | Physical risks cause energy shortages and make upstream energy supply unstable | Increased costs ( short term ) | 規劃導入節能設備，及緊急供電系統，以備不時之需 | ||
| Transformation | Carbon pricing system | The government has formulated policies related to carbon emission charges, so that greenhouse gas emissions will incur additional costs | Increased costs (Medium term) | 積極推動節能減碳措施，並評估設定減碳目標，減少碳價徵收對營運成本的潛在影響 | |
| Changing consumer behavior | Corporate customers have a growing awareness of sustainability and expect/require products to comply with green and sustainable standards and certifications | Revenue decline (Medium term) | 發揮自身核心能力，將主要產品與綠能結合，以因應客戶對低碳產品之要求 | ||
| Chance | Products and Services | Develop new low-carbon markets, new products and services | As policy trends in various countries and customers’ low-carbon awareness gradually increase, the demand for renewable energy and related supply chain products increases. | 營收增加 （ 中長期 ） | • 持續研發創新，掌握及預測太陽能印刷網版之市場需求 • 調整生產與銷售策略，爭取更多產品銷售機會 |
| Talent cultivation | Recruiting and developing sustainable talents | In order to respond to the sustainable development trend, Canghe must recruit sustainable talents, cultivate a professional sustainable team, and make employees an important partner in Canghe's sustainable development vision. | 營收增加 成本增加 （ 長期 ） | • 規劃成立倉和永續團隊 • 對外建立永續品牌形象 |