Stakeholder Engagement

Cathay values stakeholder expectations, and adheres to AA 1000 SES to identify 9 major stakeholders, upholding the four fundamental engagement principles: Materialness, Effectiveness, Flexibility, and Respectfulness to formulate the “Cathay FHC Stakeholder Engagement Strategies”, set up multiple channels for communication and feedback of stakeholder engagement results, including reports and press releases; shareholders' meetings, investor conferences, forums, and charitable events; respond to investor ESG questionnaires and participating in international initiatives; conduct employee and customer satisfaction surveys.

 

We annually report our performance of communication with stakeholders to the Board of Directors. For more information, please refer to Communication Channels and Response Method of Issues of Concern for Stakeholders.

 

Active Engagement to Guide Industrial Development

Cathay FHC has clearly stipulated on its Code of Operation Integrity and Code of Conduct for Employees that participation in public affairs must comply with laws and regulations, and any donations made must be disclosed accordingly. Following the rapid development of digital finance technologies, financial institutions not only face competition from the technology industry or e-commerce platforms, but must also respond to a plethora of emerging risks, such as aging population and climate change. Cathay FHC engages in the affairs of various associations and societies in hopes of building a consensus in the industry and contributing to industrial development. Long time collaborators include the Insurance Society of the R.O.C., International Insurance Society (IIS), and the Bankers Association of the R.O.C. In addition, Chang-Ken Lee, President of Cathay FHC, is the chairperson of the Financial Planning Association of Taiwan; Tiao-Kuei Huang, Chairman of Cathay Life, is the current chairperson of the Life Insurance Association R.O.C.; and Jeff Chang, Chairman of Cathay SITE, is the current chairperson of the Securities Investment Trust & Consulting Association of the R.O.C. All of these leaders actively promote collaboration between industry and government, and formulate related policies for mutual prosperity in the industry.

Cathay Financial Holdings — Explanations for Public Participation and Policy Influence

CS Issue Materiality Analysis

In terms of non-financial information disclosure, Cathay FHC adopted the GRI standard and AA1000 Accountability Principles, focusing on the four principles of Inclusivity, Materiality, Responsiveness and Impact, in order to establish a management structure for ESG information disclosure, identify major ESG issues, respond to stakeholder requirements on transparency, and internally set a sustainability blueprint.

2020 Goals Attainment of Material Issues


Cathay FHC 2020 Material Topic Matrix

 

Changes made to material issues in 2020:

1. In accordance with the contents of relevant issues, “responsible investment and lending” and “green finance” were renamed “ESG investment policy and management” and “ESG products and services” respectively. 
2. Compared with 2019, we have considered the development of relevant issues in Taiwan and a new focus on health in Cathay’s sustainability strategies; therefore, we incorporated “loss control” were into “diverse protection,” and added “healthy society” and “financial planning.” “Inclusive finance” and “digital finance” were renamed “financial inclusion” and “financial innovation” respectively.
3. Compared with 2019, “compliance” was renamed “ethics and compliance”, while “data privacy” was added to the issues to highlight the importance of customer privacy and data security management; “occupational health and safety” and “climate initiatives” were moved to material issues.

 

Ethics and Compliance, risk management, and information security were some of the material issues highlighted by Cathay FHC in 2020. Below are the risk control strategies implemented for the two material issues listed:

 Material Issue  Risk Management Strategy
Information Security

Cathay FHC has a cross-company FHC-level Information Security Communications Committee and FHC-level information security incident emergency response team, which fully dedicated to information security management and quality improvement. Furthermore, Cathay FHC in 2020 established the Security Operation Center that operates 24/7 to monitor and immediately respond to information security risks. We utilized an external professional information security consulting and response team, which is highly experienced in responding to information security incidents, to provide appropriate and professional recommendations and emergency response support.

Furthermore, Cathay Life and CUB invite vendors to perform a white-hat hacker penetration test each year to strengthen their information security. Different hacking methods are used to analyze vulnerabilities and scenarios that may be attacked by hackers, including connection management, access right testing, raising authority and escape. Improvements are made for high risk items in test results, and reinforcement measures are taken to improve the quality of information security. Improvements were completed for 100% of severe risk and high risk items in the test results. Furthermore, Cathay FHC and its subsidiaries all had an external vendor conduct computer system safety evaluations in 2020, which examined information structure, inspected network activity, conducted vulnerability scanning and penetration testing, examined security settings, and examined compliance. We carried out follow-up and improvement measures based on the system security status, and improvements for severe risk and high risk items were all 100% completed to ensure the safety of data.

Ethics and Compliance

Cathay FHC values the corporate culture of ethical corporate management. We established the Policy and Code of Operation Integrity, the Procedures and Guidelines of Integrity Management Operation, and the Code of Conduct for Employee to require employees to comply with internal regulations when performing their duties, to participate in public affairs in a lawful way, and to ensure that related measures are disclosed in accordance with the law. Furthermore, all of our employees have completed our annual training on the Code of Conduct for Employees with a completion rate of 100% in 2020.

Cathay FHC has closely followed changes in the domestic and overseas financial and regulatory environments to strictly ensure that all operations comply with regulatory requirements. We have built systematic management of compliance risks, including trainings, self-evaluations and self-inspections, quantified compliance risk assessment mechanism, and law amendment management system. We established the External Compliance Incident Reporting and Management Guidelines for the effective supervision of our subsidiaries and to ensure that the Board of Directors and managers rapidly obtain warning information, evaluate, and take improvement measures in response to the group's compliance risks. Furthermore, Cathay FHC adopted the risk-based approach to continue to develop AML/CFT system by establishing the AML/CFT Management Guidelines, group-level risk methodologies, and implementing a group-level management enhancement project, and looked into the use of new technologies, such as RPA, AI, and big data analytics, to improve the Group's AML/CFT performance. We also strengthened cross-business risk management, such as adjusting the cross-business monitoring framework and improving the quality of operations between subsidiaries to improve overall AML/CFT results at the group level.



Cathay FHC ‘s business scope includes life insurance, banking, property insurance, securities, securities investment trust and venture capital, corresponding to the type of stakeholders and issues are also very broad. In 2015, we introduced the concept of integrated reporting (IR) by emphasizing opportunities, risks, corporate strategies, and value creation to identify Cathay's five major capitals for the impact evaluation of material issues. When retrieving stakeholders' opinions, we integrated the company's results of Employee Satisfaction and Voice of Customer surveys, substantially increasing feedback scope and representativeness. From among 61 issues, 18 material issues were identified. In 2015, we also clarified the level of impact that each issue has on the company and specifically incorporated interviews with senior executives to identify the counterstrategies that Cathay adopts in response to each material issue. How to achieve sustainable development of enterprises, design and control through the mechanism, effectively supervise their organizational activities, and improve its organizational operation, has become the enterprise can effectively control the risk and the use of capital to create value. The Compliance Department introduced risk-based management practices in 2016 with the view of achieving better control of compliance risks. 

"Talent" is at the core of the financial services industry. Cathay has always viewed the cultivation of talent as its source of corporate competitiveness. In addition to selecting and fostering people to enrich our talent base, we have promoted Industry-academic Cooperation between the digital financial industry and academia and supported projects to uncover talent in the development of FinTech initiatives. We expect these projects to provide integrated resources that create a pool of financial elite with innovative thinking. These measures are described below:


A corporation's quest towards sustainability is a process whereby all stakeholders co-create value. Cathay FHC takes stakeholders’ expectations very seriously and upholds four principles of engagement: Materiality, effectiveness, flexibility, and respect. We established the Cathay FHC Stakeholder Engagement Policy on this basis, as well as engagement goals as the basis and methods for identifying stakeholders. We disclose engagement results through a number of channels, including reports, press releases, our website, investor conferences, shareholders' meetings, forums, charitable events, employee and customer opinion surveys; participating in CSR evaluations, and responding to investor ESG questionnaires. These are all active efforts we make to communicate with stakeholders.

Cathay FHC CS Committee regularly reviews the short-term, medium-term, and long-term goals of issues. We annually report our performance of communication with stakeholders to the Board of Directors. For more information, please refer to Communication Channels and Response Method of Issues of Concern for Stakeholders.

 

Active Engagement to Guide Industrial Development

Cathay FHC has clearly stipulated on its Code of Operation Integrity and Code of Conduct for Employees that participation in public affairs must comply with laws and regulations, and any donations made must be disclosed accordingly. Following the rapid development of digital finance technologies, financial institutions not only face competition from the technology industry or e-commerce platforms, but must also respond to a plethora of emerging risks, such as aging population and climate change. Cathay FHC engages in the affairs of various associations and societies in hopes of building a consensus in the industry and contributing to industrial development. Long time collaborators include the Insurance Society of the R.O.C., International Insurance Society (IIS), and the Bankers Association of the R.O.C. In addition, Chang-Ken Lee, President of Cathay FHC, is the chairperson of the Financial Planning Association of Taiwan; Tiao-Kuei Huang, Chairman of Cathay Life, is the current chairperson of the Life Insurance Association R.O.C.; and Jeff Chang, Chairman of Cathay SITE, is the current chairperson of the Securities Investment Trust & Consulting Association of the R.O.C. All of these leaders actively promote collaboration between industry and government, and formulate related policies for mutual prosperity in the industry.

Cathay Financial Holdings — Explanations for Public Participation and Policy Influence

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