Risk analysis and control measure explanation for derivative holding a position during the reporting period(including but not limited to market risk, liquidity risk, credit risk, operation risk and law risk)| In order to hedge the foreign exchange risk in operating activities, reduce the impact of exchange rate fluctuations, and give full play to the hedging function of foreign exchange derivative transaction, the Company implemented foreign exchange derivative transaction business consistent with its business scale, term, and currency.(I) Risks of conducting foreign exchange derivative transactions1. Market risks: market risks, such as losses resulted from changes in the price of foreign exchange derivatives due to the fluctuated underlying interest rate, exchange rate or other market price, may arise.2. Internal control risks: considering the specialty and complexity of foreign exchange derivative transaction business, inadequate internal control mechanisms may lead to risks.3. Liquidity risks: risk of failure to complete transactions due to lack of market liquidity.4. Performance risks: foreign exchange derivatives business faces the risk of default due to failed contract fulfillment when the contract expires.5. Legal risks: changes in relevant laws or violations of the relevant legal system by counterparty, resulting the contract cannot be executed properly, may cause losses to the Company.(II) Risk response measures1. Clarify the principles of foreign exchange derivative transaction: foreign exchange derivative transaction is based on the hedging principle to avoid risks from exchange rate fluctuations to the greatest extent, and based on market conditions, operation strategies shall be adjusted in time to improve hedging effects.2. System construction: the Company has established the Management Measures for Foreign Exchange Derivative Transactions, in which the scope of authorization, approval procedures, key operation points, risk management and information disclosure concerning foreign exchange derivative transactions are well defined, so that the conduct and risks of foreign exchange derivative transactions can be effectively regulated.3. Product selection: prior to any foreign exchange derivative transaction, it's necessary to select an FX derivative that suits the company's business context best, and is highly liquid and risk through a comparative analysis of various counterparties and products, before conducting business. The Company used forward instruments for general hedge and swap contracts for rolling hedge.4. Counterparty management: be prudent when selecting counterparties for foreign exchange derivatives business. The company only conducts foreign exchange derivative transaction business with large commercial banks and other foreign exchange organization with legal qualifications, thus avoiding potential default and legal risks.5. Management by specially-assigned persons: a special working group, set up by the Company's management representatives, Fund Department, Financial Sharing Center, Audit Department, Securities Department and other departments concerned, is responsible for the risk assessment, operation, recording and supervision of foreign exchange derivative transactions. The working group is supposed to decide on emergency mitigations in case of any significant changes in the market.