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 market risks, operational risks, financial risks, operation and strike risks, cargo safety risks, sanction risks, credit risks, climate change, pandemic risks, information security risks, spare parts procurement risks, ship docking risks and fuel procurement risks management.

The company reported to the board of directors on the implementation of risk management in December 2020 as follows:

Risk Types 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 notifications 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, in case the joint venture cooperation breaks down, there is still the ability to operate independently.
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 fixed-rate bank loans, 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.
Financial Risks: Credit Risks 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.
Employee training and propaganda:
  1. Train customers to declare honestly and enhance the awareness of dangerous goods.
  2. Organize training on regulations governing dangerous goods.
Safety management on the transportation of dangerous goods:
  1. Establish a standard management system for dangerous goods and set restrictions on the transportation of dangerous goods.
  2. Strengthen the dangerous goods management system.
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.
Risk Management and Response Measures for Climate Change

Climate change is a global issue. As a guardian of the green earth, Evergreen keeps track of issues related to climate change and formulates environmental protection policies. Advanced marine technology is developed for fleet to maximize its load-ability and satisfy energy conservation targets, and dedicate efforts towards environmental protection together with suppliers.

Under the increasing threat of climate change, Evergreen identifies the opportunities and challenges brought about by climate change and extreme weather referring to the Task Force on Climate-related Financial Disclosures (TCFD). Furthermore, in response to severe weather that affect ship safety, such as rough sea conditions, typhoons, sea fog, sea ice and extremely low atmospheric pressure, are included in Evergreen's "risk management" assessment system. To set up disaster prevention plans, monitor the performances of preventive measures, and eventually reduce the risk of climate change, and seize potential opportunities, the relevant budgets are made.

In response to the possible impact of climate change, Evergreen has established the following operating procedures based on the four core elements, namely, governance, strategy, risk management, and indicators and goals:

operating procedures based on the four core elements, namely, governance, strategy, risk management, and indicators and goals
Risk and Opportunities Related to Climate Change
Issue Changes in domestic and foreign regulations Increased customer awareness of environmental protection
Type of Risk Transition risks Physical risks
Duration of Impact Short / medium / long-term Short / medium / long-term
Object of Impact 1.  Company ships
2.  Suppliers
3.  Shipowners / Charterers
4.  Ship crew members
5.  Customers
1.  Company ships
2.  Employees
3.  Products or services
4.  Suppliers
5.  Customers
Negative Impact and Financial Impact 1.  Berthing at specific terminals is restricted due to shore power connection requirements, which affects the ship schedules.
2.  Failure to meet the energy conservation and carbon reduction goals of customers or authorities results in less booking or idle ships and increases operating costs.
1.  The affected safety of ships, crews and cargoes increases operating costs.
2.  Affected ship schedules and inland transportation schedules result in increased costs for customers and the Company.
Opportunities and Benefits 1.  Improve energy efficiency to reduce energy costs
2.  Develop green marinetech, elevate the corporate image,and increase opportunities for cooperation with upstream and downstream suppliers
1.  Develop weather and sea condition monitoring and navigation, optimize ship schedules, and improve operational efficiency
2.  Develop ship position monitoring technology and improve marinetech standards
3.  Strengthen the Company's resilience to extreme weather and increase customer trust and support
Response Measures 1.  Glean information on new energy and evaluate its feasibility
2.  Install shore power systems in line with local laws and regulations and terminal facilities
3.  Have responsible engineers arrange professional maintenance service providers to conduct maintenance aboard
4.  Organize environmental training for employees
1.  Use the fleet safety management system (FMS.safety) provided by WNI Weather Navigation Company to monitor weather information
2.  Plan ship schedules and port calls efficiently based on climate monitoring data
3.  Improve loading / unloading efficiency to reduce berthing time at terminals
4.  Keep track of disasters proactively, and urge suppliers to float countermeasures such as route changes
5.  Pay close attention to changes in navigable water level restrictions issued by the Panamanian authorities, adjust maximum loading TEU flexibly according to changes in navigable draft and adjust fleet deployment if necessary
Actions 1.  In 2019, 207 ships used shore power in the United States. A total of 76 ships used shore power at Chinese ports.
2.  The shore power connection rate increased. The shore power connection rate at Kaohsiung Container Terminal reached 86%.
1.  In 2019, WNI gave advice to 272 ships on the avoidance of 29 typhoons.
2.  In 2019, there was neither damage caused by typhoons, explosive cyclones, sea ice, or sea fog nor major customer complaints against inland transportation.
Issue Changes in energy policies and equipment requirements Increased frequency of extreme weather
Type of Risk Transition risks Transition risks
Duration of Impact Short / medium / long-term Short / medium / long-term
Object of Impact 1.  Company ships
2.  Products or services
3.  Shipowners / Charterers
1.  Company
2.  Customers
3.  Employees
Negative Impact and Financial Impact 1.  Rising oil prices or equipment modification increase operating costs.
2.  Energy conservation and carbon reduction practice increases operating costs.
1.  Environmentally-friendly equipment modification increases operating costs.
2.  Failure to meet the needs of customers and stakeholders for environmental protection takes a toll on the corporate image.
Opportunities and Benefits 1.  Install scrubbers in ships to save the expense of low-sulfur fuel purchase
2.  Replace old ships with green ship to save operating costs also fulfill our corporate sustainability and environmental protection commitments
3.  Improve energy efficiency and save electricity
4.  Elevate the corporate image as a guardian of the green Earth
1.  Issue green bonds to purchase eco-friendly equipment
2.  Use energy efficient equipment to reduce energy consumption
3.  Promote innovative functions such as Internet and EDI to improve work efficiency
Response Measures 1.  Evaluate the installation of desulfurization and denitrification equipment in existing or newly built ships according to the statutory requirements
2.  Purchase compliant low-sulfur fuel and ensure the stable quality of fuel
3.  Build next-generation green ships
1.  Keep abreast of environmental trends and evaluate the feasibility of responses to the trends
2.  Replace paperwork with e-mail and electronic data interchange (EDI) to reduce carbon emissions
Actions 1.  Replaced old ships with new ones
2.  Equipped new ships with desulfurization and denitrification equipment (63% of our new ships had been equipped with scrubbers by the end of 2019)
3.  Negotiated contracts with oilers to ensure stable volumes and prices
1.  Issued NT$2 billion of green bonds to purchase and install ecofriendly fuel equipment in ships
2.  Complied with environmental requirements and evaluated the feasibility of new energy
3.  Promoted the replacement of paperwork with electronic operations to increase productivity