Enterprise Risk Management at Posco

Developments that adversely affected Korea's economic recovery were likely to decrease the demand for Posco's products. Korea was Posco's most important market, accounting for 70.6 % of Posco's total net sales in 2001.

Economic difficulties in Asia, including Japan, Indonesia, Thailand and Malaysia, had led to a general reduction in demand for Posco's products in the region. Posco's export sales accounted for 26.7 % of its total sales volume for steel products in 2001. Posco's sales to Asia, other than Korea, accounted for 70.7 % of its total export sales volume for steel products in 2001. Posco expected that sales to these countries might remain relatively weak until significant recovery occurred in these economies...

Posco believed that its conservative financial management policies and access to multiple sources of financing both in local and international markets had contributed to its satisfactory operating performance, despite the challenging economic environment in Korea and Asia since 1997. Posco reduced its total debt outstanding from W8, 731 billion as of December 31,1997 to W6,357 billion as of December 31, 2001. Posco had significantly reduced the amount of long-term foreign currency loans from W4, 523 billion as of December 31, 1997, (representing 51.8 % of total debt) to W3088 billion as of December 31, 2001, (representing 48.6 % of total debt)...