The Financial Supervisory Service held a workshop to review securities firms' risk management capabilities for supplying venture capital. The Financial Supervisory Service noted that problems were found, such as securities firms relying on reviewers' capabilities without minimum standards or not granting the chief risk officer (CRO) the right to request reconsideration by the deliberation body.
On the 17th, ahead of additional designations of comprehensive financial investment business entities and an expansion of securities firms' supply of venture capital, the Financial Supervisory Service held a "Risk management workshop on corporate credit provision by securities firms." The online workshop was attended by about 150 staff in charge of venture capital supply and corporate finance review and post-management at securities firms.
Venture capital refers to investments in new technology business partnerships, venture capital (VC), small and venture corporations, and KOSDAQ venture funds.
That day, the Financial Supervisory Service shared the results of its inspection of the status of risk management for corporate credit provision in the first half of this year, along with case studies such as venture capital supply strategies from other sectors.
The Financial Supervisory Service said that improvements are needed in the review and post-management process, pointing out that securities firms rely on reviewers' capabilities for investment decisions and do not grant the CRO the right to request reconsideration by the deliberation body. It also conveyed concerns about managing conflicts of interest that can arise when note issuance operations and corporate finance work are carried out within the same division.
Industry officials who attended the workshop defined risk factors by type of credit provision—such as acquisition finance, stock-backed loans, and asset securitization—and shared practical know-how on review and post-management, including stress tests based on key assumptions for each scenario. They also presented "how to use core review checklists by investment type" and a "post-evaluation system that reflects the characteristics of industries, borrowers, and collateral."
As the introduction of a mandatory venture capital ratio for comprehensive financial investment business entities brings attention to the task of screening and sourcing eligible investments, IBK Industrial Bank of Korea, which has extensive relevant experience, also introduced its venture capital supply strategy.
Currently, securities firms must supply 25% of funds raised through commercial paper issuance and integrated investment accounts (IMA) to domestic venture capital. The investment ratio will increase in phases to 10% next year, 20% in 2027, and 25% in 2028. The current 30% cap on real estate investments will be lowered to 15% next year and 10% in 2027.
An official at the Financial Supervisory Service said, "The Financial Supervisory Service will communicate closely and actively cooperate to ensure the smooth supply of venture capital by securities firms and to strengthen their risk management capabilities going forward."