Evergreen has drawn up a risk management policy to ensure the integrity and implementation of the risk management system and to enhance the division of risk management work, ultimately ensuring the achievement of our operation goals.
The "Risk Management Policy" formulated by the company was approved by the board of directors in 2020 as the highest guiding principle of the company's risk management. The risk management organization structure is that the Project division supervises the various responsible departments to implement risk management policies, monitor management processes, transmit risk management information and handle risk management related issues, and the Audit Department performs risk management audits on the operation of risk management policies to ensure effective operation of risk management policies.
The company's risk management scope includes exchange rate risks, cash flow and fair value interest rate risks, price risks, credit risks, liquidity risks, legal risks, marine accident risks, risk of crew injury and cargo safety risks.
The company reports to the board of directors on the implementation of risk management on December 27, 2021.
Risk type and countermeasures
|Risk type||Description||Mitigation actions or countermeasures|
|Market Risks||International politics, economy, and epidemics cause unstable shipments and a reduction in revenue.||Select quality customers, develop new customers, expand e-commerce, send customers notification of service changes and other precautions, conduct customer satisfaction surveys to improve customer experience, uphold the business philosophy of corporate and environmental sustainability to win customers' support, and strengthen north-south and regional loops to diversify market risks.|
|Operational Risks||The overly concentrated market increases risk.||Strengthen joint cooperation with appropriate carriers, regularly review the performance of jointly operated routes, and conduct market assessments in line with market needs to develop niche markets in a timely manner and to diversify operational risks.|
|Financial Risks：Exchange Rate Risks||Risks mainly come from transaction risks and accounting risks.||Adopt money market hedges or forward exchange hedges, control centralization of capital, offset risks of position, and keep track of exchange rates to avoid risks.|
|Financial Risks：Interest Rate Risks||Interest expenses may increase due to rising interest rates.||Issue fixed-rate bonds or undertake interest rate swaps as appropriate to avoid the risk of interest-bearing long-term liabilities at floating rates, and undertake loans with floating-rate interest through time deposits to offset part of risk arising from changes in interest rates.|
|The Company may suffer from the inability of customers to pay the accounts receivable per terms of collection or of counterparties of financial instruments to fulfill contractual obligations.||Establish and implement credit risk management, conduct credit risk analysis, evaluate the credit quality of customers based on their financial status, past experience, and other factors, and only transact with financial institutions with good credit ratings.|
|Financial Risks：Liquidity Risks||The Company has financial liabilities with different maturities (including accounts payable, lease liabilities, and long-term loans). If the assets are difficult to realize or have insufficient liquidity to pay financial liabilities due, the Company will be exposed to liquidity risks.||Undertake short-term time deposits only with excess funds to improve liquidity, monitor cash flow forecasting, ensure that there are sufficient funds to meet operational needs and mature financial liabilities, apply to financial institutions for credit lines in case of contingencies, and issue new shares or convertible bonds based on the market to raise required funds.|
|Operation and Strike Risks||Route plans jeopardize the normal ship schedules due to factors such as operations or strikes.||Strictly track and monitor ship schedules and adjust ship schedules flexibly to meet the requirements of route plans and make various adjustments to restore the subsequent passages to a normal state.|
|Cargo safety risks||Dangerous goods are declared wrongly and concealed.||
|Sanction Risks||International economic sanctions and embargoes||Establish an computerized inspection system to conduct self-inspections according to the sanctions list and request due diligence for customers on the watch list and keep records to protect owners and the Company.|
|Credit Risks||Customer credit issues||Request branches to make good use of risk investigation reports to confirm customers' financial status and set credit terms based on their shipment status and keep track of customers' financial status and payment and make appropriate adjustments if necessary.|
|Climate Change||Climate anomalies||Use the weather navigation system and flexible mooring to reduce the risks caused by climate anomalies, accelerate ship replacement, install scrubbers, install shore power systems, request suppliers to float the climate anomaly response plans, request agents/branches to report disasters and emergency responses in time, and issue green bonds.|
|Pandemic Risks||Outbreaks of communicable diseases||Request branches/agencies to monitor the epidemics and report to local governments' regulations and countermeasures, keep track of the global epidemics through meetings and take response measures according to the classification of the epidemics.|
|Information Security Risks||Hackers, viruses, and other invasions and destruction||Divide work and responsibilities of departments, classify the security level of information assets, conduct annual regular information security personnel management and training, implement computer system management, network management, system access management, system development and maintenance management, and entity and environment management, and make and manage business continuity plans.|
|Spare Parts Procurement Risks||Poor quality of spare parts, delayed supply, shortages, or noncompliance||Establish correct spare parts specifications and terms of purchase and collate annual fleet requirements, optimize the existing evaluation system, select qualified suppliers, develop new suppliers to maintain competitiveness, and review subsequent equipment maintenance cycles to confirm equipment's useful life.|
|Dry-Docking Risks||Poor quality of dry-docking and maintenance, delayed delivery, and accounting discrepancies||Established a dry-docking and maintenance project to control annual dry-docking and maintenance of the fleet, audit shipyards' locations /capacities / construction methods, and reputation on-site, weigh the advantages and disadvantages objectively using the existing drydocking and maintenance evaluation mechanism as a basis for selection, develop outstanding shipyards to maintain the flexibility of fleet allocation, and give comprehensive consideration to the inquiries to avoid a large gap with actual accounts.|
|Fuel Procurement Risks||Poor fuel quality, short supply or non-compliance||Establish an evaluation system to select qualified suppliers, develop new suppliers to maintain competitiveness, arrange for bunker surveyors to conduct fuel inspections, arrange the best fueling ports, and establish a procurement committee to meet periodically to draw up procurement strategies.|