2012 Corporate Social Responsibility Report - UMC

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2.6 Risk Management Realizing corporate social responsibility is the best longterm risk management approach for a company. It is UMC’s belief that establishing long-term partnership with customers and social groups is key to sustainable operations, while comprehensive risk management, proper risk containment, and strict compliance with various laws and regulations are essential to ensure the sustainable operations of the company. In order to reduce the negative impact and losses resulting from any incidents, to maintain the company’s image, and to guarantee stakeholders’ rights and interests, UMC works hard to perfect its crisis response and prevention through active practice and simulations. Risk Classification Based on the evaluation of the company’s operations, UMC classified risks into "strategic risks", "operating risks", "financial risks", and "disaster risks". In addition, the company has established a comprehensive set of response procedures aimed at addressing the needs of a diverse range of emergency conditions, thus reducing management uncertainty to the lowest achievable level. Management and Evaluation of Operating and Financial Risks Interest rate, exchange rate changes Inflation Investment, the borrowing of funds Endorsement and derivatives trading Financial Risk Risk Management Operation Risk Corporate image changes Domestic and international policy and legal changes Technology and industry change Mergers & Acquisitions Strategy Risk Fab expansion Purchase / sales Equity transfer or replacement Changes in Management rights Labor and business ethics Hazards Risk Earthquakes, floods, typhoons and other natural disasters Fire, explosions, power shortage and other accidents epidemics, terrorism, sabotage and other incidents 2.6.1 Operating and Financial Risks n UMC holds shareholder meetings and investor conferences regularly to maintain a high-level of financial transparency. The company consistently meets its obligation as a corporate citizen by participating in public and social activities. n UMC closely monitors the changes of policies and laws and makes proper adjustments in internal systems and business activities accordingly to ensure the smooth operation of the company. n In case of a material shortage due to centralized purchase, low vendor capacity, accidents or natural disasters, UMC has its suppliers store and manage materials in the UMC warehouse to lower the risks of material shortage. Relevant operation guidelines are formulated based on four aspects of "Risk Assessment", "Operations Impact", "Analysis", "Incident Management and Operations Continuation Plan" and "Materials Emergency Purchasing". n According to labor and ethics standards of EICC, relative departments will be aware of the changes of Labor Standards Act to adjust relative labor regulations for implementing labor risk assessments and controlling risks. In addition, UMC implements business ethics risk assessment by examining Employee Code of Conduct, EICC code of conduct on-line examination and Employment of Relatives survey annually. In order to reduce business ethics risk rate, the ratio of examination must be 100% completed. n For more information, please visit the UMC 2011 Annual Report at http://www.umc.com/English/ investors/c.asp 2.6.2 Hazards Risk Management As a global manufacturing leader, UMC is well aware of the numerous natural and artificial disasters that affect or impact its operations and employees. UMC's approach to hazard risk management is based on preventing loss of life or property. To reach HPR (Highly Protected Risk, the top safety standard for semiconductor industry), UMC follows strict engineering safety procedures, regularly enforces safety codes and standards, and follows detailed industry safety guidelines. We are proactive in managing hazards risk and safety. As the world leader in wafer foundry business, UMC is a phrase which means not only the world leader in wafer foundry business but also unique, mature, and continuous improvement in hazard risk management. Based on performance of design and cost effective, hazards risk management slogan is as follows: n Uniqueness in hazards risk management n Maturity in property loss control n Continuous improvement in BCP Fire Control Safety In addition to adopting international standards such as FM, UL, NFPA and SEMI S2 in property protection, equipment safety, risk control and evaluation, UMC has established its own corporate safety guidelines to further enhance these safety standards. In 2012, UMC evaluated the risk control and transfer benefit, and consider the space utilization and process efficiency during new generation fab design, and then standardized Self-Defined Maximum Foreseeable Loss (MFL) Fire Separation Design Rule to optimize loss control. UMC 2012 Corporate Social Responsibility Report P.26
Earthquake Precautions Earthquakes are one of the most frequent natural disasters in Taiwan. Fully aware of this, UMC has been proactive in establishing best-in-class risk management procedures, and engaged the services of EQE and VEC, internationally renowned engineering consulting firms, to evaluate and reduce the seismic exposure of buildings, facility equipment, piping and process tools. 2.6.3 Triple-Star Rating system The Triple-Star Rating system, including 20 items in Human Element and Physical Protection, was introduced to UMC in 1998. Three stars is the highest grade for each item. We have adopted the Triple Star Audit Program from AIG, a global leader in risk management and insurance since 1999. UMC used to receive low ratings on 15 items. However, through concerted efforts and gradual improvement, now all new fabs have been rated as top-class in all of the 20 items at the first rating assessment. UMC's achievements are illustrated in the chart below: Risk management Housekeeping & Fire Safety Inspections Inspection & Maintenance of Fire Fighting Eqmt. Hot Works Emergency Organization Business Continuity Planning Smoking Control Impairment of Fire Fighting Equipment Inspection of Electrical Installation Watchman & Security Automatic Sprinklers Facilities & Support Equipment Fire Detection Outside Hydrant First Aid Fighting Equipment Water Supply Flammable Liquid Hazard Flammable Gas Hazard Production Tools & Equipment Clean Room Fab6A Fab8AB Fab8C Fab8D Fab8E Fab8F Fab8S Fab12A P1/2 Human Element Fab12A P3/4 Fab12i ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ Physical Protection ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★★ ★★ ★★ ★★ ★★★ ★★ ★★★ ★★★ ★★★ ★★★ ★★★ UMC 2012 Corporate Social Responsibility Report P.27
Page 1 and 2: 2012 Corporate Social Responsibilit
Page 3 and 4: Letter from CEO To all our friends
Page 5 and 6: Honors and Awards n Became a compon
Page 7 and 8: 1.1 Company Profile 1.1.1 About UMC
Page 9 and 10: 1.2 Sustainability Strategy 1.2.1 S
Page 11 and 12: 1.3 Communication with Stakeholders
Page 13 and 14: 1.3.3 Communication Methods and Cha
Page 15 and 16: 2012 key performance compendium and
Page 17 and 18: BCMS Enhancement To implement the b
Page 19 and 20: 2.2 Operational Performance Due to
Page 21 and 22: 2.3 Corporate Governance UMC is com
Page 23 and 24: Communication and Complaint Channel
Page 25: 2.5 Competitive Customer Service UM
Page 29 and 30: New supplier selection Suppliers th
Page 31 and 32: The supplier risk control mechanism
Page 33 and 34: Environmental Accounting UMC implem
Page 37 and 38: Cleaner Production assessment syste
Page 39 and 40: 2012 Results In 2012, UMC completed
Page 41 and 42: Stable operation and Remote monitor
Page 43 and 44: Implemented Reuse Measures in UMC
Page 45 and 46: “369 + Energy and Resource Produc
Page 47 and 48: 3.3.5 Inventory and Verification of
Page 49 and 50: 3.4 Energy efficiency 3.4.1 Energy
Page 51 and 52: 3.5 Enhance Water efficiency 3.5.1
Page 53 and 54: 3.6 Promotion of Environmental Awar
Page 55 and 56: Hazardous Substances Restrictions a
Page 57 and 58: Environmental Management Statistics
Page 61 and 62: 4.1 Social and common prosperity Fe
Page 63 and 64: 4.2 Healthy Work Environment 4.2.1
Page 65 and 66: Element 3 - A Warm UMC Employee Ass
Page 67 and 68: 4.2.2 Industrial Safety and Health
Page 69 and 70: 4.3 Human Resource Management 4.3.1
Page 71 and 72: Reference competency models to plan
Page 73 and 74: 4.3.4 2012 Human Resource Statistic
Page 75 and 76: 4.4.2 UMC Public Welfare Investment
Page 77 and 78:
Appendix Global Reporting Initiativ
Page 79 and 80:
GRI Guidelines Location Page Disclo
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Assurance Statement UMC 2012 Corpor
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2012 Corporate Social Responsibility Report - UMC

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