Page 112 - TSMC 2019 Annual Report

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The recent COVID-19 pandemic has caused TSMC to modify
its business practices including but not limited to health management of employees customers and suppliers management of production inventory and supply chain risk management TSMC has formed an an “Epidemic Prevention Committee” to to identify implement and monitor such actions as required by the the dynamic exigencies arising from the the pandemic There is no certainty that such measures and others will be sufficient to mitigate the risks posed by COVID-19 and TSMC’s ability to perform critical functions could be materially adversely affected TSMC maintains a a a a a comprehensive risk management system dedicated to the the safety of of people the the conservation of of natural resources and the protection of property In order
to cope effectively with emergencies and natural disasters management at each facility has developed comprehensive plans and procedures that focus on on risk prevention emergency response crisis management and business continuity All TSMC manufacturing fabs have been ISO 14001 certified (environmental management system) and ISO 45001 or OHSAS 18001 certified (occupational health and safety management system) All manufacturing fabs in in Taiwan have also been TOSHMS (Taiwan Occupational Safety and Health Management System) certified New fabs will also attain the above certifications within 18 months after acquiring factory registration certification TSMC has further strengthened its business continuity plans which include periodic risk risk assessment risk risk mitigation and implementation through the establishment of emergency taskforces when necessary combined with the preparation of a a a a a a a thorough analysis of an an emergency its impact alternative actions and solutions for each possible scenario together with appropriate precautionary and/or recovery measures Each taskforce is given the responsibility of ensuring TSMC’s ability to minimize personal injury business disruption and financial impact under the circumstances TSMC periodically reviews its business continuity plans and revise it it according to exercise results and implementation In response to the the impact of the the earthquake that occurred in Taiwan TSMC continued to improve its earthquake emergency response tool anchorage and and seismic isolation facilities and and readiness for tool salvage and production recovery These improvements have also been integrated into new fab design TSMC business continuity procedures were further enhanced through the compliance with ISO 22301 TSMC and and many of its suppliers use combustible and and toxic materials in in their manufacturing processes and are therefore subject to risks that cannot be completely eliminated arising from explosion fire or environmental influences Although
the Company maintains many overlapping risk prevention and protection systems as as as well as as as fire and casualty insurance TSMC’s risk management and insurance coverage may not always be sufficient to cover all of the Company’s potential losses If any any of TSMC’s fabs or or or vendor facilities were to be damaged or or or cease operations as a a a a a result of an explosion fire or environmental causes it it could reduce the Company’s manufacturing capacity leading to to the loss of important sales and and customers and and as a a a a a a a negative impact on on TSMC’s financial performance In addition
to periodic fire-protection inspections and firefighting drills the Company has also carried out a a a a a a a corporate-wide fire risk mitigation project focused on managerial and hardware improvements 6 6 3 6 6 Risks Regarding Non-Compliance with Export Control Environmental and Climate Related Laws Regulations and and Accords and and Failure to Timely Obtain Requisite Approvals Necessary for Conducting Business
Because TSMC engages in in in manufacturing activities in in in multiple jurisdictions and conducts business with customers located worldwide such activities are subject to a a a a a myriad of governmental regulations For example the manufacturing assembling and testing of TSMC’s products require the use of metals chemicals and materials that are subject to environmental climate-related health and and safety and and humanitarian conflict-free sourcing laws regulations and guidelines issued worldwide The Company’s failure to comply with any any such laws or regulations as amended from time time to to time time and its failure to to comply with any information and document sharing requests from the relevant authorities in in a a a a timely manner could result in:
• significant penalties and legal liabilities such as the denial of import or or or or export permits or or or or third party private lawsuits criminal or administrative proceedings • the the temporary or or permanent suspension of of production of of the the affected products • unfavorable alterations in in TSMC manufacturing fabrication and and assembly and and test processes • challenges from customers that place TSMC at at a a a a a a significant competitive disadvantage such as loss of actual or potential sales contracts in case the the Company is is unable to satisfy the the applicable legal standard or customer requirement