Scope
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Risk factor
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Financial impact
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Corporate banking lending
(physical risks are limited to Taiwan)
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Transition risks:
Carbon price
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- Payment of carbon-related fees causes the deterioration in the company's financial position
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- Summarizes the financial impact of the abovementioned risk factors, uses a model to calculate the impact on PD, and calculates the expected loss
- Most considerable expected loss ratio is about 4 BPs
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Physical risks
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Suspension due to rainstorm
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- The expected number of days exceeding the statutory number of disaster prevention leave days in each administrative district is used to calculate the percentage of decline in revenue caused by the suspension.
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Flood repair costs
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- Calculate the hazard of rainfall exceeding 650 mm within 24 hours in each administrative district
- Compare the flood potential map to determine the vulnerability
- Estimate the cost of repair for losses caused by floods by industry
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Water shortage
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- The hazard drought in each county/city (determined based on alert level)
- Estimate the additional cost of water withdrawal by county/city and industry
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Real estate collateral for the consumer banking loan (physical risks are limited to Taiwan)
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Physical risks – Reduction in
the value of collateral due to caused by torrential rain |
- The hazard of rainfall exceeding 650 mm within 24 hours in each administrative district
- Use the collateral flood loss model to analyze the reduction in value caused by flood
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- With consideration of the expected loss of collateral value, the model is used to calculate the impact on LGD and further calculate the expected loss
- Under the SSP5-8.5 scenario in 2050, 9,172 real estate guarantee cases are located in highrisk areas (The impairment of real estate value is above 40%), and the balance of affected collateral cases is NT$31.6 billion, accounting for 0.98% of E.SUN's total assets.
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Bond and Equity Investments
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Transition risks: Carbon price
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- Payment of carbon-related fees by the target company causes an increase in cost, and the loss ratio is set based on deterioration in the company's financial position
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- The expected loss is calculated based on changes in the target's loss ratio or international credit rating
- Most considerable expected loss ratio is about 25 BPs
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Transition risks: Country and industry transition risks
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- With consideration of the transition risks of the target's country and industry, historical data and judgment of internal experts are considered to evaluate changes in international credit rating in the scenario
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