Risk Management

The Board of Directors serves as the highest governance body for risk management at VSO Electronics, overseeing the overall risk control mechanisms and approving relevant policies, procedures, or guidelines. In order to pursue steady business operations and move toward the goal of sustainable development, the Board approved the “Risk Management Policies and Procedures” on March 27, 2023, to serve as the guiding framework for business risk management.

VSO Electronics identifies potential risks that may impact corporate sustainability through its daily operations, focusing on four major dimensions: Environmental (E), Social (S), Economic (including Corporate Governance) (G), and Others. The Company formulates corresponding management strategies and response measures to address these risks. Through risk control, avoidance, transfer, and appropriate risk acceptance, VSO Electronics strives to minimize potential risks and, where possible, transform them into opportunities for business growth.

VSO Electronics’ Risk Management Policies and Procedures are established with consideration of the overall scale, business nature, risk profile, and operational activities of the Company and its subsidiaries. The applicable risk management policies and procedures cover the following aspects:

1. Risk Management Objectives

2. Risk Governance and Culture

3. Risk Management Organizational Structure and Responsibilities

4. Risk Management Procedures

5. Risk Reporting and Disclosure

VSO Electronics established the Sustainability Development Committee on March 27, 2023, which reports to the Board of Directors. To achieve sustainability goals and strengthen sustainability and risk governance, the Board approved the “Sustainability Development and Risk Management Committee Organizational Charter” on November 11, 2024. Under the Sustainability Development and Risk Management Committee, there is a Risk Management Task Force responsible for executing risk management duties and regularly reporting risk management activities to the Committee. 。

VSO Electronics promotes and implements risk management operations within its existing operational management organizational system and internal control framework. The Risk Management Task Force actively identifies, addresses, and controls risks that should be considered during the operational processes. It requires supervisors of various functional units to bear responsibility for risk management, with layered accountability to analyze and monitor relevant risks within their respective units, ensuring that risk control mechanisms and procedures are executed timely and effectively. The Audit Department is responsible for formulating the annual audit plan based on risk assessment results and reporting the company's risk management operations to the Audit Committee and the Board of Directors.

The authority and responsibilities of the Risk Management Committee include the following items:

1. Review risk management policies, procedures, and frameworks, and regularly assess their applicability and effectiveness.

2. Approve the risk appetite (risk tolerance) and guide the allocation of resources.

3. Ensure that the risk management mechanisms adequately address the risks faced by the company and are integrated into daily operational processes.

4. Approve the prioritization of risk controls and the risk levels.

5. Review the implementation of risk management and provide necessary recommendations for improvement.

6. Execute the risk management decisions made by the Board of Directors.