Risk Management

Risk Management Structure
To supervise the effectiveness of the risk control mechanism, Mega Securities has the Board of Directors as the highest decision-making unit for risk management. The Board of Directors is responsible for approving risk management policies and procedures, overall risk appetite, and appointing the Risk Management Committee to supervise daily risk management affairs. The Risk Management Committee has been established under the Board of Directors to supervise the establishment of the risk control mechanism and ensure the implementation of the risk management policy. The convener of the Committee is the chairperson. The other members are composed of the Director and General Manager, the Chief Risk Officer, and other department heads . The Committee is responsible for supervising the implementation of risk management business, deliberating the risk management policies, annual risk management objectives, the Articles of Incorporation of the Risk Management Committee, and risk management rules, and reviewing the overall risk appetite or risk limit. The Risk Management Committee convenes at least one meeting every quarter, and the meeting minutes shall be reported to the Board of Directors. Extraordinary meetings may also be convened as needed for business needs or for emergencies. The Risk Management Office is responsible for meeting affairs.

Risk management measures
For Mega Securities, the risk management policy is approved by the Board of Directors, which clearly defines the risk management objectives and regularly monitors the implementation. The Board of Directors also approves the risk management rules to address major financial and non-financial risk categories, such as market, credit, liquidity, operational, climate, and others according to the three lines of defense mechanism of the business departments, the Risk Management Office, the Legal Affairs and Compliance Office, and the Audit Office. We have defined the management principles for the six risk types, and regularly review the risk management mechanism, risk appetite, and risk management priority through assessment reports, scenario analyses, and stress tests to establish response strategies, control objectives, internal control systems, and procedures. The procedures and clear attribution of responsibilities can be incorporated by each business department into individual management regulations to effectively manage the Company's various operational and sustainability risks. In addition, in order to effectively respond to the risks brought about by climate change, Mega Financial Holdings has incorporated climate change risk management into the risk management policies and guidelines. Mega Securities has also been approved by the Board of Directors to add a climate risk management policy to its risk management policy and add the emerging risks to its risk management rules.