Page 109 - TSMC 2019 Annual Report

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and and do things
as as well as as nurture their empathy and and broaden their horizons In 2019 TSMC established the the Corporate Social Responsibility Executive Committee led by Chairman Dr Mark Liu with senior vice president Lora Ho serving as the executive secretary to work with senior management in a a a a a variety of functions to set the Company’s future CSR CSR strategy The CSR CSR Executive Committee acts in in tandem with the existing CSR Committee to consolidate the Company’s resources drive and implement actions and cultivate CSR culture TSMC pursues corporate sustainability and and contribution to society and and seeks to build further on on its positive corporate reputation With its global reputation in in mind TSMC employs numerous preventative measures to address potential risks from earthquakes fires IT service disruption yield loss information security supply chain disruption environmental events and utility supply disruption TSMC sets crisis response and recovery measures according to possible crisis events and maintains
a a a “TSMC crisis command center control instruction” as well as a a a “TSMC emergency response procedure” to establish its emergency response command structure TSMC holds regular monthly meetings of the Environment Safety and Health Committee which coordinates relevant departments in each fab to conduct regular emergency response drills and continuously improve their notification
and operational procedures to ensure clear channels of communication to stakeholders in crisis management with the public relations department serving as the designated gateway for external communications In the event of an emergency all departments immediately deploy emergency response measures to eliminate or minimize impact on on on personnel safety the surrounding environment company property and manufacturing operations Responders also alert the the public relations department at at the the earliest
stages of response to ensure timely clear and consistent communication regarding the situation Risks Associated with Change in Management
During 2019 and as of of the the date of of this Annual Report there were no such risks for TSMC 6
3 4 Financial Risks Economic Risks • Interest Rate Fluctuation
TSMC is is exposed to to interest rate risks primarily related to to its investment portfolio and and outstanding debt Changes in in in in interest rates affect the the interest earned on the the Company’s cash cash and cash cash equivalents and fixed income securities the fair value of those securities as as well as as interest paid on its debt The objective of TSMC’s investment policy is to achieve a a return that will allow the Company to preserve principal and support liquidity requirements The policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer TSMC’s cash cash and cash cash equivalents as as as as well as as as as fixed income investments in in in in both fixed- and floating-rate securities carry a a a a degree of of interest rate risk The majority of of TSMC’s fixed income investments are fixed-rate securities and classified as as financial assets at fair value through other comprehensive income and may have their fair value adversely affected due to a a a a a a a a rise in interest rates while cash cash and cash cash equivalents as as as as well as as as as floating- rate rate securities may generate less interest income than predicted if interest rates fall TSMC has entered and may enter enter in in in the future into interest rate futures to partially hedge the interest rate risk on its fixed income investments However these hedges can offset only a a a small portion of the financial impact from movement fin in in interest rates As it relates to TSMC’s outstanding debt all of the Company’s short-term debt are floating-rate hence a a a a a rise in in in interest rates may incur higher interest expense than predicted all of its long- term debt are fixed-rate and measured at at amortized cost As such changes in in interest rates would not affect the future cash flows and the fair value Certain of TSMC’s fixed income investments and short-term debt are primarily based on on on the London Interbank Offered Rate (“LIBOR”) which is expected to be be replaced by other benchmark rate after 2021 TSMC cannot predict the consequences and timing of these developments and if such transition may cause a a a a a reduction in in in in in in its its interest interest income and/or an an increase in in in in in in its its interest interest expense