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142 Huawei Investment & Holding Co., Ltd.

Risk Factors

Huawei’s Risk Management System
In line with the Committee of Sponsoring
Organizations of the Treadway Commission
(COSO) framework, and referencing ISO 31000 risk
management standards, Huawei has initiated an
Enterprise Risk Management (ERM) system that
accounts for our unique organizational structure and
operating model. Under this system, we have defined a
robust set of ERM policies and processes, continuously
refined our ERM organizations and operating
mechanisms, and ramped up efforts to assess risk
management. Huawei’s ERM system ensures the

■    The Board of Directors approves solutions related
to managing the company’s major risks, crises, and
unforeseen events.

■    Business managers, as the primary risk owners
in their respective business domains, proactively
identify and manage risks to ensure they remain at
an acceptable level.

At Huawei, risk management factors are incorporated
into both strategic planning and business planning
processes: Each business department and field office
systematically identifies and assesses risks during
strategic planning, lists appropriate countermeasures
in their annual business plans, and then monitors and
reports on high-agenda risks during routine operations.
Huawei ensures uninterrupted business operations
by identifying major risk factors during strategic
decision making and planning, and taking necessary
measures to control risks during business planning and

Strategic Risks
Humankind will enter an intelligent world in the next
two or three decades. Digital technology is reshaping
the world around us, and we want to make sure that
this future is inclusive – that everyone can benefit

Huawei’s risk factors refer to those factors that have been identified in our strategic plans, business models,
financial systems, and the external environment. These factors could make the company’s ultimate achievement of
its business objectives uncertain. In this section, we will detail the major risk factors that could significantly impact
the company’s competitiveness, reputation, financial position, operating results, or long-term prospects.

from the changes digital technology brings. Mature
commercial applications of new technologies –
particularly 5G, cloud computing, artificial intelligence,
and blockchain – are speeding up the digital
transformation of all industries. This will present
enormous opportunities. That said, the external
environment is becoming more complicated than
ever, significantly challenging how globalization will
progress. Downward pressure on the global economy
has intensified. In the long term, the US government
will continue to suppress the development of leading
technology – a challenging environment for Huawei to
survive and thrive.

Moving forward, we will leverage our ICT strengths
to enable the digital transformation of all industries,
and ultimately bring digital to every person, home,
and organization for a fully connected, intelligent
world. Going forward, we remain committed to
embracing and leveraging a global supply chain
to hone our competitive edge. Beyond developing
leading products, we need to extend our roots deep
into the soil and build a diverse ecosystem that does
not depend on any one country. We also need to go
beyond the limits of the skies above us, striving for
theoretical breakthroughs, technological inventions,
and ground-breaking products and business models.
We will keep enhancing our software engineering
capabilities, pressing ahead with our US$2 billion
five-year budget for building quality, trustworthy
products and solutions.

External Risks
Macro environment: The global economy is under
downward pressure, strained by escalating global
trade frictions and higher barriers, businesses’ lack of
confidence to invest, and the uncertainties brought
about by geopolitical tensions. Against this backdrop,
Huawei is increasingly likely to face additional external
risks. Therefore, business departments and field offices
must ramp up efforts to identify and control risks and
promptly adjust strategies accordingly.
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