The US-China trade war standoff in 2019 continued to impact the global trade and the economic performance. In addition to the financial market volatility, the outlook on the economy was unclear and all these factors raised the risks in business operation and finance. Facing with the uncertainties from both internal and external risks, we are committed to establish a robust risk management system. Abiding by the laws and regulations, we further plan, evaluate, and develop countermeasures to implement strategically against the potential risks that we may encounter in our business activities.
Food safety risk
Food safety and security is the number one priority for the food industry as the potential risk in food safety and security could damage a company’s image and further impact the company’s financial performance. Therefore, food safety and security risk is a significant material issue for our company, and Food Safety Center oversees and manages all the related risks in food safety.
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
Face with severe global climate changes and to maintain a steady supply of grain, our company source from different countries to reduce our risk exposures. For example, initially, we import soybean and corn from the East Coast of the US, but now, we also import from Brazil in South America. On the other hand, we purchase large amounts of locally grown corn to keep our inventory at a secure level to prevent shortage or disruption of the raw material supply.
The sourcing department manages the risk of grain (raw material) supply chain.
Occupational Safety Risk
As a centennial company, we are gradually adopting automation within our manufacturing factories to reduce and minimize the safety hazards and manual operations. Meanwhile, upon entering the factory, it is mandatory to wear a helmet to prevent and reduce the risk of head injuries.
In 2019, we were actively promoting AI-led smart factory, and building the data application integration platform. To pursue effective work flow and suitable work nvironment, intelligent-monitor management system was installed at our oil press factory to create a new era of smart manufacturing and enhance productivity.
Nowadays, 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:
1.Financial Credit Risk
Due to the US-China trade war impact, many businesses face difficulties in the operations and cash turnover, which cause numbers of business to close; relatively, our financial risk exposures increased as our customers came under these conditions.
Our Finance Group and Audit Office monitor the financial credit risk. Through the customer line of credit management system, due diligence and careful considerations were taken when evaluating the line of credit for each customer. Each credit line is reviewed quarterly, and strict measures are taken against the customers who exceed the credit limit, to ensure that outstanding receivables are collected. On the other hand, to raise awareness in our sales personnel on the importance of reducing the accounts receivable, the percentage of the total collected outstanding receivable is used as an indicator in performance bonus.
2.Exchange Rate Risk
Analyzing from the exchange rate perspective, China depreciated its currency to countermeasure the US-China trade war, which affected currency valuation in the entire Asia. The New Taiwan Dollar depreciated as well, which increase our exchange rate risk when we purchased imported grain with US dollar. 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.