Risk Management and Crisis Management

Policy and Risk Management

Recognizing significant shifts in the business environment that could impact an organization’s ability to strive for sustainable business successes, the Company values risk management as an essential process for managing risks to cope with internal and external uncertainties, enhancing competitiveness and business opportunities to achieve short-term and long-term business goals, as well as boosting confidence among stakeholders.

The Company formulated a risk management policy to guide operations and communicate with all involved parties to promote awareness and compliance. It assigned those in charge of risk management, from the Board of Directors, management to all employees. It also conducts a policy review at least yearly, based on evolving risks affecting the organization. Furthermore, it created a corporate culture of risk management. This implementation ensures a common understanding and awareness of risks, leading to effective development and improvement of the risk management process.

Risk Management Guidelines

The Company’s risk management framework is guided by internationally recognized standards: the Committee of Sponsoring Organizations of the Treadway Commission, September 2004 (COSO ERM) and the International Organization for Standardization (ISO 31000:2009 Risk Management), including risk determination from economic, social, and environmental perspectives. The process is directly supervised by the Risk Management and Sustainable Development Committee (RMSDC).

Promoting Risk Management Culture

The Company promotes the risk management culture by requiring all parties to serve as risk owners, managing risks from risk identification, analysis, and assessment. It aims to determine mitigation measures, including monitoring and evaluating risks. Then communicating through the department's coordinator reports risk levels and status to top management and the Risk Management and Sustainable Development Committee (RMSDC).

Risk from climate change affecting business operations

Climate change is an urgent and critical global agenda item affecting the environment and socioeconomic adaptation, and the World Economic Forum ranked it as a top global risk. The Company recognizes climate change risk as a crucial issue for it to control the impact and find a way to adapt and grow despite the risk. It has assigned the Risk Management and Social Development Committee to consider, define, review, and improve climate-change strategies, including managing potential risks, before proposing them to the Board. The Committee also oversees and monitors compliance with such strategies.

The Company identified key risks and opportunities related to climate change, such as transition risk and physical risk, and defined the following strategies:

Transition Risk

No.	Type	Impact Timeframe	Risk and Opportunity	Potential Financial Impact
1	Policy and law	Medium term and long term (3-20 years)	New laws and regulations related to climate change, such as the National Climate Change Act (Global Warming Act) and climate change-related taxes or interest rates Requirements for low-carbon construction materials, products, and services	Increasing costs of construction materials, products, and services Higher operating expenses, such as costs related to greenhouse gas projects Rising interest rates in case of no action taken to manage climate change
2	Technological change	Medium term (3-10 years)	Development of construction technologies and use of energy-efficient or fuel-efficient machinery Growth of renewable-energy technologies or higher energy efficiency Design or use of energy-efficient construction materials, such as energy-saving light bulbs and green materials and equipment Contribution to greenhouse gas reduction Participation in a partnership or agencies related to renewable energy or the design of green materials and equipment	Higher operating expenses if ignoring fuel-efficient or energy-efficient machinery Investment or cooperation with partners to develop innovations Lower operating expenses, such as utility expenses in common areas before the handover to the juristic person Lower electrical expenses and fuel consumption
3	Marketing	Long term (more than 10 years)	Increasing demand for green products and services Higher consumer needs for residences using renewable energy Development of innovative products and services to fulfill the needs of environmentally conscious consumers	Shrinking market share If the Company does not adapt itself to consumer behaviors Increasing opportunities to sell products that meet the needs of green consumers Investment in innovation development or collaboration with partners Enhanced corporate image as a company that values the environment
4	Reputation	At any point in time	Tarnished reputation as a non-eco-friendly company Increased ability to manage supply chains and operate under dynamic internal and external factors	The Company's goodwill may influence consumers’ decisions to purchase a residence, which impacts the sales volume Increasing costs of resolving environmental impacts Investment in developing the environmental management supply chain Enhanced corporate image as a company that values the environment

Strategy for Transition Risk Management

Define policies and goals that cover the efficient use of resources, consumption of alternative energy, and reduction of greenhouse gas emissions to become a low-carbon organization in the future
Apply the findings of surveys and studies on consumer needs to the design and development of innovative products and services
Support the development of green innovation and technologies
Follow up and review performance results of greenhouse gas reduction operations

Physical Risk

No.	Type	Impact Timeframe	Risk and Opportunity	Potential Financial Impact
1	Disaster or drastic climate change	Medium term (3-10 years)	Flash floods delaying construction Higher temperatures affecting workers' health and safety	A longer construction period or interrupted construction due to rain and flooding, resulting in higher operating costs Design that responds to and prevents more severe disasters, leading to higher costs of goods sold Due to flooding, higher maintenance costs of finished residences before delivery to the juristic person Higher premiums of building or property insurance Medical treatment costs for workers injured or sick from working under warmer conditions
2	Permanent climate change	Long term (more than 10 years)	Heat waves or continued rising temperatures Unusual seasonal changes, such as longer rainy seasons or summers Rising sea levels that may impact land prices Climate changes affecting workers’ health	Higher operating costs for longer construction periods due to rain or hot weather Faster deterioration of buildings and constructions due to severe weather conditions, resulting in higher maintenance costs Increasing land costs Costs of medical treatment for workers injured or sick from working under warmer conditions

Strategy for Physical Risk Management

Create a business continuity management system
Manage operational safety

Crisis Management

The Company values the significance of responding to critical risks that impact business operations, whether they are elements of nature, such as flash floods and epidemics, or man-made, such as fires, protests, riots, and cyber attacks. Thus, it has introduced the Business Continuity Management System (BCMS) as guidelines for uninterrupted business, for continuous business operation. It also communicates internally with all employees so that they acknowledge and understand the guidelines as follows:

Determine the key departments or functions responsible as per plan on crisis response, including the Disaster Management Committee.
Prepare a preventive and response plan : Determine procedures, establish a crisis management command center, and prepare backup work locations.
Organize drills under the preventive and response plan : Organize an annual drill to ensure that management and employees know their roles and what to do during a given crisis. These drills can also identify shortcomings in established countermeasures so that relevant parties can further improve.

Epidemic prevention and response

To prevent and respond to epidemics, the Company has established a dedicated taskforce to perform the duty under the following guidelines:

Research and Development on Innovation and Technology