Risk Management

EGAT's operational management procedures and regulatory measures encompass the establishment of clear corporate policies, quality management procedures, implementation of internal control mechanisms, and conducting risk assessments to ensure the company's compliance and effectiveness. These procedures vary according to the specific requirements of each department. Apart from focusing on enhancing safety, quality, and efficiency, they are supported by comprehensive execution strategies. They are continuously updated to address the evolving civil aviation regulations and customer demands.

Risk Management Process

Board of Directors

As the highest governance body for risk management in EGAT, the Board of Directors is primarily responsible for the following:

  1. Approving risk management policies, procedures, and frameworks.
  2. Ensuring alignment between operational strategies and risk management policies.
  3. Ensuring the establishment of appropriate risk management mechanisms and risk management culture.
  4. Supervising and ensuring the effective operation of the overall risk management mechanisms.
  5. Allocating and assigning adequate and appropriate resources to ensure effective risk management.

Sustainability Committee

Responsible for coordinating and supervising various risk management matters. It primarily handles the following:

  1. Reviewing risk management policies, procedures, and frameworks.
  2. Approving the execution status of risk management and providing necessary improvement recommendations, reporting to the Board of Directors at least annually.
  3. Implementing risk management decisions made by the Board of Directors.

Sustainability Committee Executive Team

Responsible for executing risk management-related tasks, including:

  1. Reviewing risk management policies, procedures, and frameworks.
  2. Reporting the execution status of the company’s risk management annually to the Sustainability Committee for approval.
  3. Assisting and supervising the implementation of risk management activities across departments.
  4. Coordinating inter-departmental interactions and communications related to risk management operations.
  5. Planning risk management-related training to enhance overall risk awareness and culture.

Executive units

Executive units are responsible for identifying, analyzing, evaluating, and responding to risks within their respective units. They are required to establish relevant crisis management mechanisms where deemed necessary.

  1. Report risk management information to the Sustainability Committee Executive Team.
  2. Ensure the effective implementation of risk management and related control procedures in accordance with risk management policies.

EGAT’s risk management process includes: risk identification, risk analysis, risk assessment, risk response, risk supervision and review mechanisms, and risk disclosure and communication.

Risk Identification

  • Each executive unit should identify risks associated with its business operations based on the Company's strategic objectives and the risk management policies and procedures approved by the Board of Directors.
  • Additionally, risks related to economic, environmental, social, and other dimensions of corporate governance that may arise during operations should be identified using appropriate methods.

Risk Analysis

  • After identifying potential risk factors, each department analyzes the probability and impact of these factors to assess their effect on the company. This assessment serves as a basis for prioritizing risk management and selecting response measures.

Risk Assessment

  • For quantifiable risks, rigorous statistical analysis methods and techniques should be employed for management and analysis.
  • For risks that are difficult to quantify, qualitative methods should be used through text to describe the likelihood of occurrence and the extent of its impact.

Risk Response

  • EGAT should develop relevant action plans for risk response to ensure that relevant personnel fully understand and execute them, and continuously monitor the implementation of these plans.
  • EGAT should consider corporate strategic objectives, perspectives of internal and external stakeholders, risk tolerance, and available resources when selecting risk response methods, aiming to strike a balance between achieving objectives and cost-effectiveness.

Risk Supervision and Review

  • Each department should monitor the risks associated with its business operations, propose response plans, and strive to mitigate risks to an acceptable level.

Risk Identification and Mitigation

For all identified risk items, EGAT adopted a proactive and prudent approach, with the following mitigation actions in place:

Risk Item and Description Response Measures
War may cause shortages or instability in the supply of raw materials.War or geopolitical conflicts may lead to disruptions in international logistics, increased transportation costs, and instability in the supply of aircraft parts and raw materials. This, in turn, could affect the Company's maintenance schedules and operational continuity, potentially driving up procurement costs and compressing profit margins.
  • Inventory Buffer: Increase safety stock levels for aircraft materials with long lead times.
  • Proactive Evaluation: Place orders in advance based on fleet operations and supply chain conditions.
  • Alternative Sourcing: Simultaneously search the market for available alternative parts.
  • Order management and delivery tracking.
Exchange rate riskThe Company may be exposed to foreign exchange risk due to exchange rate fluctuations when holding assets or engaging in transactions denominated in foreign currencies. Failure to properly manage foreign currency positions may result in exchange losses and increase financial risks.
  • Maintain close contact with banks and monitor market exchange rate trends closely. For controllable factors, evaluate and adjust foreign currency positions to reduce foreign currency holdings.
Reinvestment riskInvestees are affected by market conditions, industry competition, operational management, and regulatory changes. Their operating performance and financial position directly impact the company's investment returns and capital utilization efficiency; failure to provide proper oversight may result in financial or reputational damage.
  • Regularly obtain management and operational reports to monitor actual operating performance.
  • Participate in Board and shareholders' meetings to understand the Company's operations.
  • To strengthen risk management, the operations team is required to provide market analyses, business development plans, operational plans, improvement plans, financial forecasts, and future funding requirements in response to risks associated with market, operational, financial, or regulatory changes.
Heat stressWith extreme heat and heatwaves becoming increasingly frequent, personnel working outdoors or in high-temperature environments face heat stress risks, such as heatstroke and heat exhaustion. This not only impacts employee health and productivity but may also increase the risk of occupational accidents and operational disruptions.
  • Develop an app to send hazard alerts, and provide indoor shaded rest areas, an adequate number of water dispensers, cooling drinks, and salt tablets for employees to stay hydrated and replenish electrolytes.
Occupational safety riskThe Company's maintenance and related operations involve high-altitude work and machinery operation. Insufficient safety management or employee protection measures could lead to occupational accidents, casualties, and equipment damage, which would not only impact employee health and morale but could also result in legal liabilities and risks of operational disruption.
  • Establish an occupational health and safety management system in accordance with ISO 45001 and successfully pass annual third-party verification. Regularly conduct workplace environment monitoring and employee safety education and training.
  • Safety awareness is strengthened through monthly Occupational Safety and Health Committee meetings and inspection mechanisms to reduce the risk of occupational accidents.
  • Implement a fall detection system, dedicated work platforms, and an inspection system for high-altitude operations.

Providing high-quality maintenance, assembly, and component services for aircraft, engines, and components is the core business of EGAT. To ensure product safety and quality, a complete management system and operating instructions have been established to implement product safety and quality control. For detailed information, please refer to Chapter 4 - Creating Sustainable Quality.

Internal Audit Regulations and Processes

In accordance with the Regulations Governing the Establishment of Internal Control Systems by Public Companies, EGAT has established a documented internal control system, including detailed internal audit implementation rules, which have been approved by the Board of Directors and serve as the foundation for executing internal audits.

The Audit Division is an independent unit reporting directly to the Board of Directors. The head of the Audit Division not only reports audit activities regularly to the Audit Committee, but also attends Board meetings to present audit reports. Audit personnel are responsible for the evaluation and supervision of the internal control system. Based on risk assessment results, they formulate the annual audit plan, execute audit activities, and follow up and review corrective actions for internal control deficiencies, ensuring EGAT’s sustainable operations.

In addition to assisting the Board of Directors and management in reviewing and evaluating the effectiveness and efficiency of the internal control system, audit personnel also provide timely improvement recommendations to ensure the system is continuously and effectively implemented, serving as the basis for its ongoing refinement. Moreover, audit personnel promote and oversee the annual self-assessment of the internal control system conducted by each business unit, and review the self-assessment reports. These results serve as a primary reference for the Board of Directors and the President in evaluating the overall effectiveness of the internal control system and issuing the Internal Control System Statement.

EGAT's 2025 audit plan consisted of 41 items, covering the company's operational cycles, various management control operations, sustainability information management, and computerized information processing and cybersecurity operations. All audit items were completed according to the audit plan schedule.

Internal Control System Audit for Each Operational Cycle
14 items
Audit of Management Control Operations (Including Sustainability Information Management)
9 items
Audit of Subsidiary Supervision and Management
1 item
Audit of Loans and Endorsements/Guarantees (Quarterly)
4 items
Audit of Derivative Trading Operations (Monthly)
12 items
Audit of Computerized Information Processing and Cybersecurity Operations
1 item