Status of Operations

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■ Status of Operations

To effectively manage the risks arising from the operations of SinoPac Holdings and its subsidiaries, the Board of Directors serves as the highest supervisory unit in charge of approving the risk management policy and risk appetite or limit and giving the management authority for daily risk management. The Risk Management Division takes in charge of developing the risk management policies, guidelines, and systems for SinoPac Holdings and its subsidiaries. In addition to implementing the risk management policies, guidelines, and systems approved by the Board of Directors, the Risk Management Division is responsible to regularly evaluate the performance of SinoPac Holdings and its subsidiaries in terms of risk management.

  • Status of Operations:

    In 2020:

    • Establish mechanisms for identifying emerging risks and introduce the TCFD framework to identify financial risks caused by climate change.

    • Establish the Guidelines for the Management of Climate-Related Risks and Opportunities" to facilitate the identification, measurement, and monitoring of climate-related risks and opportunities and formulate response measures and reports.

    • Optimize the risk information integration system, continued to use the "data granulation" structure and the "data governance" structure to build risk information integration database.

    • In response to the Global COVID-19 pandemic, the "credit and market risk enhancement mechanism" and "liquidity risk response countermeasures" were formulated, and rolling adjustments were made with the changes in the epidemic.

    • Established an external penalty event database system for financial holdings to actively learn and improve from mistakes in the industry, and save the time and manpower for auditing, legal compliance, and risk management units collecting punishment information.

    In 2021:

    • Continue to improve emerging risk and climate change risk management mechanisms, and complete scenario analysis on both climate-related physical risks and transition risks, and provided results on climate change risk analysis in the risk management report quarterly and submitted it to the Risk Management Committee and the Board of Directors.

    • In response to the Global and local COVID-19 pandemic, based on the two aspects of Top-down, SinoPac Holdings and Button-up of its subsidiaries have formulated a strengthening mechanism and countermeasures for the three risk pillars of market, credit, and liquidity, and will be adjusted in a rolling manner as the pandemic changes.

    • Optimize the risk information integration system, continued to use the "data granulation" structure and the "data governance" structure to build risk information integration database. Also, SinoPac Holdings planned to use the "data visualization platform" for self analysis and development, with AI tools to strengthen risk parameters and built intelligence tracking or early warning mechanism to construct a visualized "integrated risk management system".

 

■ Credit, Market, Operation, and Liquidity Risk Management

 

■ Emerging Risk Management

Climate change and population structure changes may cause material impacts on the overall business environment. Effective identification and assessment of emerging risks (potential risks in the next 3 to 5 years) and formulation of response measures have become important tasks for financial institutions. SinoPac Holdings thus established the Emerging Risk Management Guidelines and the according management mechanisms for the identification, measurement, monitoring, reporting, and mitigation measures for emerging risks. Since 2019, the Risk Management Division of SinoPac Holdings has referenced related reports on emerging risks published by external institutions each year. The Division compiles feedback from subsidiaries, identifies emerging risks at the group level, and plans mitigation measures for the management to implement advanced preparation and response.

  • Emerging Risk Identification Results
    SinoPac Holdings compiles the emerging risks submitted by the subsidiaries and considers the possibility of occurrence and the level of impact to identify the Group's emerging risks in the next 3 to 5 years. Among these risks, the two major risks including “asset bubble burst” and “climate change” have more significant impact on SinoPac Holdings and the Company formulated related mitigating actions.



 

■ Climate Risk Management

  • Governance Framework
    The Sustainable Development Committee of SinoPac Holdings stays up-to-date on domestic and overseas trends in sustainable development issues and climate change, formulate sustainability guidelines. The task forces under the committee have formulated action plans corresponding to the commitment to Mitigate and Adapt to Climate Change.

  • Management Procedures
    To implement the Sustainable Development Roadmap and enhance ESG risk management mechanisms, SinoPac Holdings integrated climate change risks into the Company’s centralized “Risk Management Policy” in 2019 and established the "Guidelines for the Management of Climate-Related Risks and Opportunities" to cover all types/sources of risks and opportunities. The management procedures for climate-related risks and opportunities can be divided into four steps including compiling a list of risks and opportunities, identifying risks/opportunities of subsidiaries, identifying group-level risks/opportunities and proposing mitigation or adaptation measures, and disclosing climate-related risks/opportunities and strategies. Starting from 2021, the Risk Management Division of SinoPac Holdings shall disclose the overall climate change risks in the quarterly Risk Management Report and report to the Risk Management Committee and the Board of Directors.

  • Results the Identification of Climate-Related Risks and Opportunities


  • Results the Identification of Climate-Related Opportunities
    SinoPac Holdings leverages its core competencies in the finance industry and the market to grasp opportunities created by climate change and actively develop climate-related financial products. Please refer to SinoPac Holdings 2 0 2 0 Corporate Social Responsibility Report 3.1. Sustainable Finance Strategy, 3.2 Sustainable Financial Products and Services, and 3.4 Smart Financing for detailed information on the implementation strategies and explanation of products. Resource efficiency opportunities are concentrated in operations. SinoPac Holdings continues to optimize energy conservation actions to reduce operating costs. Please refer to 5.1 Green Operations for detailed information on implementation strategies and response measures.

  • Quantification of Climate-Related Physical Risks and Transition Risks
    SinoPac Holdings quantified the impact of extreme climate events on its operations and collateral for physical risks based on the results of the aforementioned climate risk assessment; the quantification of transition risks are based on the financial impact of changes in policies and law.