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Risk Management

TWM established the "Risk Management Committee" after approval by the Board of Directors in 2015. The Committee Chair is the Chairman of the Board, and the Deputy Chair is the President. The Committee reports to the Board of Directors to reinforce the organization's risk management mechanism.

Risk Management Policy

  • Continue to promote the operation model with risk management as the direction.
  • Establish a risk management mechanism with early identification, precise measurement, effective monitoring and strict control.
  • Build a risk management system for the overall company, and control the risks within an acceptable level or a range of control.
  • Introduce the latest risk management guidelines and improve continuously.

Risk Management Mechanism

Risk Management Procedure

Risk Management Matrix

Analysis of Significant and Emerging Risks and Opportunities

*Emerging risk

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Category Significant Risks Explanation of Risk Trend Possible impacts to TWM Actions/Countermeasures
(mitigating risks & seizing opportunities)
Actual projects Control KPI
Regulatory Legal Compliance
  • Penalties and penalties related to information protection
  • Intellectual Property Rights and Patent Disputes
Remaining Stable
  • Network and frequency spectrum sharing have been included in the “Telecom Management Act,” allowing for more effective resource utilization. TWM will actively communicate with the administrative and legislative bodies to promote legal amendments beneficial to industry developments.
  • NCC proposed a draft on "Media Diversity and Monopoly Control Act", which was submitted to be reviewed by the Executive Yuan on February 14, 2019. In particular, the terms of “media finance separation” are not retroactive, and current shares or operating conditions are not affected, but the flexibility of future corporate mergers and acquisitions is limited.
  • The government plans to release 5G licenses in the first half of 2020 and will complete the revision and announcement of mobile broadband business management rules in 2019. The Company intends to participate in it and will have a subsequent spectrum bid and network construction expenditure.
  • The Company will actively communicate with the administration and the legislative agency to promote the “Telecommunication Act” and “Media Diversity and the Monopoly and Control Act” draft, towards the good direction for the development of the industry.
  • In addition to continuous communication with the competent authority regarding 5G-related industrial policy and the rules of releasing license, the commercial model for the current B2C is unable to meet the needs of the future industry, and will develop a B2B2X multi-dimensional business model in the future.
5G Bidding Project
  • The Telecommunications Management Act is scheduled to complete the review case by case this session.
  • 5G bidding project
Policy & Legislative Changes
  • Amendments to legal regulations including one fixed and one flexible day off per week policy, labor practices, human rights, environment, energy, sustainability and IT regulations could affect the Company’s business reputation if timely action is not taken.
  • Policies set to encourage emerging and SME businesses have lowered the barrier to entry from new competitors
Network bandwidth resources Climate change/ natural disasters*
  • Rising intensity of rainstorm has caused the equipment damage rate to increase
  • Rising average temperature has increased the need for air conditioning.
  • Power consumption increase has led to decline in revenue.
On the rise
  • Increase in elevated temperature and rainstorm intensity may lead to greater possibility of equipment damage and additional operating costs.
  • Demand on air-conditioning for machine rooms is growing as periods of excessively high temperatures prolonged. This may cause more electricity consumption and higher operating cost.
  • Extra labor costs and working hours are needed for rebuilding destruction of natural disasters.
  • Climate change and extreme weather result in the unstable supply of power and water, leading to interruption in our operations.
  • Introducing High Temperature Resistant and moisture resistant equipment.
  • Reinforcing the SOP of emergency repair as well as recovery after major disasters and holding disaster prevention drill regularly.
  • Adding back-up electricity generators to the stations located in natural disaster hotspots.
  • Smart energy conservation
  • ISO50001
  • Renewable Energy Consumption
  • Energy intensity
  • Energy conservation
  • Set up of the backup generator
Telecommunication technology innovation*
  • IoT technology poses high complexity
  • Digital platform convergence
  • Development of 5G
Remaining stable
  • The demand of low latency and massive connections.
  • The business opportunities brought by the construction of NB-IOT.
  • Improving spectrum usage efficiency and importing the access spectrum to reduce network loading.
  • Completed the 700-section full-time NB-IOT deployment in 2018 and then be operated in July.
  • TWM signed 5G MOU with Industrial Technology Research Institute to promote IIoT and AioT. Meanwhile, will also completely upgrade Xinzhuang Baseball Stadium into the iCloud Multi-access Edge Computing (iMEC) and VR360 smart stadium to complete the layout of 5G experimental network.
No
Information security Information privacy and security*
  • Impact to Company reputation due to information leak
  • Increased concern from consumers
  • Increased loopholes to personal information from emerging services and products
Remaining stable The company provides customers with various telecommunications and value-added services. In the future, innovative services (such as AIoT) and product range will continue to increase. In addition, domestic and foreign security/privacy standards (such as domestic information security law and EU GDPR) will become more strict. If the customer's personal information is leaked carelessly, the Company shall bear legal responsibility and seriously damage the Company's image. In 2004, the ISO 27001 "Information Security Management System (ISMS)" were required to be followed by the new BS 10012 and ISO/IEC29100 privacy framework standards, and were integrated into the corporate operating procedures, such as the personal data file violation and control. Promote ISO Privacy Protection International Standard to strengthen the level of customers' privacy. Legal Actions and Disputes with Customers
Market Alternative and emerging business models
  • Product cycle shortened causing increased cost
  • Develop the products or services complied with recycling economy
On the rise Due to the intense competition in the market, more of the users terminate the contract in advance since other companies offer better bonus. And it is hard to maintain the revenue. Moreover, we need to invest more contract protection cost or find more new users from the market. TWM offers special discounts by labeling users in groups, so as to strive for user renewal and prevent rent withdrawal, or to provide more diversified contracted products or differentiated user experience through my series video and audio value-added services.
  • Myfone mix & match binding with 3my project
Measurable KPI
Intense Competition
  • Irrational price competitiveness impacts revenue and goodwill
  • New Competitors Joined
  • The saturation of telecommunications market
On the rise Taiwan telecom industry has been trapped into a price competition. And the new 4G business (T-Star/Line Mobile) are actively added to the project and offers low-priced unlimited 4G data plans. This will also make it more competitive. In response to market competition, the Company attracts the young users with short-term contract (12 months) in the online store.
Promotion of Myfone mix & match, to change the product model binding with contract and allow users to have diverse choices.
  • EC 499 Single phone number
  • Myfone mix & match
Measurable KPI
Changing customer requirements*
  • Preference for unlimited monthly plans impacting revenue
  • Increase in usage of personal device
On the rise Due to the popularization of 4G and unlimited Internet access, more and more users use VOIP to replace traditional voice call. This makes revenue from traditional voice calls decline. And increase of Internet access volume is unable to enhance sales revenue. TWM will develop more mobile value-added services to expand our revenue base, for instance, video products in the mySeries, contract of smart household appliances, provide wearable device services, etc.
  • Free myMusic with purchase of iPhone
  • Myfone mix & match
  • One Number Services
  • myAir Service
Measurable KPI
Demographic changes*
  • Aging society impacting service demands
  • Low birthrate impacting service and labor demands
Remaining stable Currently, low birth rate and aging society are impacting the Taiwanese society. Though there is no significant impacts on the mobile market, they are foreseeable impact in the future. Senior users rarely replace existing phones with new phones and it is difficult to stimulate phone plan renewals for this group of consumers. Hence, we changed the contractual model and launched the myfone mix & match service to allow for more choices.
There has been a decline in the age of child users, so TWM has launched prepaid card to satisfy the needs of children and their parents.
  • Myfone mix & match
  • Prepaid Card NTD$1.8 per call
Measurable KPI
Innovation Management Innovation kinetic energy growth
  • The speed of innovation decreases and is harmful to market share
  • Insufficient R&D resources impacted the promotion speed
  • Opportunity of cross-industry cooperation is insufficient
On the rise The innovative services of telecommunications industry faced strong competition from the various OTT apps. Telecommunications operators need to find new growth kinetic energy to escape from the destiny of Dumb Pipe. The Group shall use the unique resources of the telecommunications industry such as big data from users, telecommunication fees subsidy, physical stores channel, improve customer service system, and existing customers, etc., to create differentiated competitive advantages in the internet services.
  • myMusic, myVideo,
  • myBook,
  • myfone,
  • TAMedia
Number of Users and Revenue