Business operations and developments often face various uncertainties, which include global, regional, political, economic, financial, and technological risks. In 2020, the impacts of US-China trade war, Brexit, North Korea’s missile launch, and the Covid-19 pandemic had rocked global finance and economic development severely. According to The Global Risks Report 2021 16th Edition Insight Report released by World Economic Forum, it stated that the risk of a pandemic became reality in 2020.Its ranking jumped to key threats for the next decade along with climate change. Food safety, cyber security, environmental risk and financial risk are some other risks that also required our undivided attention. Facing with these potential risks, we delegate each business unit to assess, evaluate, develop countermeasures and execute accordingly.


Food Safety Risk

Food safety issues were still a heard item in 2020.The potential risk in food safety could damage a company’s reputation and further impact the company’s financial performance. Therefore, food safety risk is a significant material concern for our company, and our Food Safety Center hosts regular meetings about food safety and quality topics to ensure that we not only meet consumers’ needs but also comply with the laws and regulations. Through the implementation of source management, the execution of every safety measure, the traceable agricultural products, and the electronic traceability tracking system, all geared to achieve food safety control.


Climate Change Risk

The global climate changes are getting severe. Tornadoes, rainstorms, blizzard, and draughts are ever common; these natural phenomena are affecting the food supply, which they could have a financial impact to the business operation. Every country is doing its shares of the carbon reduction, low carbon transformation, environmental protection, and energy conservation. Using the Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures, TCFD, we evaluated and assessed the potential risks and opportunities that our company may face. We further identified two risk categories: transition risks and physical risks; and the related risks, potential impacts, and countermeasures are listed below.


Infectious Disease Risk

The global outbreak of Covid-19 in 2020 brought upon a huge impact on the global economy and business operations as national lockdowns, factories halt production, port closures, cargo shortages, and flight reductions. To prevent the impact of Covid-19 on our business operations, we not only comply with the government preventive policies but also enforce our own precautions with our employees, visitors, and vendors to minimize cross-transmission risk. So, we could maintain normal operation.


Environmental Risk

We establish an “Environmental Safety Task Force”. The members are full-time environmental safety personnel from each plant; they are to report on environmental issues as they happen, inspect the plant and the surrounding environment regularly, prevent potential environmental pollution, and, at the same time, also conduct in-plant greenhouse gas quantification, implement energy-saving and carbonreduction measures, and upgrade equipment effectiveness and efficiency.


Cybersecurity Risk

In 2020, Covid-19 pandemic has changed the workplace culture. Working remotely is the new norm and method. Our meetings are hosted virtually via meeting platforms which may raise the concern in cybersecurity. With the cyberattacks on the rise (malware, APT attacks, ransomware, and phishing), they pose threats to our cybersecurity. A robust information security management network is critical and a must to secure the confidentiality and integrity of the crucial internal information. Through the continuous educational training, the information technology personnel are prepared to apply the knowledge and the skills to implement information risk concept within the company. Preventive Measures taken:


Financial Risk

(1) Accounts Receivable Turnover Risk

In 2020, the Covid-19 pandemic impacted the global economy as the consumer confidence took a deep dive. Domestic companies were struck with operational and financial difficulties that lead to bankruptcies and the risk of uncollectible of accounts receivable. In the third quarter of 2020, we re-evaluated the credit lines for all customers. Each business unit used the average monthly sale amount, payment term, and payment history as the basis to determine the credit line accordingly. The change requests were submitted to the finance department and the audit office for evaluation. The “Customer Credit Line Management Policy” served as guidelines for the final decision. Also, for those customers that exceeded their credit lines, we may require the customers to increase the collateral guarantee and monitor closely on those accounts to secure our collectability of receivables.

Thirdly, customers’ collectability turnover rate is used as a key performance indicator for the sales bonus distribution.

(2) Exchange Rate Risk

Covid-19 pandemic hit the US hard. The high death tolls and the government mandates forced companies to close, and some even went out of business. The US government had quantitative easing policies and provided stimulus packages. These actions prompted de-dollarization, which led to the NT$ appreciation. Since we primarily import grain commodities, we have a demand for US dollar. With the NT$ appreciation, our exchange rate risk was lower.

The hedge fund was used as a preventive measure against the exchange rate risk and to reduce the exchange rate loss. Our Finance Group monitors the financial credit risk.



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