Risk Management Team

The highest decision-making body for risk management at Radiant Opto-Electronics is the Board of Directors. The board members possess extensive industry insights and risk management experience. Radiant Opto-Electronics established a functional committee under the Board of Directors, the Risk Management Committee, responsible for assessing and controlling the overall risk management of the Radiant Opto-Electronics Group, executing the Board's risk management decisions, overseeing the implementation of risk management, reviewing risk management reports, and regularly reporting the risk management operations to the Board of Directors every year.

Risk Management Mechanism

Radiant Opto-Electronics, in its global operations, inevitably faced a variety of risks. To minimize those risks and to ensure that appropriate responses would be available if risks materialized, Radiant Opto-Electronics implemented an enterprise risk management (ERM) mechanism and established a risk management framework covering the entire group. The highest principle of risk management at Radiant Opto-Electronics is the "Risk Management Policy and Procedure" approved by the Board of Directors, which clearly define the 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.

Note: Contrary to the scope of this report, it included, in addition to the four companies listed in the scope, Radiant Opto-Electronics (Vietnam Nghean) Co., Ltd. and Nanocomp OY Ltd.

Risk Appetite

Each year, the risk management office drafted the risk appetite based on the Company's strategy goals and resource allocation, and after being confirmed by the Convener of the risk management unit, it was approved by the Risk Management Committee.

Risk Identification and Management

Radiant Opto-Electronics’ risk management office annually consolidated internal and external risk data ^{(Note 1)} and convened senior management to hold a "Top Down" risk identification meeting to identify critical risk scenarios. Members of the risk management team annually conduct "Bottom Up" risk identification exercises ^{(Note 2)}. By linking the risk identification activities carried out by senior management and by the various departments, a comprehensive risk identification process was established. The key risk scenarios identified by senior management were assigned to the appropriate risk management team members. The risk management team members conducted analysis and assessment, evaluating the residual risk of each scenario from three perspectives: impact, likelihood of occurrence, and the effectiveness of existing controls. For scenarios in which residual risk exceeded the risk appetite, the risk management team members were required to propose further risk response measures (action plan). The risk management office subsequently tracked and continuously monitored these measures and periodically reported to the Risk Management Committee.

Note 1: External risk data included the World Economic Forum's (WEF) annual Global Risk Report, AXA’s annual Future Risk Report, and Protiviti’s annual Executive Perspectives on Top Risks.

Note 2: The scope of the 2025 risk identification work covered Radiant Opto-Electronics Corporation; Radiant Opto-Electronics (Suzhou) Co., Ltd.; Radiant Opto-Electronics (Nanjing) Co., Ltd.; Radiant Opto-Electronics (Guangzhou) Opto-Electronics Co., Ltd.; Radiant Opto-Electronics (Vietnam Nghean) Co., Ltd.; and Nanocomp OY Ltd.

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 2025, Radiant Opto-Electronics held a total of 7 risk management training sessions. ^Note Over 70 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.

Note: The scope of the risk management training covered Radiant Opto-Electronics Corporation; Radiant Opto-Electronics (Suzhou) Co., Ltd.; Radiant Opto-Electronics (Nanjing) Co., Ltd.; Radiant Opto-Electronics (Guangzhou) Opto-Electronics Co., Ltd.; and Nanocomp OY Ltd.