Risk Management

To ensure steady operation and sustainable development, the Risk Management Policy and Procedures were stipulated by the Board of Directors on February 27, 2020 based on the Regulations Governing Establishment of Internal Control Systems by Public Companies promulgated by the Financial Supervisory Commission. The Procedures stipulate the Board of Directors, Audit Committee, Auditing Office, President and President’s Office, individual risk management units, and subsidiaries shall together participate in, promote, and implement relevant risk management measures.

Risk Management Organization Structure and Risk Management Categories

Individual risk management units’ reports to the board of directors on different categories of risks controlled by them in 2020:

Times of Reports Dates Report Content
1 February 27, 2020 Amendment to the Internal Audit Statement
2 February 27, 2020 Stipulation of the Risk Management Policy and Procedures
3 April 10, 2020 Amendment to the Derivatives Trading Procedures
4 August 4, 2020 Amendment to the Internal Audit System
5 November 20, 2020 Risk management status report

Risk Management Status Report

Effective intellectual property right management helps encourage R&D, protect R&D achievements and proprietary technologies, optimize manufacture processes, expedite product innovations and upgrades as well as smart manufacture to enable high value-added transformation of Walsin Lihwa. Therefore, Walsin Lihwa started to have the Taiwan Intellectual Property Right Management System (TIPS) implemented in 2020 and reported the implementation status and annual plan at a board meeting on November 13, 2020.

TIPS Implementation Status in 2020

Intellectual Property Right Management Policies

As Walsin Lihwa diligently engages in the R&D of basic materials and relevant technology applications to gradually implement smart manufacturing and manufacture process optimization, promote product upgrades, and grow the market of relevant industry applications, there are four important intellectual property right management policies to help strengthen:

  • R&D for innovation and competitiveness enhancement,
  • Trademark and brand image protection,
  • Confidential document management, and
  • Employees’ awareness of intellectual property rights for more effective intellectual property right management.
Intellectual Property Right Management System Promotion Team

Intellectual Property Right Management Plan
  • Patent Management
    1. Encouragement of innovation: Relevant incentive mechanisms encourage employees to file invention applications.
    2. Inventory on a regular basis: The number of patents and patent statuses are inventoried every year to decide whether some patents shall be kept valid.
  • Trademark Management
    1. Optimized management: A concrete trademark management process helps optimize management of trademarks and relevant processes.
    2. Inventory on a regular basis: The number of trademarks and trademark statuses are inventoried every year to examine whether products and their trademarks are consistent to ensure necessary trademark protection and weed out the trademarks no long in use to save trademark maintenance costs.
  • Business Secret Management
    1. Optimized management: Confidentiality measures are taken to protect company confidentiality and the implementation of such measures is reviewed every year to ensure implementation effectiveness.
    2. Education and training: Education and training on business secrets and confidentiality management are provided to all employees to strengthen their awareness of confidentiality.
    3. Employment contract: Employment contracts have confidentiality and business strife limitation clauses requiring effective confidentiality obligations during and after employment.
Implementation Status

Considering intellectual property rights very important, Walsin Lihwa started to have the TIPS implemented in 2020 as follows:

  1. From April to June, the TIPS was experimentally implemented in the General Affairs Department, Human Resources Division, IT Center, Legal Division, President’s Office, as well as technology and quality assurance departments. 24 regulations related to the TIPS were also set forth and amended for intellectual property right management objective and policy development.
  2. In May, three sessions of education and training on the TIPS basic concept, implementation practice, and TIPS article introduction were provided to 115 trainees from the aforementioned units to strengthen their awareness of intellectual property right protection. In August, education and training on self-evaluation of the TIPS effectiveness were provided to 13 trainees for them to assist in self-evaluation of intellectual property right management.
  3. From June to September, confidential documents and intellectual property rights were inventoried.
  4. From November to December, company-wide education and training on rule of law as well as intellectual property right management and protection took place. As of the end of 2020, there were 761 trainees.
  5. On November 13, the intellectual property right management system annual plan and implementation status were submitted to the Sustainable Committee and reported to the Board of Directors.
  6. On December 2, a TIPS certificate valid through December 31, 2021 was awarded to Walsin Lihwa.
Categories of Possible Intellectual Property Risks and Countermeasure

To ensure effective use of R&D results, protection of related interests or rights, and prevention of intellectual property rights from infringement, categories of identifiable intellectual property right risks and countermeasures are tabulated as follows:

Categories Countermeasures
Patent
  • Strengthen and promote newly established R&D processes
  • Encourage R&D personnel to file more patent applications
Trademark
  • Strengthen application, maintenance trademarks and control of use of trademarks as well as archiving of trademark certificates
Business secret
  • Strengthen employee education and training on intellectual property rights and confidentiality obligations
Intellectual Property Right Acquisition

As of December 31, 2020, Walsin Lihwa and its major domestic subsidiaries acquired18 patent certificates and valid patents in Taiwan, where Walsin Lihwa had 73 registered and valid trademarks.

Information Security Management Structure Implementation

  • In response to company transformation and enhancement of information security management, Walsin Lihwa established a Big Data & Cyber Security Division under its IT Center in 2017. The division is responsible for information security policy development and amendment; planning, coordination, and implementation of relevant information security measures; and strengthening information security management solutions year by year.
  • Pursuant to its Regulations Governing Information Security Organization Management , Walsin Lihwa established its IT Steering Committee in 2018 as an information security management and decision-making body for the headquarters and individual business units. Responsible for review and resolution of information security management matters, the IT Steering Committee has an information security promotion team responsible for risk appraisal, information security technologies, and information security compliance review.

Information Security Policy

  • Objectives of information security: To maintain the confidentiality, completeness, and availability of business information including sensitive information at Walsin Lihwa, all the employees, internal and external information service users, and 3rd-party service contractors are expected to work steadfastly together to achieve the following objectives:
    1. Comply with relevant laws and regulations to protect company confidential information; prevent unauthorized access, tempering, damage, and/or improper disclosure to ensure the correctness of every category of business information.
    2. Set up comprehensive business continuity planning and procedures for the management of information security events to ensure such events are properly responded, controlled, and processed, and conduct scenario drills on a regular basis to ensure ongoing operation of IT systems and information services in case of any information security events.
    3. Cautiously handle and protect personal information and intellectual property rights pursuant to relevant domestic and overseas requirements.
    4. Enhance employees’ awareness of information security and reduce the risks associated with how information is used through management review, risk appraisal. internal auditing, education and training, and information security drills.
    5. Require all the employees to strengthen compliance with the Information Security Policy as well as relevant regulations governing information security and SOPs.

Specific Program for Information Security Management

  • Develop information security plans for information security policy implementation year by year, bring in information security systems and workflow standards, and continue making information security technologies and relevant protection measures more complete.
  • The specific management program has 5 objectives, separation of intranet from extranet, multi-layered security defense, identification of security loopholes or other potential risks by log analysis and security inspection, smart security protection, and behavior analysis by log and big data analysis at the security operation center, which can be achieved step by step through 4 approaches, IT governance, data and equipment protection, network and system control, and boundary defense.
  • The specific management program includes:
    1. Implement adequate access authorization and protection based on the confidentiality levels of information assets to reduce exposure to risks.
    2. Continue bringing in advanced information solutions to enable effective system, host, and network behavior management and protection.
    3. Provide education and training on a regular basis to share new knowledge on information security and strengthen employees’ awareness of information security.
    4. Focus on important systems to conduct disaster backup drills on a regular basis to rapidly resume operation in case of any disasters.
    5. Evaluate and improve endpoint, server, and network equipment protection, and engage 3rd party professional services such as the information security inspection and diagnosis provided by the Industrial Development Bureau, Ministry of Economic Affairs.
  • In the future, information security at Walsin Lihwa will focus on prevention of online leaks of R&D results and intellectual property rights, production line and equipment protection from hacker attacks, and capability development for rapid responsiveness to information security events to cope with the challenges from comprehensive digitalization brought in by Industry 4.0.

Walsin Lihwa has been promoting relevant laws and regulations against insider trading to its board of directors and executives above managers every year since 2019. Please refer to the following link for details.

Report on Promotion of Insider Trading Prevention in 2020
Report on Promotion of Insider Trading Prevention in 2019