Risk Management
1. Risk Management Organizational Structure
The Board of Directors serves as the highest authority for risk management oversight and decision-making. In accordance with the Company's business strategies and the industry environment, the Board of Directors approves the Company's risk management policies and procedures.
The Company has established a Sustainability Development Committee and appointed the Vice President of the Finance and Administration Division to oversee sustainability-related matters. Management at all levels and employees across the Company jointly participate in the implementation and promotion of risk management.
With respect to the identification, prevention, monitoring, and control of overall risks, as well as significant risk management issues, the Company consolidates relevant risk matters and reports to the Board of Directors at least once a year.
2. Risk Management Policies and Procedures
In 2023, the Company's Board of Directors approved the Risk Management Best Practice Principles. The implementation of these principles is jointly promoted and carried out by the Board of Directors, management at all levels, and employees.
The Company regularly identifies significant risks associated with its operations each year and appropriately evaluates and manages various significant risks that may arise from its operations. The results of such risk assessments and management serve as a reference for the formulation of business strategies.
To strengthen the functions of the Board of Directors and taking into consideration the Company's scale and risk profile, the Company has established an Audit Committee with relevant responsibilities to assist the Board of Directors in supervising the establishment of an effective risk management mechanism, risk response strategies, and compliance with risk management procedures.
3. Risk Identification and Rationale for Selection
The risks assessed and the rationale for their identification and selection in 2026 are as follows:
Risk Category | Risk Factor | Risk Identification and Rationale for Selection |
| Financial Risks | Domestic and Global Macroeconomic Conditions | Changes in global economic conditions, inflation, interest rates, and other macroeconomic factors may affect demand for the Company's products, market prices, and raw material costs, thereby impacting revenue and profitability. |
| Industry Changes | The industry environment is significantly affected by technological advancements, regulatory policies, changes in medical practice patterns, and market demand. In recent years, declining birth rates globally, trends toward later marriage and childbearing, increasing awareness of male reproductive health, and the rapid development of precision medicine and digital testing technologies have created growth opportunities while also bringing a high degree of uncertainty and structural transformation risks. | |
| Foreign Exchange Rates | As a significant portion of the Company's revenue is denominated in foreign currencies, substantial fluctuations in exchange rates may affect revenue recognition and cost expenditures, thereby adversely affecting the Company's overall profitability. | |
| Operational Risks | Customer Rights and Interests | The Company's major products and services are directly provided to healthcare institutions and end users. Poor service quality or inadequate handling of customer complaints may affect customer satisfaction and brand trust, thereby damaging the Company's reputation and revenue. To maintain customer relationships and market competitiveness, the Company considers customer rights and interests an important operational risk. |
| Differences in Medical Device Regulations Across Countries | Medical device products must comply with regulatory and certification requirements in different countries and regions. Regulatory updates or delays in regulatory reviews may affect product launch schedules and sales plans. As the Company actively expands into global markets and continues to introduce new products, differences in medical device regulations across countries are regarded as a key operational risk. | |
| Procurement and Supply Chain | The Company's manufacturing operations rely on the stable supply of raw materials and key components. Any disruption or delay involving major suppliers may affect production schedules and product delivery, thereby impacting operational performance. Given the increasing uncertainty in the global supply chain environment, the Company continuously monitors procurement and supply chain stability and therefore identifies this as a major operational risk. | |
| Trade Secrets and Patent and Trademark Rights | The Company's core competitiveness is derived from its R&D capabilities and intellectual property. The leakage or infringement of patents or technologies, or failure to obtain patent protection in a timely manner, may adversely affect R&D results and market advantages. In response to rapid technological changes and intense competition within the industry, the Company considers intellectual property management an important operational risk. | |
| Talent Recruitment | ||
| Strategic Risks | Regulatory and Legal Requirements | The Company's major products are medical devices and biotechnology-related healthcare products and are subject to regulatory requirements in various countries, including those of the FDA, CE, TFDA, and NMPA, as well as applicable quality management requirements. Regulatory amendments or delays in review procedures may directly affect product launch schedules and market expansion plans. As regulatory compliance is critical to market access, the Company identifies regulatory and legal requirements as a significant strategic risk. |
| Product Development and Commercialization | The Company and its subsidiaries continue to invest in new product development and market expansion. Product launch schedules and commercialization success directly affect operational performance and growth momentum. Delays in R&D caused by market changes, regulatory adjustments, or clinical validation may result in increased costs and delays in development. As R&D capabilities and innovation are core sources of the Company's competitive advantage, product development and commercialization are identified as key strategic risks. | |
| Corporate Image and Crisis Management | The Company is committed to maintaining its brand image and fulfilling its corporate social responsibilities. Negative perceptions arising from product quality issues, advertising and promotional activities, external public sentiment, or other incidents may affect customer trust and market perception. Given the importance of corporate reputation to the confidence of business partners and investors, the Company identifies corporate image management and crisis response as strategic risks. | |
External Factors / Impacts | Changes in the Workplace Environment Affecting Employee Health and Safety | The Company's operating sites encompass diverse work environments, including R&D, manufacturing, and office facilities. Aging equipment, environmental changes, or deficiencies in safety management may result in occupational accidents or adverse impacts on employee health, thereby affecting business continuity and corporate reputation. As work patterns evolve and the workforce expands, potential occupational safety and health risks may increase. Accordingly, the Company identifies workplace safety and employee health protection as operational risks and continuously mitigates such risks through systematic management and awareness programs. |
| Climate Change-Related Risks | Physical Risks from Natural Disasters | The Company's production and operating sites may be exposed to extreme weather events, earthquakes, flooding, power outages, and other natural disasters. Such events may result in equipment damage, supply disruptions, or employee injuries, thereby affecting business continuity. As climate change increasingly affects environmental conditions and the stability of energy supplies, the Company identifies natural disasters as a significant physical risk and incorporates them into its sustainability management framework, with long-term monitoring and response mechanisms in place. |
| Carbon Fee | With the implementation of the Climate Change Response Act and the introduction of carbon pricing mechanisms, future carbon fees may increase operating costs and affect market competitiveness. Although the Company is currently not among the entities subject to the initial phase of carbon fee collection, it has proactively established greenhouse gas reduction targets and initiated internal management mechanisms in response to international decarbonization trends and regulatory requirements. Considering the potential long-term impact of climate policies on operations, the Company identifies carbon fee imposition as an important strategic risk, continuously monitors regulatory developments, and strengthens its internal response capabilities. |
4. Implementation of Risk Measurement Standards
All major operational policies, investment projects, endorsements and guarantees, loans of funds, bank financing, and other significant matters are evaluated and analyzed by the appropriate responsible departments. The Finance and Administration Division consolidates the relevant assessments and submits them to the Audit Committee for approval before they are further submitted to the Board of Directors for resolution and implementation.
Each year, based on the results of the Company's risk assessment, the Internal Audit Office formulates an annual audit plan covering the Company's overall operational processes and submits the plan to the Audit Committee and the Board of Directors for approval.
The Internal Audit Office reports to the Audit Committee and the Board of Directors on a quarterly basis regarding audit findings, recommendations, and follow-up improvement measures.
The Internal Audit Office consolidates the internal control self-assessment results of each department together with its audit findings. No material deficiencies in internal controls were identified in 2025. On March 3, 2026, the assessment results regarding the effectiveness of the Company's internal control system for 2025 were submitted to the Audit Committee and the Board of Directors for review.
Through the supervision of the Audit Committee and the Board of Directors over the internal control self-assessment processes conducted by various departments and the audit plans implemented by the Internal Audit Office, the Company is able to effectively manage and control the implementation of risk management measures and reduce the risk of non-compliance.
5. Reporting
The Company reports its risk management operations to the Board of Directors at least once a year. On March 3, 2026, the Company reported the following risk management operations to the Board of Directors:
Risk management organizational structure, policies and procedures, risk identification and response measures, and implementation status.
Annual internal audit plan and audit results:
Each year, based on the results of risk assessments, the Internal Audit Office formulates an annual audit plan covering the Company's overall operational processes. Audit findings, recommendations, and follow-up improvement measures are reported to the Audit Committee and the Board of Directors on a quarterly basis. No material internal control deficiencies were identified during any quarter of 2025. The Statement of Internal Control System Effectiveness for 2025 was reviewed and approved by the Audit Committee and the Board of Directors on March 3, 2026.