Risk Management policies

  • Any associated risk events should be reported to the immediate supervisors, audit committee, general managers, chairman and the board of directors.
  • The risk assessment is carried out by the general manager and used as a record of tracking business performance.
  • The Company has established policies and implementations towards Internal Control, Internal Audit Implementation and Self-Assessed Internal Control Procedures. Department managers are each responsible for closely monitoring the associated risks. The audit committee is to perform risk assessment and report directly to the direct supervisors if any irregularities were discovered.

To ensure a stable operation, Eurocharm Group hold important meetings regularly. In terms of quality, environment, occupational safety and health, and information, there are relevant responsible units responsible for management and checking. In addition, the auditing office is responsible for risk management, and the main audit items are listed in the annual audit plan. After the approval of the board of directors at the end of each year, the audit of the internal control system is carried out, and the audit results are disclosed in the audit report every quarter.

ESGTypeImportant MeetingFrequency
Economics/Governance, Society, EnvironmentroutineBusiness MeetingEach month
Economics/GovernanceroutineQuality Management Review MeetingEach Year
Environment, SocietyroutineEnvironmental and Safety Management Review MeetingEach Year
SocietyroutineLabor Safety and Health ConferenceEach Quarter

The risks identified include changes in interest rates and foreign exchange rates, inflation, high-risk, highly leveraged investments, lending, or endorsement guarantees, and derivatives transactions, changes in policies and regulations, changes in technology, changes of corporate image, expansion of plants, purchasing and excessive customer concentration, major changes in shareholdings, changes in ownership, expansion of production capacity, climate change, etc. In response to these risks, the Company developed countermeasures to reduce any risk that may influence the Company’s operation.

RiskCountermeasures
Failed Climate ActionsThe environment and safety committee sets goals for greenhouse gas management, regularly reviews the achievement of performance, and pays attention to the changes in regulations to formulate response plans immediately.
The Group complies with government regulations by submitting a waste disposal plan and paying recycling and disposal fees as required by the Waste Disposal Act. The waste generated from the Group’s operational activities includes wastewater and liquid waste from the painting production line. In 2022, the total amount of general industrial waste was 782.51 tons, recyclable waste was 14,627.59 tons, and hazardous waste was 5,221.92 tons. All the wastes are regularly removed by qualified disposal agencies. The goal for VPIC1 is to reduce hazardous waste by at least 3% in 2023. In addition, among the waste disposal contractors commissioned by Vietnam VPIC1, one of them has a hazardous waste incinerator that collects the heat and recirculates it to the boiler for reuse.
Optimization of energy efficiency and management mechanisms: To improve efficiency of energy usage, the group has introduced the ISO 50001 Energy Management System, gradually replace outdated facility with high-performance power conversion equipment, and actively cultivate talents specialized in low-carbon technology transformation.
Changes in Interest RatesThe changes in interest rate have no significant effect on the business operation as the Company’s 2022 annual interest income and interest expense have minimal influences on the pre-tax net profit.
Foreign exchange rateThe changes in foreign exchange rate have no significant effect on the business operation as the Company’s 2022 foreign exchange gain is accounted for 0.19% of the consolidated revenue. In addition, the Company monitors the exchange rate movement closely to minimize the risk of an exchange rate.
InflationIn recent years, due to the growth of emerging markets and the expanding demand for raw materials, inflation occurs globally. To prevent future upward trends in raw materials and alleviate the pressure of rising costs, the Company will proactively improve our processes and timely increase product prices to reflect the rising costs and mitigate the pressure from inflation.
High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives TransactionsEurocharm grows stably and has always been concentrating on its core business. The Company did not engage in any high-risk or high-leveraged investments. As of the publication date of the Annual Report, all loans of the Company are capital transfer among companys where the Group hold 100% of the shares. There are no loans lent to other affiliated enterprises. The transactions and procedures related to lending and endorsement should be strickly based on the Company’s “Procedures for Lending”. Furthermore, derivative transactions engaged were all with the aim to avoid the risk resulting from currency exchange. The Company will follow the “Procedures for Acquisition and Disposal of Assets” to protect the maximum right of the Company.
Changes in Policies and RegulationsThe Company is registered in the Cayman Islands while its subsidiaries are registered in Taiwan, Vietnam, and the British Virgin Islands. The Company does not operate in the Cayman Islands. Fluctuation in Vietnam’s internal exchange rate is stable. The political relationship between Taiwan and Vietnam is stable. The Company and its important subsidiaries conduct all their businesses in accordance with regulations of their respective territories. The Company’s major products, including automotive and motorcycle parts and medical equipment, are not considered part of the restricted industry. Therefore, in the latest year and as of the date when annual report was published, critical policy changes or regulation changes in Taiwan, Vietnam, the Cayman Islands, and the British Virgin Islands are not expected to pose significant influences on the Company’s finances and sales. However, since the Company has customers and suppliers across the world and some countries in Asia have specific political climate, in the event of changes in respective government’s policy, economy, tax or interest rate, or in the event of incidents involving politics, diplomacy or society, a business of the Company’s client or the Company might be affected accordingly.
Changes in Technology (including information security risks)
The Company’s clients include leading vendors across the world. Given the close collaboration relationship between both parties now, the Company is, therefore, able to access to information of the latest technology through such relationship. Losing such important clients is equal to losing critical sources to understand changes in technology as well as shifts in the industry. Failure to master market trend and the trend for future product development will keep the Company from launching products needed by the market and operation may suffer from a significant and adverse impact. As such, the Company continuously pursues the advancement of metal processing and molding. On the other hand, the Company also follows clients’ steps closely to obtain, at any time, the latest technology information in the market, understand future changes in the industry and master market trend as well as product future development direction.
At current phase, the Company focuses its development on automotive, motorcycle, and recreational vehicle parts as well as medical assistive equipment. With the popularity of environmental protection consciousness, the need for lightweight and strengthened vehicle products is in demand. This allows the Company’s business to enjoy continued growth. There is no replacing technology or product in a short time going forward. Therefore, changes in technology and industry are not expected to pose significant influence on the Company’s finance business.
The Company has an information technology security policy to establish and maintain a secure environment for company information and computer systems. However, even if a company has established the above policies, procedures, and many other information security protection measures, there is no guarantee that the computer system that controls or maintains important corporate functions such as the company’s manufacturing operations and accounting are completely immune to attacks from any third-party systems. These cyber-attacks illegally invade the company’s internal (external) network systems, disrupt the company’s operations, and damage the Company’s goodwill and other activities. In the event of a severe cyber-attack, a company’s system may lose important company data. Therefore, the company will continuously review and evaluate its cybersecurity regulations and procedures to ensure their appropriateness and effectiveness, but there is no guarantee that the Company will not be affected by emerging risks and attacks amid the ever-changing cybersecurity threats.
Changes in Corporate ImageThe Company enjoys a good business reputation in the international market, and this has established the Company’s credibility and position in this industry. After being listed, the emphasis on corporate image is larger than ever. The Company will continue to expand its international sales territory and maximize its profit through high productivity. We will also share the positive results to all the shareholders and employees. After the Company go public, it will be more beneficial to our corporate image.
Factory ExpansionAll of the Company’s plant expansions have gone through complete, careful and assessment processes by responsible units, and have already taken comprehensive considerations of investment benefits and potential risks.
Excessive Concentration of Purchasing Sources and Excessive Customer ConcentrationThe main raw materials the Company uses are iron pipes, iron, iron rolls, aluminum, steel, coating, etc. The purchasing decisions are made based on the factors including quality, price, delivery, and flexibility. These suppliers are replaceable, and none of the raw materials is exclusive; the Company can always require two or more price offers for the same material. Therefore, there is no risk or concern over an excessive concentration of purchasing.
As for the sales from individual customers, the operating income of the two customers takes up to 51.85% of the consolidated operating income. Sales from the Company’s other clients does not exceed 10%. However, As the Company’s largest customers holds 70% of the market share in Vietnam and the Company is their main supplier, the situation of excessive customer concentration is expected. As a result, the Company has been actively developing new customers to diversify and lower the impact of excessive customer concentration.
Large Share Transfers or ChangesNo directors and shareholders with more than 10% of the shares transferred large portion of their share rights in the latest year and as of the date when annual report was published. No directors were replaced.
Changes in Management RightsIn the latest year and as of the date when annual report was published, the management rights has not changed. The Company has also established a professional management system. Therefore, the changes in management rights should have minimal effect on the Company.
Capacity ExpansionThe Company regularly conducts long-term market demand forecasts for its products and services to make overall plans for production capacity. Because the demand forecast changes significantly in the market environment at any time, when the demand decreases, the Company would temporarily reduce the operation of some production lines or machines and idle capacity would be generated. In response to this possible risk, the Company will continue to observe market changes and work closely with customers. If market demand is not as expected, the Company will adjust its production capacity plan in a timely manner to reduce the negative impact on the company’s financial performance.

Summary of Risk Committee Operations

In 2022, all departments conducted regular annual risk assessments and develop risk management strategies and plans based on the principles of materiality, considering corporate governance issues such as economic, environmental, and social aspects that may have a significant impact on customers, investors, and other stakeholders. For high-risk issues, in addition to reporting on the risk status and strengthening control plans during monthly meetings, a report will also be submitted to the board of directors at least once a year for supervision and review. Eurocharm established its Risk Committee on June 1, 2022, with four directors and independent directors serving as committee members. The Committee elected an independent director, Jen-Tien Yuan, as the convener and chairperson of the meetings. High risk issues reported to the Board of Directors in 2022 included compound disaster risks, status of supervision for data risks. The operation of the Risk Committee follows the Bylaws of the Company. The Risk Committee should convene two meetings every year and call for other meetings if necessary. In 2022, the Risk Committee hold 2 meetings with 100% average attendance for all members.
On December 30, 2022, the “Annual Board Performance Evaluation and Self-Assessment of Board Members for 2022” and “Self-Assessment of Functional Committee Members” were conducted, yielding a “satisfactory” evaluation. The result is expected to be presented to the Board in the first quarter of 2023.

TitleNameExperience (Education)
ChairmanChen-Tien YuanLaw-National Taiwan University
MBA, Guanghua School of Management, Peking University
Vice President, EY Management Services Inc.
Partner, Yuan, Chen & Partners Attorneys-at-Law
Supervisor, Wenetgroup Ltd.
Director, Yuan Chen Asset Management Co., Ltd.
Independent DirectorYen-Hsi LinBachelor Degree in Philosophy, Fu Jen Catholic University
General manager of Taiwan Branch of DDI-Asia/Pacific International Ltd., and consultant for directors of branches around the globe
Independent Director of Eurocharm Holdings Co., Ltd.
Independent Director of Entire Technology Co., Ltd.
Director (Legal representative) of iMotion Inc.
Director of Teach For Taiwan Education Foundation
Independent DirectorYi-Jen KuoTransportation Engineering and Management, National Chiao Tung University
Administrator, China Steel Corporation
Manager, China Steel
Aluminum Corporation
President, China Steel Global Trading Corporation
Advisor, China Steel Global Trading Corporation
DirectorAntonio YuIndustrial Engineering- University of Wisconsin- Madison
Bioengineering- National Taiwan University
ItemUnit2022
Number of MeetingsTimes2
Attendance Rate%100
Motions ReviewedCases2
DateContentOpinions and Suggestions
2022.6.101.To propose the Convener and meeting chair of the Company’s Risk Committee.Unanimous consent
2022.12.301.To propose the establishment of guidelines for risk management practices.Unanimous consent