Innolux is specialized in and focused on the manufacture, sale, and development of display panels and does not engage in investments of high risk or high leverage. Faced with the rapidly changing macro environment, risk identification and control & improvement of responsiveness have become essential to business operations and management. To effectively reduce operational risks and achieve sustainable development, the Financial Department takes hedging measures based on its authority after assessment, analysis, and drawing up of the risk management strategies. This is to deal with the risks in the macro environment (domestic and overseas economic conditions and financial market changes) and the internal environment (organizational operations and strategic development). The Audit Office constantly supervises internal control and legal compliance. After implementing hedges, the Financial Department will disclose related information by law and submit the results to the Audit Committee and the Board for review.
At Innolux, we categorize financial risks into credit, market, liquidity, asset & operational interruption, and business investment risks.
||(A) Set a credit line and the method(s) of transaction based on the credit ratings of customers, constantly assess the payment performance of customers and implement collections.
(B) Analyze the status of customer operations and the industrial trends regularly, make alerts, and take countermeasures to control credit risks and ensure operational performance.
||(A) After assessing the foreign exchange risks and interest rate risks, the Financial Department establishes hedging strategies and implements hedging transactions. Hedging should aim at avoiding foreign exchange risks on substantial positions, with a focus on undertaking financial products with simple structures and high liquidity.
(B) The Financial Department also balances assets and liabilities in natural hedging for substantial positions generated by foreign currencies and undertakes products for hedging exchange rate risks for risk exposure positions to hedge risk from exchange rate volatility and reduce or avoid potential economic loss. To prevent interest rate volatility in the market from affecting financial costs of the floating interest liabilities raised for operational needs and investments, the Financial Department undertakes products for hedging interest rate risks at appropriate times to lock in interest rate risks.
||In addition to maintaining high liquidity in fund allocations, channels for short-term and long-term financing are expanded constantly to diversify funding sources, hedge systemic liquidity risks from occurrences in the financial market, and raise funds from the capital market to strengthen the capital structure and enhance operational performance.
|Asset and Business Interruption Risk
||To prevent natural disasters or Force Majeure from causing property damage to plants, equipment and goods, and business disruption risks, different types of insurance are purchased after assessing the management costs, premium expenses, and risk self-retention costs of various risks to transfer related risks to a third party (risk-bearing institution).
|Business Investment Risk
||Carefully assess the targets of strategic investments, constantly review, supervise, and manage reinvestments, assess the benefits of medium-term and long-term investments, and timely dispose of non-core investment items to reduce business investment risks.