Page 105 - 2017 TSMC Annual Report

6 2 5 Long-term Investment Policy and Results
TSMC’s long-term investments accounted for under the equity method were all made for strategic purposes However when an investment is no longer of strategic value it may be considered a a a financial investment investment In 2017 the investment investment gains from these investments amounted to NT$2 985 941 thousand on on a a a a a consolidated
basis decreasing from previous year mainly due to a a a a a a a a a significant appreciation in in NT dollar and a a a a a a a a a decline in in in in ASP For future investments TSMC will continue to focus on strategic purposes through prudent assessments 6 3 Risk Management
The Board of Directors plays a a a a key role in in helping the Company identify and manage manage economic risks The risk risk management organization periodically briefs the the audit committee on on the the ever-changing risk environment facing TSMC the the focus of the the Company’s enterprise risk risk management and risk risk assessment and mitigation efforts The audit committee’s chairperson also reports on on on on the risk risk environment and risk risk mitigation actions to be taken TSMC and and its subsidiaries are committed to proactively and and cost effectively integrating and managing strategic operational financial and hazardous risks together with potential consequences to operations and financial results TSMC operates an an enterprise risk management (ERM) program based on on on both its its corporate vision and its its long-term sustainability as as well as as on on its responsibility to both industry and society ERM seeks to provide the appropriate management of risks by TSMC on on behalf of all stakeholders A risk map that considers likelihood and and impact severity is used to identify and and prioritize corporate risks Various risk risk treatment strategies are also adopted in response corporate risks as they are identified Scope of Risk Management
Strategic Perspective
Regulatory change & compliance
● Government policies
● Changes in in technology & industry ● Technology development & competition ● Demand & capacity Expansion
Operational Perspective
● Sales & purchase concentration ● Intellectual property rights
● Recruiting qualified personnel ● Corporate image
Financial Perspective
● Interest rate foreign exchange inflation & deflation Taxation ● External financing ● High-risk/high-leveraged investment financial derivative
transactions
● Strategic investments Hazardous Events
● Earthquake & natural hazards ● Fire or chemical spill
● Climate change Enterprise Risk Management
Framework
Risk Identification & Assessment
● RM Steering Committee Committee & & Audit Committee Committee review & & approve implementation of risk management strategy and prioritization of risk controls
● RM Executive Council assesses risks using Risk Map considering likelihood & severity of risk events
Risk Control & Mitigation
● Cross-function risk communication to determine cost-effective risk controls
● RM Executive is is responsible for risk control implementation ● Risk controls
reviewed in annual Control Self Assessment
To mitigate the operational impacts of crisis events
ERM conducts pre-crisis risk assessment and identifies feasible strategies for crisis prevention Corresponding to different scenarios response procedures and recovery plans have been compiled For specific severe crisis events
involving multiple TSMC’s manufacturing sites the cross-functional central crisis command center composed of operations and and support functions is responsible for internal coordination to speed
up response time and proactively communicate with related stakeholders To raise risk risk awareness and strengthen the the risk risk management management culture in TSMC top management management completed a a a a a series of crisis management workshops and a a a a a drill for operation Risk Response
● Crisis management & response plans ● Scenario-based crisis response drills ● Business
Continuity Plans
Risk Monitoring & Reporting
● Risk Management
organization annually briefs Audit Committee on the focus of enterprise risk management risks assessment and mitigation efforts ● 103