Established written principles for overall risk management and provided written policies for specific areas and matters. While the Board of Directors serves as the highest governing body for risk management, day-to-day risk management tasks are carried out by the Group's Finance Department in accordance with policies approved by the Board. This is achieved through close collaboration with various operating units within the Group, with the participation and promotion of managers and employees at all levels. In accordance with the implementation rules, various risks are clearly classified, management guidelines are established, and corresponding responsible units are set up for inspection. Through the process of identifying, analyzing, measuring, monitoring, responding to, and reporting risks, if any significant abnormalities are found, the responsible units will assess and report them to the Board of Directors, formulate improvement plans and response strategies, and report to the Board of Directors at least once a year.
Risk Management Process
Risk Categories and Response Measures
The company's daily operations are affected by various risks, including financial risks, operational risks, food safety risks, information security risks, occupational safety risks, and climate change environmental risks. The company's operating policies are handled in accordance with legal regulations, and we pay close attention to important domestic and international policies and regulatory changes that may affect operations. Relevant departments identify, assess, analyze, and measure potential risks, and consult with relevant experts in a timely manner to respond. Risks are centrally managed and implemented in a hierarchical manner based on their characteristics and impact levels to keep risks under control at all times and formulate risk control strategies, reducing the potential adverse impact of all operational risks on business operations.
| Risk Category | Responsible Unit | Risk Description | Risk Control Strategies |
|---|---|---|---|
| Corporate Governance | Board Operations, Functional Committees | The risk of corporate sustainable development management has been elevated to an important issue for enterprises beyond financial aspects. |
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| Financial Risks | Accounting Department | Market risks, exchange rate risks, price risks, credit risks, and liquidity risks may have potential adverse effects on the company's financial position and financial performance. | Responsible for capital allocation and utilization, ensuring accounts receivable and creditor's rights, compliance with and promotion of various laws and regulations, and the reliability of financial statements; interest rate change monitoring; operational performance analysis and risk control. |
| Operational Risks | General Manager, Sales & Marketing Department, Business Development Department | The rapid changes in economic and trade due to the interconnected impact of geopolitics and extreme weather, as well as inflation, can cause business impacts. | Formulate company operating strategies and evaluate operational benefits; monitor market price changes in response to inflation, adjust sales pricing, and choose to cooperate with multiple qualified manufacturers to reduce impact; formulate digital marketing strategies, diversify product research and development and promotion; evaluate and develop new business investments to diversify operational risks. |
| Information Security Risks | IT Department | Improper computer operations leading to company data leakage, hacker intrusion, resulting in losses in operational performance and corporate image. | Establish computer network system information security control mechanisms; conduct information security knowledge education and training; establish information security reporting procedures and regularly conduct information security audits; establish customer privacy protection policies. |
| Corporate Image | Accounting Department, Marketing and Communications Department | Corporate business conduct may lead to reputational risks, financial risks, legal compliance risks, human rights protection risks, and supply chain risks. | Establish a sound internal control system, formulate policies and procedures that comply with regulations, strengthen supply chain risk assessment and diversify the supply chain; adopt parks, sponsor NGOs, participate in community co-prosperity development activities, and enhance corporate image. |
| Food Safety and Supply Chain Management | Food Safety & Hygiene Committee | Food safety incidents may cause damage to the company's image and lead to liability for compensation. | Establish a comprehensive food safety control system and set up a food safety and hygiene team to regularly review and improve food safety and quality management matters; screen the supply chain, monitor raw material safety and supply stability; formulate response measures for changes in laws and regulations; conduct food safety risk hazard analysis and control. |
| Risk Category | Responsible Unit | Risk Description | Risk Control Strategies |
|---|---|---|---|
| Occupational Safety and Health | Occupational Safety & Health Committee | Improper equipment operation or inadequate implementation of workplace safety measures may lead to occupational accidents. | Establish an occupational safety and health committee for regular review; implement employee safety and health management; conduct education and training and formulate occupational accident prevention plans to reduce the risk of accidents. |
| Talent Attraction, Training, and Retention | Human Rights Protection Committee | The phenomenon of labor shortage poses operational risks to the labor-intensive tourism industry. | Create a happy working environment and actively protect employee rights and interests, striving to enhance the company's overall competitiveness and market position. Hire with diversity and inclusion, and strengthen employee benefits and care. |
| Community Care and Public Welfare | Public Relations Department, Stakeholder Engagement Committee | Stakeholder concerns have expanded from financial performance and profitability to non-financial corporate sustainable development risks. | We deeply understand the importance of corporate social responsibility in establishing sustainable development. Through public welfare activities and community care programs, we actively participate in community improvement efforts and directly contribute to achieving the United Nations Sustainable Development Goals. |
| Risk Category | Responsible Unit | Risk Description | Risk Control Strategies |
|---|---|---|---|
| Environmental Protection and Energy | Sustainable Energy Management Committee | Stricter environmental regulations may lead to corporate transformation risks, potentially impacting corporate operations and financial planning. | The Environmental Sustainability Committee is responsible for environmental impact risk assessment and establishing preventive measures for environmental hazards, as well as supervising implementation effectiveness. Comply with laws and regulations to ensure the effective operation of the environmental management system; integrate energy-saving concepts into daily operations through announcements, publicity, education and training, etc., including waste management and reduction, sewage discharge, implementation of energy conservation and carbon reduction policies, reduction of ineffective electricity waste, reduction of single-use toiletries packaging containers, switching to large-capacity press bottles, and purchasing equipment with environmental labels. |
| Climate Change | Sustainable Energy Management Committee | The impact of extreme weather risks is becoming increasingly severe, which may cause difficulties in obtaining raw materials or increase costs, leading to business interruption risks, property losses, and reduced operational performance. | In accordance with the TCFD's recommendations for climate-related financial disclosures, identify climate change risks and opportunities, and establish indicators and conduct target management based on the identification results. Establish a cross-departmental sustainable energy management committee to manage energy use efficiency and greenhouse gas reduction and emission targets; implement energy-saving policies; strengthen supply chain integration and seek alternative raw materials; and obtain adequate insurance to reduce losses. |
Financial Risks
The financial strategy is based on prudence and conservatism, adhering to various laws and regulations to ensure the reliability of financial statements. In recent years, there have been no high-risk, high-leverage investments or derivatives transactions. Risk management is carried out by the Group's Finance Department in accordance with policies approved by the Board of Directors. The Group's Finance Department, through close cooperation with various operating units within the Group, is responsible for identifying, assessing, and mitigating financial risks.
Operational Risks
A Food Safety Committee has been established to formulate and supervise the implementation of food safety policies, and an occupational safety officer is responsible for employee workplace safety education and training to reduce workplace accidents. The Energy Team is responsible for formulating and implementing energy-saving policies. Based on the guiding principle of customer first, we aim to enhance the company's overall corporate image and prevent corporate crisis risks. We continue to monitor market price changes, adjust sales pricing, and maintain good interaction with suppliers to ensure that multiple qualified alternative suppliers are available. We incorporate raw material price increases and inflation risks into our annual operating plans to reduce their impact on the company's profit and loss.
Corporate Image
Uphold the principles of integrity, professionalism, and sound management, and value corporate image and risk control. Enhance Taiwan's image and strive to put customers first to improve the Group's overall image through adopting parks, sponsoring NGOs, and cooperating with the Tourism Bureau in conducting domestic and international promotional activities. As of the date of this report in 2023, there have been no significant changes in corporate image leading to corporate crisis management situations.
Corporate business conduct may lead to reputational risks, financial risks, legal compliance risks, human rights protection risks, and supply chain risks. Therefore, we have established a sound internal control system, formulated policies and procedures that comply with regulations, and strengthened supply chain risk assessment and diversified supply chain management. To enhance corporate image and reduce risks, we took the following measures:
Establish an internal control system
In accordance with the "Risk Management Best Practices for Listed and OTC Companies," formulated risk management policies and procedures for Silks Hotel Group, clearly stating that the Board of Directors is the highest governing body for corporate risk management. We formulated and implemented policies and procedures that comply with regulations to ensure that corporate behavior meets relevant regulatory requirements, reducing legal compliance risks.
Strengthening Supply Chain Risk Assessment
Mitigate supply chain risks by meticulously screening and monitoring suppliers, ensuring a stable and reliable supply chain. Actively collaborate with global partners to explore innovative sustainable technologies and strategies, fostering greener operational practices. Through these endeavors, we aspire to inspire companies within our industry and beyond, collectively working towards a fairer and more environmentally conscious future, guiding our supply chain towards sustainable development.
Social Responsibility and Public Welfare Activities
We are dedicated to supporting and improving the communities we serve through public welfare activities and environmental practices, while also contributing to the development of inclusive, safe, resilient, and sustainable cities and communities. Examples include adopting parks to maintain their greenery and artistic lighting, enhancing the quality of life for local residents; participating in community co-prosperity development activities, such as annually organizing charity cooking events at the Hualien Dawn Center to provide catering services for people with intellectual disabilities; and hosting sustainable charity Christmas markets, bazaars, and blood donation drives to support disadvantaged families in remote areas and the Hualien New Dawn Educare Center, embodying corporate social responsibility and enhancing our corporate image.
Through these initiatives, we not only elevate our corporate image but also create lasting positive impacts on local communities, demonstrating our commitment as a responsible corporate citizen. We firmly believe that true business success stems from bringing continuous and tangible benefits to society, and we remain dedicated to driving positive social and environmental change.