Sustainable Risk Management

Enterprises are facing risks that become complex and thus the ability to prevent risks and recover from emergencies are tested. A well-structured risk management mechanism could form a good protection through identifying possible future challenges and ensuring that it can response to the threats and have the ability to perform continuous operations, demonstrating organizational resilience. According to the "Global Risks Report 2021" recently published by the World Economic Forum (WEF), the major risks that may affect the world in the next decade include economic confrontation between major powers, political fragmentation, extreme climate change, cyber attacks, etc. Businesses must take adequate measures to protect themselves from these risks as early as possible.

Looking back at 2020, it was a year of challenges due to the global COVID-19 pandemic, the USChina trade war, political instability and the worsening climate crisis worldwide. ASUS decided to expand the Risk Management Platform to the Business Continuity Management(BCM) Committee in 2020. The Committee aims to proactively respond to the challenges of an uncertain external environment and minimize the impacts and disruptions through an operational continuity management mechanism.

Milestone of Risk Management

 

Organizational Structure and Operation of Business Continuity Management Committee

  1. To strengthen the Board's oversight of ASUS's risk management mechanisms, the strategic development of the BCM Committee is supervised by the Chairman.
  2. The BCM Committee is overseen by a decision-making team consisting of the Co-Chief Executive Officers, Chief Operating Officer and various business executives. The decisionmaking team ensures that the protection mechanisms are integrated into day-to-day operations, so that the business can still operate during crises, demonstrate organizational resilience, and regularly report to the Board of Directors.
  3. The BCM committee consists of nine Taskforce Units (TU). Each TU establishes quantitative KRI and various risk prevention plans to strengthen a comprehensive risk management framework. Each year, the BCM Committee will present an annual risk management report to the Audit Committee.
  4. CEO Office and Sustainability & Green Quality Management Division (SGQM) are supportive units to assist each TU in setting goals, executing plans, and integrating management systems.

The TUs of the BCM committee monitor the risk trend reports of international organizations and corporate risk data, identify possible future risks through senior executive interviews, and are responsible for developing quantifiable KRI and risk prevention plans. They shall also conduct regular reviews and improvement plans, and provide quarterly feedback to the decision-making team on the implementation results. The performance of BCM was reported annually to the Audit Committee, which will report to the Board according to the materiality of the risk.

Risk Management Implementation for 2020

  1. Monitor the risk trend reports of international organizations and corporate risk data, identify possible future risks through senior executive interviews, develop KRI and risk prevention plans, and provide regular feedback on the implementation results.
  2. Use systematic approach for risk identification, assessment, and mitigation mechanisms. In 2020, the management initiative covers three dimensions - Climate Action, Sustainability Procurement, and Information Security - and the risk management report will be presented to the Audit Committee on March, 2021. Further details can be found in the respective chapters.

ASUS reshapes its risk management system and establishes an internal risk culture and robust risk response capability through the BCM Committee. We collect sustainability risk issues around the world and the changes in industry development trends periodically to adjust the materiality of the issues, and daily monitor KRI to be prepared for the occurrence or to mitigate the impacts. Encountering more impacts coming from unpredictable emerging risk, we hope to effectively consolidate internal and external resources through risk management platform to better predict, prepare for, respond to and adapt to the continuous changes in the environment. In the event of sudden operational interruption, the company will be able to survive and make breakthroughs and grow, and the capability to adapt will create more potential opportunities.

 

 

Emerging Risk:

•ASUS gathers the global risk trends through the Business Continuity Management Committee, and then assesses the mid-term and long-term impact for the emerging risk issues through the risk identification and consideration of the needs of operators. The major risk issues that have been identified in 2020 were classified into 2 emerging risks which were pandemics and lack of digital transformation talents, which is expected will affect the company from 2021~2025.

 

•If the negative news in response to the labour risks are not handled properly, it will resulting in an impact on the product sales, the preliminary estimation of the major products’ losses (ex: Notebook, Desktop, Cell Phone, etc.) are accounted for 10% annual sales for a single and major emerging market and the estimated financial impact is about NTD $150 million based on the internal assessment.

 

•If the improper information security control leads to the lawsuits that filed by the customers or negative news, it will resulting in an impact on the company's image and product sales, the preliminary estimation of the customer's litigation costs and the major products’ losses (ex: Notebook, Desktop, Cell Phone, etc.) are accounted for 12% annual sales for a single and major emerging market and the estimated financial impact is about NTD $180 million based on the internal assessment.