ANNUAL REPORT 2024
TOGETHER IN BELIEF, LEADING IN INNOVATION
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The analysis and evaluation of the impact and likelihood of each risk were conducted by categorizing risks based on their severity: high, medium, and low. In 2024, key risks were analyzed and classified as follows:
Over the past year, the Company has reinforced its workforce to enhance the RM system. This team has been tasked with developing procedures, overseeing, and continuously improving the RM framework. They also provided counsel to the BOD in establishing a governance structure, assigning responsibilities to each department in risk management, and effectively connecting the three lines of defense to ensure the system operates cohesively and aligns with strategic objectives. The BOD has demonstrated comprehensive commitment and support for the development of the RM framework by organizing risk management training programs to enhance awareness and skills across all employee levels, thereby fostering a corporate culture of risk management within the organization. Risk Management Activities In 2024 An Cuong recognized that comprehensive and accurate risk identification was the foundation for building subsequent risk management steps. The Company employed tools such as the SWOT matrix, PESTLE analysis, and checklists to thoroughly identify risk factors. Over the past year, the identified risk factors included:
High-risk Category
Classification Risk identification
Response
Market risk
To address market risk stemming from demand fluctuations, political barriers, and consumer trends, An Cuong has consistently conducted customer surveys to understand their needs and preferences. This information supports the research and development of diversified products, including surface effects, colors, material solutions, and environmentally friendly smart furniture. Additionally, the Company has launched a series of Creative Hubs in major cities to showcase products and inspire customers and partners within the architecture and interior design community. The Company has proactively initiated engagement with export customers and broadened its market presence to adjacent countries within the region. However, given the current context of export markets, Vietnam's wood industry faces the risk of being subjected to import tariffs in the U.S., its primary export market. Depending on actual developments and the imposed tariff rates (if any), there could be adverse impacts on the competitiveness of Vietnamese goods. To proactively address this potential risk, An Cuong has strictly adhered to regulations and requirements regarding the origin of materials, continuously improved its internal competitiveness, accelerated digital transformation efforts, actively collaborated and engaged in dialogue with export partners, enhanced trade defense capabilities, and diversified export markets to reduce dependency on specific markets.
In the domestic market, consumer income levels and the real estate sector have been the primary drivers of An Cuong’s business activities. Over the past year, while the macroeconomy demonstrated some recovery and consumer spending showed positive shifts, cautious sentiment persisted for discretionary consumption such as furniture. The recovery of the residential real estate market remained in its early stages, whereas demand for the Company's products typically arises during the final stages or handover phase of projects.
External risk factors
Supply chain risks due to disruptions in the supply of raw materials from suppliers; Compliance risks such as non-conformance of input materials with regulations on wood exploitation, export, and import, as well as adherence to tax obligations; Environmental risks tied to sustainability standards regarding emissions and waste management; Market risks caused by demand fluctuations and shifts in consumer trends; transportation cost risks influenced by factors like oil prices and security measures; Transportation cost risks influenced by factors like oil prices and security measures; Financial risks stemming from supplier non-compliance with legal standards or clients failing to settle debts.
Counterparty risk
To mitigate this risk, the Company has implemented the following measures:
The economic slowdown in recent years has impacted various businesses, including An Cuong's clients, particularly real estate developers. This challenging landscape has introduced potential risks to An Cuong’s operating cash flow, particular in scenarios where customers or partners struggled to fulfill their debt obligations.
Adopting a cautious sales policy, including requiring partners to provide letters of guarantee and make advance payments;
Internal risk factors
Risks of failure in innovation and new product development;
Regularly assessing customers' financial health to tailor policies accordingly, while considering the use of accounts receivable insurance for customers with uncertain risk levels;
Operational risks causing production disruptions and substandard product quality;
Diversifying the customer portfolio.
Risks related to fire hazards and occupational safety;
Management risks arising from errors, fraud, and human resource challenges; as well as risks associated with corporate culture during periods of innovation.
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