The purpose of risk management is to protect and enhance the value of the company, to have a structured and systematic assessment of the existing and potential risks that may be faced, and to make timely corresponding decisions in line with the company's operating goals and strategies, thereby enhance operating resilience of the company when facing various critical risks. As a global industry leader, Advantech has always paid attention to and promoted major strategies and operational risk management.

Advantech has formulated risk management policy and business continuity plan to prepare for possible business interruption risks, goodwill or various emerging risks, to define operation procedures when risks occur to minimize the possible impact and impact when risks occur, and to achieve follow-up correction and management.

In addition, in response to various related risks, Advantech strives to provide transparent and timely message delivery and communication to stakeholders who may be affected.

The Board of Directors is the highest governance body for risk management and oversees the overall risk management mechanism and approves the related policy. The pan-strategic risk and global risk aspects are mainly supervised and tracked by the Board of Directors, and some of them are delegated to the Sustainability and Development Committee and the Compensation Committee; the pan-operational risk aspect is mainly supervised and tracked by the Audit Committee.

The Risk Management Team is the highest management entity in the Company responsible for risk management and reports to the Board of Directors. The Risk Management Team is responsible for implementing the risk management process and all related matters. Every year, the risk investigation and edentification process will be initiated in the fourth quarter of the previous year. At the beginning of the year, the Risk Management Team will coordinate with responsible risk management units to complete the assessment and mitigation plan for each risk aspect. Due to rapid changes of external environments, the Risk Management Team will conduct an overall risk review again in the middle of the year, mainly co-work with the responsible risk management units to highlight risk exposure changes, perform reassessment, and adjust mitigation actions as needed.

Internal Audit Unit keeps facilitating main risk management processes and closely monitors risk mitigation actions and implementation status of respective risks. In addition, Internal Audit Unit will conduct focused audit of specific risk issues based on the materiality of the risk and/or the status of implementation. Internal Audit Unit will also work with Risk Management Team to provide proposal on the enhancement of the risk management mechanism at the beginning of each year.

Regular review and tracking of risk issues and related mitigation actions will be conducted through risk management meetings (quarterly), senior management meetings (monthly) or other daily management meetings depending on their importance. The Risk Management Team will arrange for significant risk to be included in the oversight and reporting of the Board of Directors or the Audit Committee.