Sustainable Governance

Risk management

ABC adheres to the business philosophy of "building an industry of world-class inductors and precision components through pragmatism, innovation, and sustainability" and manages its businesses based on principles of materiality. The Company regularly identifies and monitors risks that are relevant to its operations, which in turn allows timely response to crises and the possibility of minimizing threats or even turning them into opportunities.
Risk categoryRisk factorsThreatsResponse strategies
Strategic risksRisks of industry competitionTaiwanese businesses currently account for a relatively low percentage of the global market. There are more than 100 manufacturers of inductors and coils in Taiwan, and most of which specialize in the production of coils.The Company actively analyzes the markets and industries it is involved in, and commits significant resources to develop new products and technologies in line with the latest market trends.
The Company maintains a strong cooperative relationship with upstream and downstream partners, and works with customers in as early as the design stage. By engaging customers as our R&D partners, we are able to develop up-to-date knowledge of product trends and market demands.
Financial risksInterest rate RisksThe Company is exposed to interest rate risks due to capital borrowed at both fixed and floating rates.In the future, the Company will source capital through a combination of floating rate and fixed rate debts to mitigate the effect of interest rate changes on the Company's profitability.
Exchange rate RisksThe Company is prone to the impact of changes in USD, EUR, and RMB exchange rates. The purpose of the Company's exchange risk management practices is to avoid risks, and not to profit from risks.Foreign currency sales proceeds received from overseas are first placed in foreign currency deposit accounts, and later converted into NT$ at an appropriate time to mitigate exchange rate risks.
The Company pays constant attention to financial news and exchange rate changes, and maintains active relationships with banks. The Company also evaluates and purchases currency forwards as a means to hedge exchange rate risks.
Financial Structure RisksThe Company is currently taking debts to expand its operations, and the debt ratio is increasing, resulting in more interest expenses.In the future, the Company shall carefully evaluate major investment projects and make investments only with the approval of the Board of Directors, and keep an eye on the financial structure, cash flow and return on assets.
Business risksBusiness integrity RisksThe Company's operations are prone to worker and morality risks and incidents that may harm its goals, personnel, assets, the environment, and reputation.The Company's "Business Integrity Code of Conduct" has outlined preventive measures for business activities that are prone to higher risk of dishonesty. Issues that are of concern to internal and stakeholders are subjected to risk assessment at the end of each year to ensure that the system remains effective.
Supply chain RisksDownstream buyers are constantly squeezing the prices of components produced by the upstream, whereas the growing number of small- and medium-size manufacturers provokes price competition as a means to increase market share. In some situations, suppliers may be heavily affected by the pandemic that they are unable to ship supplies.Continue to foster good relationships with existing suppliers.
Actively look for and explore alternative suppliers.
Establish a dedicated production line for automobile electronics, enforce the IATF16949 system, and aim to take part in the supply chain of the world's major brands.
Raw materials RisksAbnormal test results in raw materials and improper uses of tools, fixtures, jigs, and auxiliary materials may contaminate the final product.ABC-AETC requires all original manufacturers to test the materials supplied, and all suppliers to fully comply with HSF regulations as well as any additional requirement imposed by the Company and any of its customers.
Cybersecurity RisksIT server disruption, leakage of confidential information, leakage of customers' information, hacker attack, loss of employees' PC terminals.Backup files and store them at an alternative location.
Progressively develop off-site backup servers and practices.
Organize backup drills on a regular basis.
Regularly examine the external intrusion LOG and develop firewall policy in response.
Enhance employees' cybersecurity awareness.
Employment relations RisksHigh attrition rate or penalty caused by poor employment relations or failure to comply with regulations.The Company has implemented and enforced internal policies in accordance with labor regulations on all matters concerning personnel management, such as appointment, dismissal, and retirement of employees. An Employee Welfare Committee has been assembled in accordance with laws to oversee employees' benefits.
Customer relationship RisksDue to the rebound in demand after the pandemic subsided, orders have increased significantly, resulting in the production capacity not being able to meet customer demand in a timely manner.We will strengthen the cooperation between production and sales, flexibly adjust the production capacity planning, and grasp the delivery schedule and production capacity situation, review and improve the orders with long delivery time, and make budget planning so that each unit can have sufficient time to arrange the production scheduling and production capacity deployment operations.
Hazard risksEnvironment, safety, and health RisksSudden or unexpected occurrence of public health incident, accident, or natural disaster may threaten continuity of the business and cause financial burden or give rise to other risks.The Company has developed an emergency response plan and a business continuity plan. Regular drills have been organized to ensure the safety of equipment operations, enhance employees' response to a crisis, shorten the time of business disruption, and minimize impact.
Risks of climate changeRisk of natural disaster continues to rise due to climate changeThe Company plans to adopt the ISO 14064-1 standard on greenhouse gas surveys, and manage data in a systematic manner that would provide a useful reference for reduction solutions in the future.
Epidemic RisksThe impact of COVID-19 will lead to business and work suspensions.The Company publishes and implements a policy of epidemic prevention measures and, where necessary, implements segregation and triage measures and simulations to address the risks faced.

Information Security Management

ABC-AETC has established an effective cybersecurity defense network as part of its vision for information security. Safeguarding customer privacy and confidential information has been a cornerstone of our solid customer relationships over the years, therefore the Group is committed to safeguarding customer information security as one of its top priorities in information security management. We aim to build long-lasting trust with our customers while ensuring the protection of our company's confidential documents to prevent information leaks.
In November 2022, ABC-AETC established a Information Security Office to maintain the integrity of the company's confidential information and ensure the security of customer and personal data privacy. Through the implementation of firewalls, we have enhanced the company's network defense capabilities. The following control measures are undertaken to prevent server room interruptions, leakage of confidential information, and hacker intrusions.

  1. Data access control
    To protect the company's information system and data security, appropriate management measures are established for security control, personnel access control, and environmental maintenance (such as temperature and humidity control) in server rooms and key areas.
  2. Anti-virus software management
    (1)Anti-virus software is installed on all internal computers and server hosts, and is set to automatically update and download anti-virus software to maintain company data and property.
    (2)All important or confidential files are set up with access rights and data encryption measures to prevent document leakage and hacker intrusion. Access rights and record retention measures are planned to be implemented for external storage devices or USB storage devices to ensure appropriate control and management.
  3. Backup Management
    Daily off-site backups are performed, and there are plans to gradually establish more comprehensive off-site backups and redundancy measures for key data. In 2022, the email and junk email backup systems were completed. The email backup system includes backup of email correspondence on LINUX-based mail servers, covering both internal and external communications, to preserve the email correspondence records. The junk email system is designed to isolate network attack emails or scam emails. Both of these systems will undergo annual software renewals and updates to ensure their effectiveness.
  4. Software and hardware maintenance
    Software and hardware maintenance is outsourced as needed, and employees are prohibited from installing or removing any software and hardware, and will be held responsible for any damage or loss.
  5. Internal information security disaster drills
    To ensure the safety of information operation system, equipment, network and data, the Company conducts systemized disaster drills every six months, mainly to test the recovery of the host system. The Company has also established a disaster recovery contingency procedure, with the general manager as the convener and the head of the IT Department and Department colleagues as the team members, to respond to the notification and contingency handling of major incidents to ensure that the Company's servers can resume normal operations within the shortest possible time in the event of a disaster. In 2022, the systemized disaster drill rate was 100%, and no information security incidents occurred.
    In addition, in order to raise the awareness of information security among employees, the Company has implemented the following measures through information security management and security awareness training for personnel:
    (1)Personnel information security management
    • All employees shall sign a confidentiality contract and shall not disclose internal confidential information to the outside world.
    • In the event of the departure or transfer of personnel related to security work, the supervisor in charge shall undertake appropriate arrangements for handling procedures to prevent unnecessary security deficiencies.
    (2)Information security awareness training
    • If a major information security incident occurs inside or outside the Company, the IT supervisor will announce it promptly to Company employees to raise their awareness of information security risks.
    • If a major information security incident occurs inside or outside the Company, the IT supervisor will announce it promptly to Company employees to raise their awareness of information security risks.
    • When employees violate information and communication security, disciplinary measures shall be imposed to strengthen their sense of accountability for information security.
    • The Company incorporates information security requirements into employee manuals and enhances training for IT personnel to enhance information security management capabilities
  6. Information Security Enhancement Planning
    The IT department will periodically send email notifications regarding recent and frequent information security events, along with relevant news content, to enhance employee information security awareness.