Risk Management

Internal Control and Risk Management

Risk Management

POSCO devotes company-wide effort to the proactive detection and management of risks, enabling rapid responses to an ever-changing business environment. Risk monitoring results and response measures are reported to the Board of Directors. Risks are classified into financial risks such as tax and investment―and non-financial risks including safety, environment, human rights, and supply chain with the responsible department prioritizing risk mitigation for each issue.

Risk Management System(RMS)

Since 2004, POSCO has operated a company-wide Risk Management System¹⁾ to enable systematic risk management across key business processes, continuously improving it based on feedback from relevant departments. We have recently integrated RMS with big data analytics, allowing field departments to autonomously detect and review anomalies in real time. When necessary, findings are escalated to internal audit procedures for further action.

1)A system that selects and assesses individual risks by work process including finance, procurement, marketing, investment, production, and facility management to manage overall risk levels

Internal Accounting Control System

POSCO's internal accounting control system comprises both design evaluations which assess the adequacy and completeness of control activities designed to prevent and detect errors and fraud in financial statements and operational evaluations, which verify that these controls function as intended. A dedicated organization oversees the inspection and management of the system, conducting both design and operational evaluations each fiscal year and reporting the results to the Board of Directors, the Audit Committee, and the General Meeting of Shareholders. Any deficiencies identified during the evaluation process are resolved through close consultation between the dedicated organization and the departments responsible for executing control activities.

Continuous Monitoring of the Global Business Environment

POSCO closely analyzes and forecasts external economic trends and movements in the steel and raw material markets each quarter. We incorporate this analysis as an essential input into its medium- and short-term management plans. To further minimize risk, we provide semi-monthly forecasts of exchange rates in major volatile economies, Chinese steel prices, and key raw-material prices including iron ore, coking coal, and nickel. We also maintain continuous risk monitoring through the Global Information Hub (GIH)―POSCO Group's management information system―which delivers daily updates on the steel business, new-growth areas, global economic trends, and competitor technology developments to all executives and employees.

Sensitivity Analysis and Scenario-based Management

POSCO monitors potential changes in revenue and profit at least once a month by tracking key economic and industry market indicators, including exchange rates, oil prices, iron ore and coking coal prices, and global steel prices. When significant movements in these indicators are expected to impact business performance, we promptly develop and implement response plans. In particular, for investment decisions, we incorporate scenario-based sensitivity analyses of core risk factors, including sales volume, sales prices, and material costs. Business plans are structured around three scenarios―Base, Optimistic, and Pessimistic―with actual performance reviewed monthly and reported at operational meetings chaired by top management, where root causes of issues and improvement measures are identified and acted upon.

ESG Risk Management for Business Investments

Before formally proposing an investment, POSCO conducts advance analysis of potential ESG risks associated with the project and reviews mitigation measures to be reflected in the proposal. At the investment review stage, in-house ESG experts participate as reviewers to assess whether risk-prevention measures are adequately established. Once an investment is approved, we require ESG indicators to be incorporated into the investment performance evaluation criteria. This requirement ensures that projects are carried out with consideration for their ESG impacts.

Tax Risk Management

POSCO works to prevent all tax risks that may arise across its operations at all domestic and overseas business sites. These risks may arise from transactions of business-related goods and services, mergers and acquisitions, corporate restructuring, international transactions, new business initiatives, and changes in transaction structures. Where necessary, we collaborate with external tax experts or seeks advice from tax authorities and make decisions only after careful review.

Tax Management Policy

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            POSCO faithfully complies with tax reporting and payment obligations not only under domestic regulations but also under the regulations of each country where we conduct business activities. We maintain transparent relationships with tax authorities in each country and diligently fulfill our taxpayer obligations, including the submission of documents as required by relevant laws.
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            POSCO adheres to the principle of conducting arm’s length transactions in accordance with the OECD Transfer Pricing Guidelines and the regulations of each country when dealing with related parties. For transfer pricing transactions with overseas related parties, we prepare BEPS<sup><span style="color: rgb(0, 117, 200);">1)？</span></sup>reports and transfer pricing reports in collaboration with external tax experts to ensure compliance.
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            POSCO adheres to the regulations of each country where it operates, faithfully fulfilling its tax obligations. We do not engage in transactions or contracts that shift income between countries to exploit differences in tax laws or loopholes in international tax systems. We ensure that taxable income is allocated consistently with the value generated in each country where business activities occur. POSCO does not use tax havens to unfairly reduce tax burdens and faithfully meets its tax obligations for international transactions through standard tax structures.
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            All tax employees of POSCO’s subsidiaries adhere to the tax regulations of each country in accordance with POSCO’s tax policy and perform their duties under the principle of maintaining a transparent relationship with tax authorities.
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            OSCO pays taxes fairly and uses legal procedures, such as appeals and administrative litigation, to contest unreasonable taxation. We share the growth benefits obtained through legal tax-saving measures with society.
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            At POSCO’s global business sites, we proactively review potential tax risks that may arise during business activities, including new business investments, strengthening the competitiveness of existing businesses, and restructuring, to ensure compliance with domestic and international regulations. During the risk review process, decisions are made based on the advice of external tax experts and tax authorities.
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        <p><span class="num">1)</span> BEPS : Base Erosion and Profit Shifting. This involves the erosion of the tax base through income shifting. It refers to the practice where multinational corporations create paper companies in countries with favorable tax rates under tax treaties to avoid paying taxes.</p>
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Tax Risk Assessment Process

Transparency in Tax Payments

In 2025, POSCO recorded a consolidated pre-tax profit of KRW 1,692.3 billion. The nominal tax expense was KRW 391.7 billion, representing a nominal tax rate of 23.1%, while the effective tax amounted to KRW 464.5 billion, resulting in an effective tax rate of 27.4%. Over the past three years, POSCO's average consolidated nominal tax rate was 23.6% and the average effective tax rate was 20.8%―2.8 percentage points lower than the nominal rate.