Sustainability
Risk management is a fundamental component of corporate governance. Welhunt firmly believes that a company’s profitability should primarily come from financial management rather than opportunistic gains. The ability in risk management will determine a trader’s competitiveness in international trade operations. Despite the outbreak of the Covid-19 pandemic and volatility in commodity prices over the past two years, Welhunt has continued to operate and grow steadily, indicating the effectiveness of our forward-looking and rigorous risk management system. By establishing clear internal control mechanisms, adhering to regulatory requirements set by authorities, and actively identifying, measuring, and responding to risks, Welhunt proactively manages various operational risks. This enhances Welhunt’s resilience in facing risks and reduces the potential impact of risk-induced losses.
Financial risk management
In international trade, Welhunt’s main payment method for commodity is by letters of credit, while transportation payments are mainly through telegraphic transfer. If the total credit limit of letter of credit is insufficient or there is a lack of liquidity of funds, it can constrain business operation due to limited financial resources, which will result in operational inefficiency. In addition, there are price volatility risks and exchange rate risks in commodities trading. If either of these risks cannot be identified in the first place, the Company may suffer losses in the event of significant fluctuations in commodity prices and exchange rates.
To ensure the smooth operation of our business activities, Welhunt maintains clear communications with financial institutions and enhances the quality of information disclosure through the provision of financial reports, business outlook, sustainability reports, and sustainable development strategies. Meanwhile, being headquartered in Taipei enables us to communicate more directly with the head offices of banks and assist them to gain a deeper understanding of the Company, thereby enhancing their confidence in our operations and establishing solid partnerships. Internally, Welhunt has formulated exchange rate risk management policies to reduce the impact of exchange rate fluctuations on the income statements through forward exchange contract and foreign exchange swap.
Regarding our business activities, we have enhanced our hedging mechanism by actively matching buyers and sellers and agreeing on pricing term. This significantly reduces price volatility risks at the operational front and actively hedge commodity risks through the use of derivatives. At present, about 80~90% of the contracts are natural hedging internally, reducing cash flow volatility and capital needs caused by relying on external reverse operations.
The Finance Department of Welhunt monitors forecasts of the liquidity needs of the whole group to ensure that we have sufficient funds to support our operations, and maintains sufficient undrawn trade financing and credit limits at all times so that we can minimize liquidity risk. At the same time, we cooperate with financial institutions to identify suitable fixed-income products, such as deposits and bonds, under the condition of overall liquidity control, to generate additional interest income by investing a portion of our funds.
Data protection and network security
Welhunt is committed to maintaining the security of its corporate information, uninterrupted operations of systems and equipment, as well as the safekeeping of business secrets, client privacy, and employees’ personal information. Therefore, in alignment with the third-party information security framework that conforms to ISO and industry standards, we plan to redesign the Company’s internal information security infrastructure in the next five years, ranging from the organizational structure, infrastructure, identity access management (IAM), data loss prevention (DLP), detection and response (D&R) to the governance, risk management, and compliance (GRC) structure. We will strive to achieve best practices in alignment with the Company’s vision and clients’ expectations.
To this end, Welhunt has tasked its Data & IT department with the redesign and planning. In 2023, a Chief Information Security Officer (CISO) role was established to oversee and drive these initiatives. The CISO will regularly update the management team on progress. In 2024, the management team formally established the “Information Security and Technology Operations Department” (IT&CS), which includes system and network security, cloud services, and cybersecurity compliance, among other areas. This move underscores Welhunt’s commitment to information security and its ongoing dedication to this priority.
In 2024, Welhunt did not experience any confirmed incidents of information leakage, theft, or loss of customer data within the current scope of visibility. We conduct annual reviews and updates of our cybersecurity compliance and governance practices, continuously optimizing our plans based on the latest assessments and industry best practices to ensure the company’s operational resilience and relevance.
Supply chain risk management
We believe that supply chain risks may come from the organization’s internal operating procedures, external counterparties, as well as geopolitical and regional conflicts at the macro level. To mitigate the impact of different risks along the value chain on our operations, we have developed rigorous management practices for each of the issues detailed below:
| Risks | Counterparties risk and credit risk |
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| Details |
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| Management measures |
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| Annual performance |
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| Risks | Geopolitical and regional conflict risks |
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| Details | Any regional politics and international norms have a direct impact on international trading companies. These include the global sanctions against Russia, resulting in a shortage of anthracite and coal; the Indonesian government’s urgent ban on coal exports; the China-Australian trade war, and implementation of international money laundering prevention programs. |
| Management measures |
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| Annual performance |
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| Risks | Operational risk |
|---|---|
| Details | International commodity prices fluctuate due to a variety of factors. If internal operations are delayed or operational errors require restarting the process, such as re-contracting or L/C amendment, the transaction progress may be delayed, resulting in the risk of market price fluctuations. |
| Management measures |
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| Annual performance | In 2022, personnel in the Trade Operation Department received three training sessions for a total of 18.5 . ours. |