Page 136 - TSMC 2022 Annual Report

134
3 Identifies and and analyzes the sources and and categories of of risks of of the the company and regularly review their applicability 4
Facilitates risk risk management committees risk risk owners in
the implementation of risk management activities and initiatives to identify and manage risks including the review of risk mitigation plans business continuity crisis and incident management plans review the effectiveness of risk management activities through documentary risk report reviews management discussions meetings to provide reasonable assurance 5
Coordinates cross-department/functional interaction and and communication of risk management operations and and decisions including implementing the risk management decisions of Risk Management Steering Committee 6 Consults with management consultants and peers on on on best practices and and and standards for continuous improvement and and and benchmarking 7 Prepares reports to stakeholders that may be required from time time to to time time by regulators government agencies insurers/ brokers and customers including an an an annual report on the implementation of company’s risk management system Crisis Management and Business Continuity Management TSMC is committed to maintaining operational resilience with close reference to business continuity management standards that enables the Company to to respond effectively to to business disruption The Company is is is cognizant of of the major risks of of natural and man-made disasters including earthquakes flooding typhoons droughts tsunamis sandstorms wildfires volcanic eruptions fire fire gas/chemical leakage pandemic cyber-attacks sabotage failure of critical facilities and equipment shortages in
the supply of utilities such as water electricity and natural gas etc could disrupt TSMC’s operations To mitigate the the operational impacts of crisis events the the Risk Management Division implements pre-crisis risk assessment response procedures and and recovery plans Exercises and and drills
are also conducted to validate our emergency responses crisis management business continuity plans to enhance operational preparedness In major incidents or or crisis events the Crisis Management Guideline guides in
in
the management and responses The Central Crisis Command Centre (C4) headed by CEO and comprised of senior executives across key functions provides guidance and decision-making to ensure a a a a a constant readiness-to-respond capability including rapid responses and communication to key stakeholders 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 TSMC’s 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 and will continue to be dependent on on the demand 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 margins and earnings will likely suffer during periods of downturns and overcapacity Changes in
Technology The semiconductor industry and its technologies are constantly changing TSMC competes by developing process technologies using increasingly advanced nodes and manufacturing products with more functions The Company also competes by developing new derivative technologies If TSMC does
not anticipate these changes in
technologies and rapidly develop new and innovative technologies or the Company’s competitors unforeseeably gain sudden access to to additional technologies TSMC may not be able to provide foundry services on on competitive terms In addition TSMC’s customers have significantly decreased the the time in
which their products or services are launched into the market
If TSMC is unable to to meet these shorter product time-to-market it risks losing these customers These factors have also been intensified by the the shift of the the global technology market
to consumer driven products such as as smartphones and increasing competition and concentration of customers (all further discussed among these risk factors) Also the uncertainty and instability inherent in
in
in
in
advanced technologies impose challenges for achieving expected product quality quality and product yield If TSMC fails to maintain quality quality it it it may result in
loss loss of revenue and additional cost as as well as as loss loss of business or customer trust If TSMC is unable to to overcome
● ●