Hyundai Rotem Establishes 'Transparent Order Review Committee' Including Outside Directors... 'Risk Prevention'

Enhancing Transparency in Order Review
Preemptive Blocking of Execution Risk Factors by Railway, Defense, and Plant Projects

Exterior view of Hyundai Rotem Uiwang Research Center

[Photo by Hyundai Rotem]

[Asia Economy Reporter Ki-min Lee] Hyundai Rotem is taking steps to prevent business risks by ensuring transparency in the order review process.

On the 20th, Hyundai Rotem announced that starting from the second half of this year, it will establish and operate a "Transparent Order Review Committee" including outside directors to thoroughly and transparently review the feasibility of new project orders. The Transparent Order Review Committee will play a role in pre-examining various risk factors that may arise during project execution, such as business viability, strategy, legal issues, and target countries related to new projects, to decide whether to participate in bidding. The committee will be composed of four outside directors and four to five internal executives.

Hyundai Rotem explained that continuous losses occurred in large projects ordered in the past, leading to the judgment that a more transparent order review process is necessary. Through this, they plan to conduct order reviews transparently and block participation in bids for projects with risks that could lead to profitability deterioration, thereby eliminating factors causing losses.

Currently, Hyundai Rotem operates a separate internal order review committee. Depending on the nature and scale of the business, Hyundai Rotem plans to operate a dual system: the Transparent Order Review Committee including outside directors, and the existing order review committee composed only of internal management from relevant business divisions, finance, legal, quality, and design departments.

Additionally, Hyundai Rotem decided to simplify the order review procedure from the existing five steps to three steps to improve efficiency. Before bidding, related teams such as design, sales, purchasing, and production will cross-verify risk factors, and the relevant headquarters will systematically manage risks that may arise during the project execution phase.

A Hyundai Rotem official said, "The establishment of the Transparent Order Review Committee including outside directors is to ensure transparency in reviewing bid participation and to prevent additional losses due to various risks," adding, "We expect that through securing transparency, a more thorough review of the business before bidding will be possible."

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