Risk Management

Emerging Risks & Response Strategies

In light of the rapid changes in the global economy, society, and environment, the associated emerging risk issues have become increasingly diverse and complex. In response, the Company has established an emerging risk management system to promptly address and manage potential threats through mechanisms for risk identification, assessment and response, and oversight.

Based on internal and external sources of emerging risk information, six key emerging risk issues and their potential impacts were identified. These were assessed by management to determine the level of impact for each issue.Survey results indicated that the top three emerging risks the Company should prioritize are: (1) demand may slow down or disappear due to tariff policies and export restrictions driven by protectionism, (2) deterioration in the corporate labor structure, and (3) restrictions on greenhouse gas emissions or rising emission costs. Mitigation measures for these risks have already been formulated.

Emerging Risk 1
Name Demand may slow down or disappear due to tariff policies and export restrictions driven by protectionism
Description As U.S.-China strategic tensions rise and the Russia-Ukraine war drags on, global geopolitical risks have intensified. Under the “Make America Great Again” policy, President Donald Trump led the implementation of high tariff measures, reshaping global supply chains and manufacturing structures. To protect its domestic steel industry, the U.S. imposed steel and aluminum tariffs, making the steel sector one of the most affected. In addition to export demand shrinking due to tariff barriers and the risk of order diversion, the trend toward regional localization has disrupted production layouts and increased operational uncertainty.
Impact This tariff policy may not only impede our direct export order intake but also adversely affect downstream customers' indirect exports, thereby reducing China Steel Corporation's export orders. Assuming a 5–10 percent decline in export orders and based on CSC Group's export volume of approximately 5.38 million tons in 2024, the Company could potentially lose some 268,000 to 537,000 tons of orders.
Mitigating actions
    Domestic sales
  • Implement flexible pricing strategy to maintain downstream customers' competitiveness amid geopolitical conflicts.
  • Enhance services and supporting packages to capture demand for high-end products and optimize the product mix.
    Overseas sales
  • Increase sales to automotive clients to diversify market risks.
  • Monitor changes in international geopolitical risks and continue relocating orders from high-risk regions to other areas.
  • Leverage the geographical and trade advantages of overseas production bases as the alternatives of the parent company.
  • Continue exploring sales opportunities in emerging markets to secure stable shipping and reduce maritime freight costs.
Emerging Risk 2
Name Deterioration in the corporate labor structure
Description With the development of emerging industries, traditional sectors are becoming less attractive to younger labor workforce, leading to an aging workforce. This demographic shift may result in decreased production efficiency, compromised product quality and delivery timelines, and a higher risk of occupational accidents. In addition, a homogeneous and non-diverse labor structure may pose challenges to technological innovation and the enhancement of competitiveness, ultimately affecting the company’s long-term development..
Impact Ineffective recruitment efforts have led to a shortage of talent, affecting the stability of business operations and the potential for development. If new employees are difficult to retain, it will further intensify the challenges of succession planning, resulting in talent loss and difficulties in knowledge management for the company In 2024, retired employees accounted for 2.4% of China Steel Corporation’s workforce, highlighting that the shortage of young labor poses a significant and unique challenge to the company.
Mitigating actions
  • Diverse means of talent acquisition, including campus recruitment, aim to boost young talent’s awareness of and interest in the steel industry.
  • Implement a mentorship program by assigning employees with over 15 years of experience to guide and assist new hires, thereby improving the retention rate of new hires.
  • Provide training on digital transformation to raise employees' awareness and encourage practical application in an effort to increase productivity and reduce costs.
  • Establish a knowledge management platform to systematically pass down the expertise of senior employees and minimize productivity loss due to inexperience.
  • Organize consensus camps to foster intergenerational exchange between supervisors and employees, thereby improving mutual understanding and collaboration.
  • Provide basic electromechanical and occupational safety training annually to ensure new hires acquire essential technical skills and prevent workplace accidents.
Emerging Risk 3
Name Restrictions on greenhouse gas emissions or rising emission costs
Description In response to climate change, governments and international institutions have increasingly imposed stricter greenhouse gas (GHG) emission standards and introduced carbon-related pricing mechanisms—such as carbon tariffs, carbon taxes, carbon fees, and emissions trading schemes (ETS). These regulatory developments are expected to drive up the cost of emissions. Consequently, companies will be required to allocate greater resources toward decarbonization initiatives to remain compliant and cost-efficient. Failure to take timely action may result in significantly higher carbon-related expenditures, thereby impacting operating margins and long-term competitiveness.
Impact Increased pressure for carbon reduction has forced companies to revise existing strategies or allocate additional capital expenditures, leading to a rise in operational costs. This may affect financial planning and resource allocation in the medium to long term.
Mitigating actions
  • The Task Force on Energy Saving & Carbon Reduction and Carbon Neutrality was established in February 2021 by CSC. CSC has set short-, medium-, and long-term carbon reduction goals. With the long-term goal of achieving carbon neutrality by 2050, CSC has preliminarily formulated a number of strategies and mapped its pathways towards carbon neutrality.
  • In the short-term, CSC has mainly planned to increase the use of renewable energy and step up efforts to improve energy efficiency, actively promoting energy conservation and carbon reduction action plans to lower carbon fees by reducing carbon emissions.
  • Taiwan's carbon fee system is introduced in 2025. CSC will propose a self-determined reduction plan in accordance with Carbon Fee Regulations, striving to qualify for preferential rates to lower carbon fees, and to mitigate the impact of the carbon fee on CSC.