With a view to boosting corporate governance and responding to the needs of stakeholders, Gamania has established the “Risk Management Committee” in August 2023 upon the approval of the Board of Directors, in order to build a total risk management and control system pursuant to the provisions of the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”to identify and manage risks in all aspects of business administration, and further achieve sustainable management.

To respond to risks in an effective manner, the Auditing Office not only has three lines of defense of internal control in place with the respective roles, functions and scope of responsibilities thereof clearly defined, but also conducts annual audits and prepares an audit progress control sheet and a summary of findings and improvements. These practices help maintain Gamania’s sound corporate image and safeguard businesses against risks to allow more stable growth.

Organizational structure of risk management

The Company’s Risk Management Committee is chaired by the Chairman, with the CFO serving as the convener and the senior executives of all units as the members. The committee meets at least twice a year, and the directors, managers of relevant departments, internal auditors, accounting or legal advisors, etc. may be invited to attend the meetings if necessary. The committee is responsible for formulating the Company’s risk management policies and framework as well as the implementation of strategies for relevant risk appetite, and reports to the Board of Directors annually to supervise the operation and overall implementation of the risk management mechanism. Members of the Board of Directors and the Risk Management Committee also receive certain hours of continuing education every year to enhance the ability to oversee and implement corporate risk management practices.

     

Rules of Organization for Risk Management Committee

Risk Management Policy and Procedures

Key Risks

Gamania identified relevant stakeholders and operational issues based on the industry characteristics, developed a risk matrix based on the potential risks and their impacts on the Company (the table below presents the major risks of the year), formulated countermeasures accordingly, and regularly monitored the implementation effectiveness.

  Risk item Risk impact description Countermeasure Monitoring period
2024 Geopolitical and Other External Risk Events Failure to strategically anticipate, assess, and respond to changes caused by geopolitical events, economic fluctuations, or other major external events (e.g., widespread pandemics).
  • Conduct market research to understand customer preferences for games and, in addition to the two main Korean online games currently licensed, explore opportunities to license games from developers in different countries and regions.
  • Develop business initiatives that differ from traditional game licensing by leveraging proprietary products from the current incubation program. These initiatives will combine diversified investments to create a range of entertainment products.
  • Flexibly adjust contract terms with licensors in response to changes in geopolitical risks as part of the Company’s operational strategy.
  • Regularly assess, maintain, and analyze the impacts related to international geopolitical developments.
  • Monitor global political and economic developments to stay informed of emerging risks and formulate and implement response strategies as needed.
 Anytime
Risk of Reduced Gameplay Time The emergence of new entertainment markets: Trends such as the rise of other industries (e.g., TikTok) or new game formats (e.g., VR games) may limit customers' time spent on Gamania's games due to competition for attention ("eyeball time").

To address risks posed by competition between traditional games with emerging entertainment markets:

  • The competition between games and emerging entertainment for "eyeball time" is a long-term trend. To address this, we aim to design games that offer players a more relaxed and burden-free experience. Additionally, the Company will expand its focus on casual game genres that can coexist with streaming video platforms, enhancing the overall enjoyment and experience for players.
  • For both licensed and proprietary products, features such as automated combat and training modes will be introduced. These designs aim to reduce the effort required from players, allowing them to easily remain engaged with the game and fully enjoy its content.
 Irregular
(usually follow the operational activities)

Emerging Risks

In order to identify potential emerging risks to the Group, Gamania identifies emerging risks and develops risk mitigation measures with reference to the reports on emerging risks released by external organizations (e.g. the Global Risks Report of WEF), internal managers’ operational concerns, and the management’s opinions compiled. The identified risks and developed measures are reported to the Risk Management Committee for early deployment and response.

  Risk item Risk impact description Countermeasure Monitoring period
2024 Uncertainty risks caused by AI implementation The introduction of AI-powered intelligent customer service presents new challenges. Failure to effectively master AI technology may lead to customer dissatisfaction during interactions.
  • Responsibility for digital content:
  • Most of Gamania Group's products and services feature digital entertainment and multimedia content. In order to provide players and consumers with a quality and innovative service experience, all digital content is launched in compliance with the regulatory requirements of the regions where we operate. In addition, while it becomes easier to speak up via the Internet in the democratic social environment, there is also a higher risk of being exposed to inappropriate content. As a platform operator, Gamania advocates that standards regarding responsible content should be formulated to convey the Group's sustainable business philosophy in relation to the digital technology industry.
  • In 2023, we officially launched the "Gamania Group Advertising Ethics Policy," becoming the first in the domestic industry to establish advertising-related regulations specifically for advertisers. By incorporating feedback from the Group's diverse digital entertainment business units, this policy aims to enhance its applicability and serve as a model for the industry.
  • Currently, there are no external ESG regulations specifically addressing AI-related content. However, the ethical use of AI, responsibility for generative content, and the management of application licenses should not fully replace human involvement. Maintaining a fair and balanced transition remains essential.
 Anytime
Risk of Reduced Gameplay Time The emergence of new entertainment markets: Trends such as the rise of other industries (e.g., TikTok) or new game formats (e.g., VR games) may limit customers' time spent on Gamania's games due to competition for attention ("eyeball time").

To address risks posed by competition between traditional games with emerging entertainment markets:

  • The competition between games and emerging entertainment for "eyeball time" is a long-term trend. To address this, we aim to design games that offer players a more relaxed and burden-free experience. Additionally, the Company will expand its focus on casual game genres that can coexist with streaming video platforms, enhancing the overall enjoyment and experience for players.
  • For both licensed and proprietary products, features such as automated combat and training modes will be introduced. These designs aim to reduce the effort required from players, allowing them to easily remain engaged with the game and fully enjoy its content.
 Irregular
(usually follow the operational activities)

 

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