As financial groups and banks strengthen internal controls in line with the financial authorities' policy, second-tier financial sectors such as capital and insurance companies are also joining in this effort. The atmosphere of strengthening internal controls, a core task for the banking sector, is expanding to second-tier financial sectors, where the focus has shifted from reinforcing internal procedures and processes to efforts in risk management through personnel renewal and external appointments.
According to the financial industry on the 26th, KB Capital recently established an Internal Control Committee through a change in its articles of association and appointed independent director Park Sang-bae, who previously served as the head of public relations at LG Electronics and LG Display, as the chairperson of the committee. The Internal Control Committee is responsible for establishing basic policies and strategies for internal control and demanding improvements for any deficiencies. KB Capital, the third largest in the industry with total assets of 16 trillion won, has also made executive changes to strengthen internal controls and risk management since the end of last year.
Hana Capital, with total assets of 18 trillion won, also amended its governance internal norms through an extraordinary shareholders' meeting at the end of the year and recommended independent directors Jeong Soo-jin and Lee Dong-hwan, both experts in financial risk management, as candidates through the executive nomination committee. The two candidates are expected to be finally appointed at the regular shareholders' meeting on the 24th. The main content of the norm amendment is to establish an Internal Control Committee within the board of directors, and most companies, including OK Capital, NH Nonghyup Capital, and Hankook Capital, are showing similar trends.
The insurance industry is no different. Samsung Life Insurance appointed Gu Yoon-cheol, a special professor at Seoul National University with a background in government, as an independent director during its shareholders' meeting on the 20th. Director Gu served as the minister-level head of the Office of Government Policy Coordination from 2020 to 2022 during the Moon Jae-in administration and held the position of second vice minister at the Ministry of Economy and Finance.
Hanwha Life also appointed Lee In-sil, former head of Statistics Korea, as an independent director, and both companies established Internal Control Committees. The insurance industry is seeing former government officials leading the initiative for internal controls, which is interpreted as a measure to prepare for the possibility of a change in government and various policy changes and regulatory risks scheduled for this year.
The industry explains that the emphasis on internal controls this year is influenced by the financial authorities. On the 11th, the financial authorities identified risk management and internal controls as key keywords for bank supervision, making it inevitable that this would lead to directives for second-tier financial sectors. In fact, at the end of last year, Meritz Capital was criticized for its insufficient consumer protection system related to product development, sales, and performance evaluation systems, receiving a comprehensive rating of 'vulnerable' from the Financial Supervisory Service.
The influence of the amendment to the Financial Companies Governance Act, which took effect in July last year, is also significant. The amendment includes the introduction of a duty structure and assigns internal control management responsibilities, and it is set to be implemented in a phased manner depending on the size of the financial sector. Insurance companies with total assets of over 5 trillion won must submit their duty structure diagrams to the financial authorities by July this year, while those under 5 trillion won and specialized financial companies with over 5 trillion won must do so by July next year, with the remaining financial companies required to submit by July 2027.
The duty structure diagram is designed to strengthen overall internal control management in financial companies so that executives responsible for related duties are held accountable when a financial incident occurs. Previously, banks that implemented the duty structure have actively sought to hire independent directors from among economic bureaucrats, and the industry analyzes that it is now the turn of the second-tier financial sector.
An industry official noted, "There seems to be a prevailing sentiment across the industry to focus more on internal management than on performance improvement for the time being," and added, "In the past, the emphasis was on strengthening processes for internal controls and risk management, but recently, there's a trend to approach this from a human resources perspective."