Material Risks | Risk identification | Corresponding management measures | Responsible unit |
Credit risk | Loan defaults, affecting the Company's profitability and jeopardizing operations | - There are internal operating measures in place
- A rigorous credit review and approval system and a complete examination process are in place to implement and enforce risk management
- Identify, analyze and monitor assets and changes in the external environment, and adjust strategies flexibly
- Continue to improve and expand the knowledge of credit investigation techniques and other related aspects of loan management so as to reduce loan defaults
| Credit Assessment Department |
Borrowers’ defaults affect the Company's profit | - Establish statistical models for applicants’ credit ratings and calculate the probability of the default risk.
- Monitor the Company's asset quality and development trends, submit a monitoring report to the Risk Management Committee every six months, and discuss the countermeasures against the asset quality trends and study feasible credit and overdue receivable collection policies in the future with relevant departments at the Asset Quality Management Meeting every six months.
| Risk Management Department |
Legal Compliance Risk | Failure to properly protect personal data may result in leakage and abuse of personal data, affecting the Company's reputation and leading to penalties by the government | - Implement the protection of customer data in accordance with the Personal Data Protection Act and related internal regulations.
- All other businesses are handled in accordance with applicable economic, social and environmental regulations.
- HFC complies with government laws and regulations, and internally supervises various businesses and contracts to comply with laws and regulations. In 2022, there were no material violations of governmental laws and regulations that resulted in penalties.
| All relevant departments |
Environmental risks | Operations are affected by changes in the natural environment or related environmental regulations | - Implement environmental and energy management system, including environmental protection, energy saving and carbon reduction, and waste reduction and recycling, while paying attention to the maintenance of safety in the offices and operating sites.
| Administration Department |
AML Risk | Failure to implement the Know-Your-Customer (KYC) review results in improper control over the flow of funds | - To enhance the control of suppliers, we inspect new suppliers through Taiwan Depository & Clearing Corporation's anti-money laundering and counter-terrorism financing (AML/CTF) screening system to confirm if they are blacklisted.
- In addition to monitoring high-risk cases per year, we manage high-, medium-, and low-risk cases with different intensity levels of management. (inspection frequency: high-risk cases: once per year; medium-risk cases: once every three years; low-risk cases: once every five years)
- We de-identified AML/CTF cases used in education and training and shared them with our subsidiaries to enhance the Group's awareness of AML/CTF.
- We set the audit indicators, perform audits regularly, and prepare audit reports according to the internal regulations.
| - First line of defense: AML Task Force
- Second line of defense: AML personnel
- Third line of defense: Audit Department
|
Market Risk | Interest rate and exchange rate fluctuations will affect the Company's operations | - Maintain a certain percentage of medium to long-term financing to avoid the risk of market interest rate fluctuations
- Undertake foreign exchange swap and interest rate swap contracts to hedge the exchange rate risk of foreign currency loans from financial institutions and effectively reduce the risk of future exchange rate fluctuations.
- Adjust the structure of long-term and short-term borrowings to ensure sufficient funds to meet operating needs and reduce liquidity risk.
| Finance Department |
Climate Change Risk | Failure of the Company to control the physical and transitional risks arising from climate change will affect its operations | - We actively strive to understand market trends, pay attention to customer needs, adjust our products and services quickly, such as offering preferential interest rates for eco-friendly vehicles, and design and promote green and environmental products and services.
- See Chapter 5 (5.1) Climate Change and Risk Management for more details on assessing the risk impacts of climate change.
| Planning Department, Debt Management Department, and Credit Assessment Department |
Information Security Risk | Failure to maintain information security will affect the Company's operations and reputation | - We have established the "Information Security Policy" by taking into account the relevant business development and needs, and the "Personal Data File Management Regulations" and other management regulations and control systems in accordance with the relevant matters stated in the policy
| Information Department |
In 2022, thanks to internal management, none of the aforementioned risks exceeded the Company's expectations and had a material negative impact. |
