Risk Management
Risk Management
Risk Management Policies and Procedures
Edison Opto has established the Risk Management Policy and Risk Management Procedures, which were approved by the Board of Directors on May 12, 2020, as the highest guiding principles for the Company’s risk management. The Company conducts annual risk assessments and formulates risk management policies for each identified risk, covering management objectives, organizational structure, responsibilities, and risk management procedures to ensure effective identification, measurement, and control of risks. This framework ensures that risks arising from business activities are maintained within acceptable levels. The Board of Directors serves as the highest authority on risk management, ensuring its effectiveness and bearing ultimate responsibility. The Audit Committee is responsible for supervision, reviewing policies, procedures, and results, and providing recommendations for improvement. The results of annual risk assessments are reported first to the Audit Committee and then to the Board of Directors.
Scope of Risk Management
Risk Categories
Based on Edison Opto's business and operational activities, risks that may impact operations and profitability are identified and assessed in a proactive and cost-effective manner. Key considerations include the business environment, operations, finance, and potential hazardous events. The Company also reviews the comprehensiveness of enterprise risk management and the effectiveness of risk controls. Six major categories of risk have been identified: Operational Risk, Information Security Risk, Hazard Risk, Environmental Risk, Financial Risk, and Other Risks.
Risk Identification and Measurement Standards
1. Each risk response unit is responsible for identifying potential risk factors it may face and must establish appropriate measurement methods (both quantitative and qualitative) and threshold standards to serve as the basis for risk management.
2. Risk measurement includes risk analysis and evaluation, such as assessing the frequency and severity of risk events and analyzing the potential negative impact if they occur. These are compared against pre-set thresholds (e.g., risk limits or risk appetite), serving as the basis for prioritizing risk control measures and selecting appropriate response strategies.
Risk Management Organizational Structure
Operational Status
Since 2020, Edison Opto has actively promoted the implementation of a risk management mechanism. Each year, the results of the risk assessment and operational status are first reported to the Audit Committee, followed by a report to the Board of Directors.
Operational Status in 2024:
On November 1, 2024, Edison Opto reported to both the Audit Committee and the Board of Directors on the same day regarding the results of the risk assessment and its implementation status. The report covered the various risks and issues identified during the year, the current risk control measures and operations, potential impacts, and future risk response measures. Each organizational unit has established both quantitative and qualitative assessment methods and threshold standards (score of 80). All identified risk factors have been properly managed internally, and no risk scores exceeding 80 have been reported.
Risk Assessment Based on CSR Materiality Principles
Edison Opto conducts risk assessments on material CSR issues and formulates corresponding risk management policies or strategies as follows:
| Major issues | Risk assessment items | Risk management policies and strategies |
|---|---|---|
| Environment | Environmental impact and management | 1. Edison Opto signs contracts with licensed disposal companies for general and industrial waste. Daily cleaning and resource recycling are implemented to promote environmental protection and resource reuse. In addition, the Company enforces energy-saving, carbon reduction, and water conservation policies, such as installing sensor faucets in restrooms, promoting switching off lights, paperless operations, and water conservation. Annual greenhouse gas and water consumption inventories are conducted with the goal of reducing CO₂ emissions and water intensity year by year. 2. Edison Opto has obtained ISO14001 Environmental Management System certification. 3. Edison Opto's products comply with applicable regulations, meet EU RoHS standards, and contain no hazardous substances. They also comply with the EU ErP Directive, U.S. CEC Title 20 and Title 24 energy efficiency standards, and Taiwan’s Green Mark, thereby reducing environmental impact from production. 4. Using the TCFD framework, Edison Opto has established a climate risk identification process. Through cross-departmental discussions, climate risks and opportunities have been identified, and corresponding measures determined. |
| Society | Occupational safety | Edison Opto is committed to safeguarding employee health and workplace safety. In compliance with occupational safety and health regulations, it conducts regular safety and health training and organizes fire safety awareness courses. To provide a safe and comfortable working environment, the Company offers dedicated parking spaces, employee dormitories, and nursing rooms, as well as 24-hour security systems and an employee cafeteria. The Company believes that healthy employees are its greatest asset, therefore it conducts regular health checks and provides on-site medical staff to manage employee health and offer health consultation services. |
| Product Safety | 1. All of Edison Opto's products comply with government regulations and laws in various regions, including obtaining product certifications in sales regions (such as BSMI, UL, CE, etc.), containing no hazardous substances (such as RoHS, REACH, etc.), and being certified by various quality management systems. This ensures stable product quality, guarantees service quality, and enhances customer satisfaction. The Company has established customer service hotlines and communication websites, and conducts annual customer satisfaction surveys to strengthen cooperation with customers. Through mutually beneficial relationships with customers, the Company builds the cornerstone for sustainable corporate development. 2. To transfer product liability risks, reduce financial losses, enhance product safety, and improve corporate image while protecting consumer rights and fulfilling corporate social responsibility, Edison Opto has purchased a global product liability insurance of USD 2 million for modules and finished products. The insurance policy number is 17000-13CM200025. | |
| Corporate Governance | Socioeconomic and Legal Compliance | Edison Opto implements corporate governance by following internal audit and control mechanisms. Annual training courses are organized for all employees and senior management, covering various legal compliance topics. By enforcing the compliance education policy, the Company enhances the legal awareness of all levels of personnel to reduce the risk of regulatory violations. |
| Reinforcing Directors’ Functions and Fulfilling Responsibilities | 1. To strengthen directors’ understanding of their rights and legal responsibilities, Edison Opto provides directors with continuing education on relevant topics and offers them the latest updates on laws, system developments, and policies each year. 2. Edison Opto has purchased directors’ liability insurance to protect directors in the event of lawsuits or claims, provided that they have fulfilled their fiduciary duties as prudent managers in the performance of their duties. | |
| Stakeholder Communication | 1. Edison Opto values investor relations, and recognizes the increasing importance of stakeholders in its development. To avoid misunderstandings that may lead to operational or litigation risks due to different positions between stakeholders and the Company, the Company maintains sufficient communication and response mechanisms regarding key stakeholders and their concerns. 2. Various communication channels have been established to actively engage with stakeholders, reduce conflicts, and prevent misunderstandings. An investor mailbox has been set up, which is managed and responded to by Edison Opto's spokesperson. 3. A grievance mechanism for stakeholders has been established, with a declaration that all business activities of Edison Opto and its subsidiaries must adhere to corporate social responsibility, ensure business ethics, and comply with government regulations. Employees are prohibited from engaging in any form of unfair business practices, and strictly forbidden from engaging in any form of bribery, improper benefits, fraud, coercion, or other illegal activities, as well as avoiding potential conflicts of interest, with the goal of establishing long-term partnerships. |