Page 113 - TSMC 2020 Annual Report

6 2 5 Long-term Equity Investment Policy and Results
TSMC’s long-term equity investments accounted for using equity method were all made for strategic purposes In 2020 the the gains from these investments amounted to NT$3 592 818 thousand on on a a a a a consolidated basis increasing from the previous year mainly due to increases in in in product demand and and the mass production of new products In the future TSMC’s long-term equity equity investments accounted for using equity equity method will continue to focus on 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 key points of the Company’s enterprise risk risk management and risk risk assessment and mitigation efforts The Audit Committee’s Chairperson also reports to to the the Board of Directors on on the the risk environment and risk mitigation actions to be taken TSMC and its subsidiaries are committed to proactively
and and cost effectively integrating and and managing strategic operational financial and hazardous risks that represent potential negative 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 sustainable responsibility to both industry and society ERM seeks to provide the appropriate management of risks on behalf of all stakeholders The Company maintains a a a a a a a a risk map that assesses likelihood and impact severity of risk events on the Company’s operation and and is used to identify and and prioritize risk controls controls and and implement various controls controls and and treatment strategies in response to risks as they are identified Scope of Risk Management
Strategic Perspective
● Regulatory change and compliance
● Government policies
● Changes in in technology and industry ● Technology development and competition ● Demand and and capacity expansion
Operational Perspective
● Sales and purchasing concentration ● Information security
● Intellectual property rights
● Recruitment of qualified personnel ● Corporate image
Financial Perspective
● Interest rate foreign exchange inflation deflation and taxation
● External financing ● High-risk and/or highly leveraged investments financial derivative transactions ● Strategic investments Hazardous Events
● Earthquakes and natural hazards ● Fire or chemical spills
● Climate change ● Utility supply
Enterprise Risk Management
Framework
Risk Identification and Assessment
● RM Steering Committee Committee and Audit Committee Committee review and approve implementation of risk management strategy and prioritization of risk controls ● RM Executive Council adopts risk map which assesses likelihood and impact of risk events on on operations To mitigate the operational impacts of crisis events ERM conducts pre-crisis risk assessment and identifies feasible strategies for crisis prevention Response procedures and recovery plans are established corresponding to different scenarios For specific severe crisis events involving multiple TSMC manufacturing sites the cross-functional central crisis command center composed of operations and and support
Risk Control and Mitigation
● Cross-function risk communication to determine cost-effective risk controls ● RM Executive Council is is responsible for risk control implementation ● Risk controls implementation reviewed in annual control control self-assessment
Risk Response ● Crisis management and response plans ● Scenario-based crisis response drills
● Business
continuity plans Risk Monitoring and Reporting
● Risk management organization reports to RM Steering Committee Committee and Audit Committee Committee on the focus of enterprise risk risk management risk risk assessment and mitigation efforts 111