Risk Management Policy and Procedures

The risk management policy of the Company is established and maintains an effective risk management framework. It aims to foster a risk management culture. Via risk identification, the Company seeks to ensure that the potential risk of operation is controlled within a tolerable level so as to protect the interests of stakeholders.

The risk management procedures of the Company undertake risk identification, risk assessment, risk monitoring, risk countermeasures and risk reporting based on company policies and the internal control system. Appropriate measures are implemented to ensure that an effective risk management is in operation.

Scope of Risk Management

The scope of risk management includes but not limited to operational risks, market risks, financial risks, environmental risks, climate change risks, cyber security risks and other risks that may cause major losses to the Company. The execution team undertakes risk management according to its job duties, and continuously pays attention to international and domestic development of risk management, as well as identifying emerging risks.

Organizational Framework of Risk Management

The organizational framework of risk management comprises the Board of Directors, the Sustainable Development Committee and the Internal Audit Department.

I. The Board of Directors is the highest supervisory unit for risk management of the Company. It is responsible for ensuring effective operation of the risk management mechanism.
II. The Sustainable Development Committee assists the Board of Directors in undertaking risk management operation and formulating risk management policy. Each year, the committee will report to the Board on the execution status of risk management. The Sustainable Development Execution Team (henceforth, the Execution Team) reports to the Sustainable Development Committee. The Execution Team assists the Sustainable Development Committee in assignments including risk management reporting, consolidation and coordination of cross-departmental risk management issues, and promotion and communication of risk management matters.
III. The Internal Audit Department reports to the Board of Directors, assisting the Board in inspecting and auditing the effectiveness and reasonableness of the internal control system. The Internal Audit Department reports the audit results to the Audit Committee and the Board of Director on a regular basis.

Operating Status

On October 31, 2022, the Company convened a Sustainable Development Meeting to report on the risk management execution status to the committee. On November 3, the Board of Directors approved the policies and procedures of sustainable development and risk management, and the Sustainable Development Committee Charter by resolution.

Risk Management Strategy

Based on the materiality principle of the sustainability report, for the purposes of inspecting the operational status of various department, and considering the level of concern of stakeholders when evaluating material issues, the risk management policy and action plans are established to identify, supervise, manage and control the relevant risks so as to reduce their influences.

	Operation	Cyber Security	Climate Change	Occupational Safety and Health	Employee Health
Customer	●	●	●
Shareholder	●	●	●
Employee	●	●	●	●	●
Supplier		●	●
Community			●	●
Media	●	●	●	●
Government	●	●	●	●	●

Description of Risk Management Responses

Company operation: In accordance with the relevant operational procedures of Aten International, the Internal Audit Department assists the Board of Directors in inspecting and auditing the effectiveness and reasonableness of the internal control system, and reports the audit results to the Audit Committee and the Board of Director on a regular basis.

Information security: Aten International obtained the certification of ISO 27001 for information security management systems in 2022. For the relevant response strategies for information security, please refer to the description on the risk management program of information security.

Climate change: The risk management procedures for climate change are based on the Task Force on Climate-Related Financial Disclosures (TCFD) framework. Via cross-departmental discussion on climate change issues, five sets of opportunities and risks are identified.

Category	Item No.	Description of Risk Management
Transformation risk	Carbon tax/renewable energy	Pursuant to laws and regulations, greenhouse gas emissions produced in the operation processes are subject to charges. Additional expenses will still be incurred even if renewable energy is adopted to lower greenhouse gas emissions.	The Company will proactively increase the efficiency of energy consumption. Solar panels will be installed in factories of the Company to reduce the purchase of renewable energy.
Transformation risk	Requirements of stakeholders	In the event that the Company is unable to take the corresponding actions pertaining to sustainable development, which thereby influences the company image, and that stakeholders are unwilling to collaborate with the Company, the company performance may be affected.	The Company will continuously engage in external communication via sustainability report, company website and other platforms on efforts undertaken and influence of the Company on sustainable development.
Opportunity risk	Low-carbon replacements of existing products and services	Due to zero-carbon emission targets set internationally, customers are starting to pay attention to low-energy consumption requirements when selecting products. If the Company is unable to provide relatively low-carbon products, it may potentially affect the performance of the Company.	Potential impact on the environment will be taken into account as early as the product designing stage so as to lower carbon emissions of different stages.
Physical risk	Floods	Due to heavy rains and rising of sea level caused by extreme weather, operating locations of the Company may be exposed to flood risk, which may give rise to interruption of operation and relevant financial losses.	According to an analysis on disaster potential map issued by the National Science and Technology Center for Disaster Reduction, the possibility of floods caused by heavy rainfall, thereby affecting operating locations, is low. The Company will continue to monitor the influence in the future.
Physical risk	Rise of average temperature	Due to an increase in average temperature caused by extreme weather, operating locations will use more electricity to provide air conditioning. This may give rise to a financial impact.	Based on scenarios provided by the Taiwan Climate Change Projection Information Platform, the Company will calculate the increase in electricity charges due to temperature rise at the main operating locations in Taiwan. In line with the zero-emission trend internationally, Aten International will continuously improve the energy efficiency of air conditioning equipment.

Occupational safety and health: The Company has obtained ISO 45001 certification on occupational health and safety system to ensure the safety of work environment. Furthermore, the Company holds occupational health and safety training on a regular basis to increase the self-safety management capability of employees.
Employee health: The Company arranges medical check-up for employees regularly every year, as well as employee assistance programs (EAPs) to let professionals of the programs provide assistance to employees to help them resolve work and life problems.