Risk Management

Risk Management Policy

In response to changes in the Company's development strategy, TCC approved the amendment to its Risk Management Policy at the Board meeting on May 14, 2024, incorporating biodiversity as a key area of risk identification to prevent and mitigate the impact of operations on nature and biodiversity.

Risk Management Policy

Organization Structure

The Risk Management Committee was established directly under the Board of Directors in May 2020. The third committee was re-elected in 2024. It currently consist of 5 members, 4 independent directors and 1 director, with expertise in risk management, auditing, information, and ESG. Among them, 4 are females.

Risk Management Process

TCC benchmarks its risk identification against sources like the WEF Global Risks Report 2025, peer analyses, SASB standards, and internal policy. The process covers four major risk dimensions: strategy, operations, finance, and climate. It also considers factors such as the geographical location of operating sites and the value chain, while assessing potential risks that could lead to significant company losses. Each risk's value, based on likelihood and impact, is evaluated against company risk appetite to set a level and formulate a response, underpinning the management cycle.

Operational Status

Two meetings were held in 2021 (on August 10 and November 8), with 100% committee member attendance
Reported on the annual updates to TCC's risk identification matrix, results of the Task Force on Climate-related Financial Disclosures (TCFD) project, and content related to the ISO 37001 Anti-Bribery Management System implementation.
The third meeting of the second term was convened in 2022 (on August 5)
Reported on updates to TCC's risk identification matrix, outlined the impacts on operations and mitigation strategies in response to war, geopolitical issues, the energy transition, and demographic shifts.
The fourth and fifth meetings of the second term were convened in 2023 (on March 24 and November 10)
Reported on updates to TCC 's risk identification matrix, climate-related performance indicators and targets, and the potential impact of Taiwan's carbon fee collection in 2024 and payment in 2025.
The sixth meeting of the second term and the first meeting of the third term were convened in 2024 (on May 14 and August 13)
Reported on updates to TCC 's risk identification matrix, climate-related performance indicators and targets, the damages and recovery progress from the April 3 earthquake, and the election of a convener.
The second meeting of the third term was convened in 2025 (on March 12)
Update status of the company's risk identification matrix, climate-related performance indicators and targets, and the revision of certain provisions of the company's " Risk Management Policy".
The Risk Management Commiee annually trains all directors in risk management. Future plans will mandate annual training for 100% of non-executive directors. TCC also annually trains all employees, followed by tests to ensure comprehension. Additionally, the“Sustainable Action by All” metric is 10% of each employee’s performance evaluation. In 2024, 8,901 employees participated in risk management education and training in 2024, accumulating 710.7 hours in total.

2024 TCC Risk Matrix

◆ Related to material topics

Industry Development and Competition - Mainland China Cement Market ◆

Poor Occupational Health and Safety Management ◆

Insufficient Information Security Management

Losses Due to Ineffective Strategic Management

Natural Disaster (Earthquake) ◆

Fluctuation in Product and
Raw Material (Energy) Prices ◆

Inflation - Tariffs

Carbon Trading/Carbon Fees/Carbon Tax for Total Carbon Emissions Control ◆

Improper Use of Alternative Raw Materials/Fuels/Waste Resource Recycling ◆

Support Intensity from Insurance and Financial Institutions for Investment and Financing

Interest Rate/Exchange Rate Fluctuations

Geopolitical Risk

To mitigate risks, TCC installed backup energy at its eastern Taiwan plants against power grid instability, providing two hours of emergency power for a kiln's adjustments. Geopolitical risks are mitigated via its international deployment strategy.

Emerging Risks

Item	Risk Factor Description	Impact	Mitigation Measures
Generative AI｜Technology	Generative AI relies on user-provided data, making it vulnerable to hacking if data isn't protected or models have flaws. Inconsistent input data can also lead to unreliable content. Furthermore, employee resistance due to job displacement fears or work process changes may hinder AI adoption.	Integrate external AI systems risks leaking customer data and trade secrets, potentially leading to litigation, fines, reputational damage, and loss of customer trust. Content generated from biased or inconsistent data can cause flawed decision-making, reduce operational efficiency, and incur correction costs, thereby eroding employee trust and decreasing AI adoption. Low employee engagement, sluggish AI implementation, failure to fully leverage AI advantages to improve efficiency, and setbacks in digital transformation process.	Establish AI policies to guide TCC's information security team. Develop a proprietary, closed AI system on ChatGPT's foundational model, ensuring data privacy while training TCC-specific models to minimize content bias. In collaboration with MIT, TCC Lyceum offers ten on-demand AI courses to ease employee anxiety regarding the AI transformation.
Geoeconomic Confrontation｜Economic	The US government is promoting the reshoring of manufacturing and implementing protective trade measures, including equivalent tariffs to encourage overseas manufacturers to set up factories in the US. The US has imposed a tariff on Taiwan, and has announced plans to expedite related negotiations. As of April 2025, the Taiwanese government has stated that it will not implement retaliatory tariff measures.	A new wave of international trade barriers may lead to the restructuring of regional trade organizations. Failure to join these organizations could further slow domestic economic growth, indirectly impacting demand for cement and energy products in domestic and foreign markets.	Mitigate import tariffs and trade barriers by establishing production bases or joint ventures in major markets. Mitigate coal price volatility from trade barriers by establishing a flexible, diversified supply chain through expanded procurement sources and long-term agreements.

Item

Risk Factor Description

Impact

Mitigation Measures

Generative AI｜Technology

Generative AI relies on user-provided data, making it vulnerable to hacking if data isn't protected or models have flaws. Inconsistent input data can also lead to unreliable content. Furthermore, employee resistance due to job displacement fears or work process changes may hinder AI adoption.

Integrate external AI systems risks leaking customer data
and trade secrets, potentially leading to litigation, fines,
reputational damage, and loss of customer trust.
Content generated from biased or inconsistent data can cause flawed decision-making, reduce operational efficiency, and incur correction costs, thereby eroding employee trust and decreasing AI adoption.
Low employee engagement, sluggish AI implementation,
failure to fully leverage AI advantages to improve efficiency, and setbacks in digital transformation process.

Establish AI policies to guide TCC's information security
team.
Develop a proprietary, closed AI system on ChatGPT's
foundational model, ensuring data privacy while training TCC-specific models to minimize content bias.
In collaboration with MIT, TCC Lyceum offers ten on-demand
AI courses to ease employee anxiety regarding the
AI transformation.

Geoeconomic Confrontation｜Economic

The US government is promoting the reshoring of manufacturing and implementing protective trade measures, including equivalent tariffs to encourage overseas manufacturers to set up factories in the US. The US has imposed a tariff on Taiwan, and has announced plans to expedite related negotiations. As of April 2025, the Taiwanese government has stated that it will not implement retaliatory tariff measures.

A new wave of international trade barriers may lead to the restructuring of regional trade organizations. Failure to join these organizations could further slow domestic economic growth, indirectly impacting demand for cement and energy products in domestic and foreign markets.

Mitigate import tariffs and trade barriers by establishing production bases or joint ventures in major markets.
Mitigate coal price volatility from trade barriers by establishing
a flexible, diversified supply chain through expanded procurement sources and long-term agreements.