Risk Management

Risk Management

THC has set a long-term goal with stable and sustainable development to set up a "Risk Management Policy and Procedure", all departments carry out potential risk identification, and assessment of the environmental, social and corporate governance issues affecting the Company’s operations. All employees are responsible for comprehensive risk management to set up defenses through daily routines. THC has formed a crisis management team to immediately carry out appropriate actions and execute relevant plans in response to a risk loss occurring, ensuring the survival of the Company and resuming normal production and business activities soon.

The Company passed "Risk Management Policy and Procedure” on March 22, 2022, formulating the guidelines for the assessment of the risk of the environmental, social, and corporate governance issues that may affect the operation of the Company and relevant countermeasures. At least once a year, report to the Board of Directors on the status of the risk management. The 2024 implementation was reported to the Board of Directors on May 9, 2025.

Risk Identification and Management Procedures

The following table reports the risk management implementation status to the Sustainability and Risk Management Committee for 2025:

Risk Category: Market

Risk Item Risk Description Current Control Measures Tracking Unit
Key Client Dependency High concentration of major brand clients, which could severely impact the company's revenue and reputation if a client adjusts its strategy, is lost, or is involved in a scandal.
  1. Strengthen long-term strategic collaboration with major clients to deepen the stickiness of In-House plants.
  2. Develop new emerging markets and diversify the client base in Southeast Asia and Africa.
 Business Dept.

Risk Category: Operational

Risk Item Risk Description Current Control Measures Tracking Unit
Product Quality and Food Safety Product quality anomalies or food safety incidents resulting in customer claims, large-scale recalls, or loss of FSSC 22000 certification.
  1. Maintain high standards for quality/food safety certifications such as FSSC 22000.
  2. Enhance quality audits and batch traceability management for raw material suppliers.
  3. Plan to introduce intelligent production monitoring for real-time quality anomaly alerts.
 Quality Assurance Dept.
Information Security Hacker attacks, ransomware, or system outages leading to operational shutdown or the leakage of confidential data.
  1. Information security policy is approved annually by the Board of Directors, and security management performance is regularly reported.
  2. Regularly conduct information security training and stress tests.
  3. Establish off-site backup and disaster recovery plans for key systems.
 IT Dept.
Environmental Pollution Liability Interruption of key raw material supply (e.g., PET, PP) due to geopolitics or pandemics, affecting production and order delivery.
  1. Establish a mechanism for diversified procurement sources to spread risk.
  2. Incorporate ESG performance into evaluation indicators to expand critical supplier assessments.
 Procurement Dept.
Occupational Safety and Health (OSH) Falls, crushing, collisions, or burns due to equipment operation, working environment, or human negligence. Aging or abnormal equipment lines or improper maintenance resulting in leaks, causing fire, explosion, production interruption, and personnel injury/death.
  1. Implement training to strengthen personnel's work safety awareness.
  2. Regular equipment inspections to reduce crushing, leaks, and electrical anomalies.
  3. Strengthen working environment and fire safety management, and conduct regular fire drills.
  4. Clearly define accident reporting procedures and emergency measures to mitigate damages.
 Occupational Health Safety Center

Risk Category: Environmental

Risk Item Risk Description Current Control Measures Tracking Unit
Climate Change and Transition
(Carbon Fee/Tax)		 The implementation of domestic and international carbon pricing mechanisms (e.g., Taiwan's carbon fee) will significantly increase operating costs, affecting product pricing and market competitiveness.
  1. Develop a 2050 Net-Zero target and plan a decarbonization pathway based on SBTi.
  2. Evaluate the procurement/self-construction of renewable energy to aim for RE10.
  3. Research and promote low-carbon, circular material (e.g., rPET) products.
  4. Complete greenhouse gas inventory for operational sites.
 Sustainable Development Dept.
Water Resources and Wastewater Discharge Operational sites (especially in overseas regions) facing seasonal or permanent water shortages or government water restrictions, affecting production. Wastewater discharge exceeding standards leading to fines and environmental pollution liability.
  1. Plan to introduce a water resource management system to enhance water recycling rate and water usage intensity.
  2. Regularly monitor and report wastewater discharge to ensure compliance with local regulations.
 Sustainable Development Dept.
Occupational Health Safety Center
Waste (Water) and Air Pollution Failure to comply with regional environmental regulations for wastewater and waste treatment, or failure to meet waste recycling rate targets, leading to fines or suspension of work.
  1. Strengthen waste sorting and reduction, and track the waste recycling rate.
  2. Regularly maintain air pollution control equipment to ensure emissions meet permit standards.
 Sustainable Development Dept.
Occupational Health Safety Center

Risk Category: Human Rights and Business Ethics

Risk Item Risk Description Current Control Measures Tracking Unit
Labor Rights and Talent Retention Workplace discrimination, migrant worker rights (zero-fee controversy), or inability to retain key talent, affecting corporate reputation and operational efficiency.
  1. Fully bear the intermediary fees for migrant workers to ensure the "zero-fee" policy is thoroughly implemented and regularly audited.
  2. Ensure the target of 100% return-to-work retention rate after parental leave is achieved.
  3. Establish a talent development system and E-learning platform to enhance employee upskilling and training rates.
 HR Dept.
Integrity Management and Anti-Corruption Fraud, corruption, or insider trading incidents, affecting corporate reputation and shareholder equity.
  1. 100% of employees complete integrity ethics (including anti-corruption) and insider trading prevention training.
  2. Regularly implement fraud risk audits.
 HR Dept.

Risk Category: Financial

Risk Item Risk Description Current Control Measures Tracking Unit
Exchange Rate Fluctuation Overseas subsidiaries mainly focus on the local domestic market, with receipts and payments primarily in local currency. The main gain/loss from exchange is from the translation gain/loss of financial assets and liabilities denominated in foreign currencies. Adopt a natural hedging strategy, using foreign currency liabilities to balance foreign currency assets. Observe international finance and exchange rate changes, and engage in hedging for the net position of foreign currency-denominated financial assets and liabilities according to the "Procedures for Engaging in Derivative Product Transactions" to appropriately mitigate the risk of exchange rate changes. Finance Dept.
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