Page 114 - TSMC 2020 Annual Report

functions is responsible for giving directions and internal coordination to speed up response time and proactively communicate with stakeholders To raise risk awareness and strengthen risk management culture in TSMC RM task forces have been formed to enhance risk assessment and conduct crisis response exercises for potential critical events such as fire earthquake IT IT service disruption IT IT security breach supply chain disruption disruption major yield loss and utility supply disruption disruption In order to continuously mitigate corporate risks crisis response exercises are used to test the integrity of ERM and effectiveness of risk controls To mitigate supply chain disruption risks TSMC has created
a a a a task force comprised of members from fab operations materials management management risk management management and quality systems management to to work with suppliers to to develop business continuity plans and enhance supply chain resilience Partly as a result of these efforts there were no interruptions in in TSMC’s supply chain in in 2020 As production capacity continues to expand with more advanced technology TSMC has initiated and implemented seismic protection engineering design risk treatment practices and green manufacturing projects during the design phase of all new fabs 6 3 1 Risk Management Organization Chart
TSMC’s risk management organization reports annually to the Audit Committee on on the the risk environment TSMC faces the the key points of enterprise risk risk management and risk risk assessment and mitigation efforts The Audit Committee Chairperson also reports to the the Board on on on these discussions and actions Organization Functions
RM Steering Committee ● Consists of functional heads (with internal audit head head sitting as an observer)
● Reports to the Audit Committee ● Reviews risk control progress
● Identifies and approves prioritization of risk controls RM Executive Council
● Consists of representatives from each function ● Determines and implements cost-effective risk controls ● Improves risk risk management transparency and how risks are are managed
RM Program
● Supports RM task forces to enhance effective risk controls ● Coordinates and facilitates RM Executive Council
on risk management activities
● Consolidates ERM reports and provides updates to the RM RM Steering Committee RM Task Force
● Identifies potential scenarios and business impact
● Determines risk risk mitigation actions in in accordance with risk risk scenarios ● Establishes crisis management procedures and conducts
exercises 6 3 2 Strategic Risks
Risks
Associated with Changes in Technology and Industry
● Industry
Developments
The electronics industries and semiconductor market
are cyclical and and subject to significant and and often rapid fluctuations in product demand which could impact
TSMC’s semiconductor foundry business Variations in in order levels from customers may result in in volatility in in the Company’s revenue and earnings From time time to to time time the electronics and semiconductor industries have experienced significant and occasionally prolonged periods of downturns and overcapacity Because TSMC is and will continue to be dependent on on the requirements of electronics and semiconductor companies
for its services periods of downturns and overcapacity in the general electronics and semiconductor industries could lead to to reduced demand for overall semiconductor foundry services including TSMC’s services If TSMC TSMC cannot take appropriate actions such as reducing its costs to sufficiently offset declines in in in demand the Company’s revenue margin and and earnings will likely suffer during periods of downturns and overcapacity Board of Directors/ Audit Committee RM Steering Committee Materials Management Management and Risk Management Management RM Executive Council
RM Program
112
RM Task Force