Risk Foresight and Crisis Management

Advantech has risk management policies and business continuity plans in place, aiming to perform risk impact assessments in advance, promotion of countermeasures, and define handing processes during risk occurrences in order to reduce their possible impacts and influences when risks occur and to facilitate subsequent correction and management. Advantech strives to provide transparent and sufficient information and communication to potentially affected stakeholders regarding major risk events and countermeasures.

The risks identified in Advantech's risk management process involve economic, environmental, and social issues. If each risk item is not effectively managed and responded to, the possible negative impacts on the Company include affecting the Company's strategy execution and operational performance achievement, impair the Company's goodwill, or increase the Company's operating costs and expenses. Please refer to the individual risk item descriptions for relevant preventive or mitigation actions. On the other hand, through early identification of risk events and effective response, risks can also be transformed into future business opportunities and competitiveness.

• Expand risk management Training course to all overseas employees, with the target completion rate of more than 80% of global employees (excluding direct employees): Actual completion rate: 86%
• Facilitate project discussions and actions formation on at least two high-level risk issues:
• 1. Strengthening risk management mechanism of large-scale DMS projects
• 2. Strengthening of Polish service center in Europe

• Expand risk management training course to all overseas employees, with the target completion rate of more than 80% of global employees (excluding direct employees)
• Facilitate project discussions on at least two major domestic or overseas risk issues
• Pan strategy risk to be included in risk assessment and risk map

• The completion rate of risk management training course exceeded 85% of the global employees (excluding direct employees).
• Facilitate project discussions on at least three major domestic or overseas risk issues
• Reasonable evolution of risk management mechanism or organization benchmarking to leading peers

• Provide advanced risk management training course for domestic and overseas management, completion rate > 70%
• Facilitate project discussions on at least five major domestic and overseas risk issues
• Reasonable evolution of risk management mechanism or organization in comparison with benchmarking peers

• For key action plans for major operational risks, please refer to 2.4 Risk foresight and crisis management

• The management unit builds data dashboards and KPIs for major risks to report and track abnormalities in real time. The Internal Audit team lists risk topics as audit topics for deep dive and follow-up
• Material risk topics are included in the matters to be tracked at the quarterly risk management meeting and reported to the Board of Directors or the Audit Committee.
• The risk management team proposes evolution proposals every year with reference to the best practices of benchmarking peers risk management

Advantech conducts an annual risk survey, targeting mid-to-senior managers, directors, certified public accountants (CPA), and external consultants. The purpose of the survey is not only to identify major risk items, but also to gather opinions on risk management improvement. A risk mailbox was created to encourage and solicit all employees feedback for improving risk management. Major risks and relevant mitigation actions are fully disclosed through various channels such as the official website, sustainability reports, earnings call, and press releases, so that investors, institutional shareholder and other stakeholders can fully understand.