Kumho Tire classifies risks related to management, environment, and safety, prioritizes them based on their likelihood and impact, and operates dedicated response teams to manage them in detail. We are proactively pursuing strategies to identify and monitor potential risks, ensuring a preemptive response. To better adapt to rapidly changing risks, we share mid-to-long-term strategies and action plans with all employees annually, incorporating risk management objectives into departmental performance goals.

Governance

Kumho Tire has established an enterprise-wide risk management system that involves the board of directors, committees, management, and dedicated risk response departments. The Strategic Steering Committee, under the Board, meets monthly to report on major business decisions and risks and to develop response plans. Additionally, the Audit Committee periodically monitors and manages the company’s risk management activities. The ESG Committee reports on major ESG legislative trends and the latest issues to the management, supporting decision-making and response strategies to prevent ESG-related risks.

Integrated Risk Management

Kumho Tire defines risk as any unforeseen event that occurs internally or externally and recognizes that failing to respond appropriately can pose significant threats that could negatively impact the organization, industry, or stakeholders. Kumho Tire categorizes financial and non-financial risks that can impact sustainable business activities into seven major categories and 20 sub-categories. Each risk is analyzed for its likelihood and impact, and risk exposure is managed on a five-level scale.

Risk Types

Financial Risk

Kumho Tire supports stable and continuous management performance across all business units by managing financial risks, such as market risk, credit risk, and liquidity risk. Kumho Tire establishes financial risk management policies, identify and evaluate risks, and engage in hedging activities from an integrated company-wide perspective.

Exchange Risk

Kumho Tire periodically reviews and monitor foreign exchange risks arising from transactions in 10 global currencies. To mitigate these risks, Kumho Tire utilizes asset-liability matching and natural hedging strategies.

Interest Rate Risk

The interest rate risk of consolidated company primarily relates to floating-rate borrowings, with the associated interest expenses being exposed to interest rate risk. For deposits and borrowings with fixed interest rates, there is no impact on current profits or capital from interest rate fluctuations.

Tax Risk

In transactions with domestic and international related parties, we comply with country-specific tax laws and international standards, including the OECD Transfer Pricing Guidelines and the Arm’s Length Principle. Kumho Tire will continue to fulfill our tax obligations faithfully, demonstrating our commitment to social responsibility.

Governance

Kumho Tire clearly defines the responsibilities and tasks related to tax reporting and payment, and Kumho Tire ensures strict compliance with tax laws and prevent any legal violations through thorough reviews by the designated department. Kumho Tire supports the tax reporting and payment obligations of overseas related parties, including corporate tax, and meet the documentation requirements of each country to mitigate global tax risks. We strive to minimize these risks through consultation with external experts.

🔗Audit Report

Non-Financial Risk

Regulatory Risk

To address regulatory risks related to tires, we consider these risks during new product development and invest actively in R&D. Kumho Tire complies with the Tire Energy Efficiency Rating System and continually develop lightweight technologies. In response to new regulations like DPP, Kumho Tire identifies ways to reduce product carbon footprints through LCA. Additionally, we are expanding our ESG management system at overseas business sites to comply with regulations like CSDDD regarding ESG disclosures for our operations and supply chains. Kumho Tire also conducts ESG supply chain evaluations for its suppliers to identify and mitigate risks.

Social Risk

Social risks are risks related to employees, such as safety accidents, labor negotiations, and human risks, therefore workplace safety and health management is especially important to respond to social risks. Since 2023, Kumho Tire has been providing safety and health training to all employees. The SHE Planning Team, responsible for safety and health issues, has integrated these topics into their KPIs, ensuring that related tasks are included in performance evaluations to manage safety and health risk more proactively.

Environmental Risk

Environmental risks, including natural disasters, pollution, and climate change, are closely linked to various stakeholders, such as customer demands and the environment surrounding production plants, due to the nature of the manufacturing industry. These financial impacts are analyzed and monitored through climate change risk assessments. In particular, in response to climate change, Kumho Tire reflects the contributions of employees who help reduce carbon emissions and save energy, in performance evaluations and incentivizes them. This approach motivates departments to generate ideas and internalizes risk mitigation activities.

Key Risk Management Activities

Risk Response Process

Kumho Tire operates an Emergency Management Committee composed of the CEO and executives from each division to respond swiftly to risks. The Emergency Management Committee operates initial response centers domestically and internationally and provides guidelines until the Headquarters Countermeasure Headquarters is established. Once the Headquarters and local Countermeasure Headquarters are formed, the Emergency Management Committee communicates with them to share necessary information for incident response, and the Public Relations Center handles external communication during crisis situations.

Strengthening Mock Drills and Training Programs

To respond effectively to crisis situations, Kumho Tire conducts annual mock drills and training for employees. The mock drills are hosted by the management departments of all domestic and global business sites. After the drills, Kumho Tire analyzes areas for improvement based on the planned scenarios and establish follow-up action plans. Additionally, we conduct employee training on various risks that may occur during work and incident cases with response measures.

Emerging risks

Kumho Tire defines the impacts of external environmental and social changes that affect corporate management goals and strategic directions as Emerging Risks. For emerging risks that have a significant impact on business value and the social environment, we analyze the business impacts and respond accordingly to mitigate these risks.