Risk Management

With the rapid changes in the global economy and politics, along with the increasing severity of climate change, businesses are facing numerous emerging environmental, social, and governance (ESG) risk factors in their operations. To strengthen corporate governance and implement risk management in business operations, Radiant Opto-Electronics officially established a Risk Management Committee in 2024. Based on the "Best Practice Principles for Listed and Over-the-Counter Companies" and the "Practical Implementation of Risk Management Guidelines for Listed and OTC Companies" issued by Taiwan Stock Exchange, the Company has built a comprehensive corporate risk management framework. The Company also holds risk education training sessions periodically to ensure the integrity of risk management and to establish a solid corporate risk culture.

Radiant Opto-Electronics Group has established a Risk Management Policy and Procedures. Through the creation of a comprehensive risk management framework and operational processes, the Company effectively prevents and controls business risks, identifies potential risks, and integrates risk management into operational activities and daily management processes, thereby shaping a comprehensive corporate risk management culture.

Establishment of Risk Culture

Radiant Opto-Electronics is committed to building a comprehensive risk culture and continuously improving it to deepen risk management awareness and capabilities of all employees. Through organizing risk management training, risk awareness and self-management are internalized as part of the employees' DNA.

In 2024, Radiant Opto-Electronics launched risk management internal educational training from its headquarters, holding a total of four training sessions. Over 66 practical risk examples were shared with employees, covering areas such as human resources, customers and products, legal compliance, reporting, information management, corporate governance, sustainable development, and supply chain risks. This initiative aims to establish risk awareness among employees and will gradually be extended to the Group's subsidiaries.

In addition to regularly reviewing the five major areas of risk management (operations/infrastructure, strategic planning, corporate governance, legal compliance, and reporting), Radiant Opto-Electronics has established a mechanism for reporting significant incidents to quickly and accurately respond to major unforeseen events, reducing the impact of risk events. The Company has defined the scope of risk events and impact reporting standards for issues such as information security incidents and environmental health and safety anomalies. Response teams have been formed to ensure timely reporting and monitoring of significant events, evaluating response plans, and establishing standard operating procedures for handling such events. Each department is responsible for subsequent actions based on their specific roles, and continuous monitoring and reporting of significant events are conducted to manage and reduce the risk impact of unpredictable major incidents on the Group. At the same time, in accordance with the risk management procedures, if a significant unforeseen risk event occurs, an ad hoc risk assessment process should be initiated to evaluate and determine whether to include the event in the risk knowledge base and to activate the risk management operation process, aiming to prevent risks before they materialize.

Risk Management and Response Strategies

Radiant Opto-Electronics' risk management is jointly carried out by relevant units, conducting risk identification, analysis, assessment, and response operations for the 2024 annual risks. The risk scenario of focus for 2024 is: "The increasing demand in the OLED market is gradually eroding the backlight market, and failure to respond promptly may result in business losses." The corresponding response measures are to strengthen the capabilities of existing products through internal initiatives, implement a dedicated project management system, and develop new products, while enhancing core competencies and expanding the optical product portfolio through external investment and acquisitions.

Establish an Internal Control System

Radiant Opto-Electronics Corporation conducts annual audits in accordance with the "Guidelines for Public Listed Companies to Establish Internal Control Systems" by the Financial Supervisory Commission. These audits assist the Board of Directors and management in supervising all internal systems and processes of the Corporation. We implement annual audit plans and continuously monitor related operating systems to ensure accuracy, reliability, timeliness, and transparency of operational, financial, and management information. We also ensure compliance with relevant laws and regulations and provide timely suggestions for improvement while ensuring the achievement of the following objectives:

To ensure continuous implementation of the self-supervision mechanism, the Auditing Office conducted an anonymous survey on internal control self-assessment. The purpose of the survey was to gain an understanding of the scores of implementing internal controls. According to the survey results, the average self-assessment scores for internal control at both the overall and operational levels in 2024 are 3.62 and 3.09, respectively, below the threshold of concern. This indicates that both management and employees are dedicated to effectively implementing the internal control system to maintain operational risk control within acceptable limits. Furthermore, the results demonstrate that the current operational control measures are satisfactory.

The Audit Office of Radiant Opto-Electronics has established a risk-based internal audit system and formulates an annual audit plan each year to inspect and assess the implementation of internal controls, providing timely improvement suggestions to ensure the continuous and effective implementation of the internal control system. The Audit Office conducts an annual review of the self-inspection reports submitted by each Corporation unit and subsidiary, in compliance with regulations. These reports, along with the outcomes of internal audits and any corresponding improvements, serve as the foundation for the Board of Directors to assess the efficacy of the internal control system and to issue a statement on its status. No corruption-related matters were identified in the aforementioned irregularities.