RiskManagement

risk MANAGEMENT

American Precoat manages various risk factors that can occur in a rapidly changing global business environment accordingly and on a proactive basis. We intend to respond effectively to the risks surrounding the company and create a stable and smooth management environment.

Operating an Integrated Risk Management System

American Precoat defines the economic, social, and environmental risks that exist within and outside the company, and establishes a systematic integrated risk. management system accordingly to respond and manage the entire company. Through this, we have been able to prevent risks from occurring in advance. Moreover, in the event of a risk, there is an established management. process for all members to undertake the most efficiently. and prompt response actions.

Risk Management System

When the company is exposed to crisis situations, it supports systematic crisis management communication both inside and outside the company. The Risk Management Team (RMT), which consists of experts from. each team, including the CEO, Planning, legal affairs, general support, production, and external experts, is operating.

Internal Control System

American Precoat operates an internal control system for risk management. The supervising organization executes a thorough analysis of the business processes related to risk such as regulatory and legal issues that may have a significant impact on our business operations, and reports the results to the Audit Committee and the Board of Directors. We further have the results reviewed and certified by external auditors and the Audit Committee.

Arrangement of a Risk Portfolio

We established a risk portfolio in the four areas of operations, finance, compliance, and strategy, to evaluate newly identified risk factors on a company-wide basis Crisis factors are selected and under continuous management based on the evaluation results.

Operational Risk

Safety and Environmental Risks Safety and environmental risks at production sites are proportional to the expansion of business sites and facilities secured pursuant to the growth of the company and thus require intensive management On this note, we have built a safety and environmental inspection system at all times. Also, we established a safety and environmental inspection system to be implemented under all circumstances, and, from 2022 in particular, provided consultations for the establishment of a new safety culture as led by our commitment to internalizing an awareness of safety and environmental management among our members. Moreover, we work on building the systems and structures that fulfill international standards as a global company.

Financial Risk

Tax Risk Management> As a faithful taxpayer and investor, American Precoat dutifully abides by all relevant laws, principles, and regulations of all countries in which we operate our business. We faithfully perform our obligations to pay taxes, comply with all tax return and payment deadlines, and related matters in an audit report and electronic disclosure system in a transparent manner.

Compliance Risk

Compliance Risk Management> We implement a compliance management system to respond effectively to compliance risks resulting from the strengthening of global compliance regulations and the growth of the company. We ensure preliminary management through manuals and monitoring by identifying the specific risk. areas. Furthermore, we established a compliance management system at the end of 2022 to systematically support the overall areas of anti-corruption, antitrust, fair trade, environmental safety and health, human resources, tax accounting, and trade secret protection.

Strategy Risk

Industry Growth Risk As oil plummeted in the second half of 2014, traditional petrochemical companies based on NCC were able to secure stable flows of profitability due to boosted price competitiveness stemming from. low-priced raw materials. Since then, however, all prices have gradually risen and global competition is intensifying in line with large-scale expansion plans in the global arena. In order to minimize the risk caused by the growth of the entire petrochemical industry, we diversify our feedstock, develop specialty products, and venture into new businesses.

Competition Rick> As competition in the global market becomes fiercer, it is increasingly necessary to respond to production technology and quality control through the establishment of a high value-added product portfolio, as well as securing profits through stable sales in general-purpose products. in this regard, American Precoat will keep up with market changes swiftly by continuously developing “end-users” and understanding customer needs and will make a devoted effort in R&D activities and production optimization.

Economic Fluctuation Risk Recently, the international trade environment has changed in a complex way. As major advanced economies. increasingly strengthen protectionism, the need for diversification in sales markets and prompt market response strategy is becoming more evident. We are thus building a swift response system to address the changes in the international market by monitoring the global market more thoroughly. Furthermore, we continue to expand our diverse and stable sales channels as a global company to minimize the volatility of earnings caused by business fluctuations.

Resource Procurement Risk> American Precoat strengthens the monitoring of the market environment to forecast the pricing direction of raw materials and products, striving to secure profitability by establishing strategies accordingly. Moreover, we also established a proactive response system for changes in the market environment through organic cooperation among departments in production, research, and sales.