We are committed to sustainable development and actively embrace the United Nations Sustainable Development Goals (SDGs), with particular emphasis on Goal 8: Decent Work and Economic Growth; Goal 12: Responsible Consumption and Production; and Goal 13: Climate Action. Guided by the "Corporate Governance Best Practice Principles—Risk Management Practices for TWSE/TPEx Listed Companies," we have established a comprehensive risk management framework. The Board of Directors serves as the highest-level governance body, overseeing the development and implementation of our risk governance structure. We have instituted robust risk management policies and documented procedures, complemented by dedicated policies and controls for specific areas, such as information security and financial risk—facilitating enhanced risk identification and mitigation effectiveness.
Risk Management Process
Risk Categories and Response Measures
The Group faces three major categories of risks—Environmental (E), Social (S), and Governance & Economic (G)—covering areas such as financial, operational, food safety, information security, human rights protection, occupational safety, and climate change. Dedicated units, in line with established policies, continuously identify, assess, and manage these risks to minimize impacts on operations and sustainability. Risk management is led by the Finance Department, with the Board of Directors setting both overarching and domain-specific risk policies to strengthen governance. As society places increasing emphasis on labor rights and human rights, improper management in these areas may adversely affect the brand and operations. Additionally, labor shortages and high turnover rates pose ongoing risks.
| Risk Category | Responsible Unit | Risk Description | Risk Control Strategies |
|---|---|---|---|
| Corporate Governance | Board Operations and Functional Committees | An unsound governance structure may lead to internal control failures, regulatory violations, and diminished stakeholder trust. |
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| Financial Risks | Accounting Department | Operations are exposed to various financial risks, including market risks (such as exchange rate and price fluctuations), credit risk, and liquidity risk. |
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| Operational Risks | General Manager and Department Heads |
This includes labor shortages, service interruptions, or system anomalies. Performance may also be impacted by geopolitical events, extreme weather, legal changes, technological risks, and inflation. |
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| Information Security Risks | IT Department | Risks related to potential data breaches or system attacks that could compromise customer and company information. |
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| Corporate Image | Finance and Public Relations Departments | Risks arising from corporate operations may include reputational risk, financial risk, legal and compliance risk, human rights risk, and supply chain risk. |
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| Food Safety and Supply Chain Management | Food Safety and Hygiene Team | Failure to implement food safety standards in food and beverage services may pose health risks to customers and result in penalties for non-compliance with relevant regulations. |
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| Risk Category | Responsible Unit | Risk Description | Risk Control Strategies |
|---|---|---|---|
| Occupational Safety and Health | Labor Safety and Health Team | Employees may face risks of work-related injuries within operational sites. |
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| Employee Care and Human Rights Protection | Human Rights Protection Committee | Operational risks arising from employee dissatisfaction, recruitment challenges, lower retention rates, and labor shortages. |
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| Talent Retention and Training | Human Rights Protection Committee | Facing long-term challenges of labor shortages and high turnover, which may result in unstable service quality and loss of competitiveness. |
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| Community Engagement and Shared Prosperity | Stakeholder Engagement Committee |
Focus on issues of concern to stakeholders. Corporate social responsibility has become a central priority within sustainable development. |
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| Risk Category | Responsible Unit | Risk Description | Risk Control Strategies |
|---|---|---|---|
| Environmental Protection and Energy | Sustainable Energy Management Committee | Government policies on carbon emission control and environmental protection are becoming increasingly stringent, placing pressure on energy-intensive and resource-dependent hotel operations, impacting the Company's operations and financial planning. |
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| Climate Change | Sustainable Energy Management Committee | Frequent extreme weather events (e.g., typhoons, heavy rainfall, droughts) increase the likelihood of disasters at operational sites, potentially causing equipment damage, operational interruptions, or supply chain disruptions. |
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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 2024, 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.