6 out of 10 Board Members Are 'Finance and Business Professionals'
Only 2 Digital Experts Among 186 Members
[Asia Economy Reporter Oh Hyung-gil] Among the six domestic financial conglomerates, it was found that 6 out of 10 board members, who play a key role in internal control, are experts in finance and management.
Although financial institutions are putting their lives on digital transformation, there were only 2 digital or IT experts on the boards.
It is stated that outside directors with expertise in various fields are included to ensure the board's function of checking and balancing management, avoiding common backgrounds or representing specific interests, but this is criticized as merely a formal measure.
According to the group disclosures for the first half of this year by financial conglomerates on the 15th, the total number of board members across six groups?Samsung (representative company Samsung Life Insurance), Hanwha (Hanwha Life Insurance), Kyobo (Kyobo Life Insurance), DB (DB Insurance), Mirae Asset (Mirae Asset Securities), and Hyundai Motor (Hyundai Capital)?was 186.
Among them, 65 were financial experts, accounting for 34%, the largest share, followed by 52 management experts (28%). Financial and management experts together accounted for over 60% of the entire board.
Next, accounting experts numbered 30 (16%), economic experts 21 (11%), and legal experts only 10 (5%). Notably, IT (digital) experts were represented by one person each at Mirae Asset and Hyundai Motor.
By group, Samsung Financial Group had the largest number of board members at 43 among the six groups. Inside directors numbered 23, and outside directors 20. Among them, 17 (40%) were financial experts, followed by 11 management experts (26%), 6 economic experts (14%), 5 accounting experts (12%), 3 legal experts (7%), and 1 other.
Hyundai Motor, with 32 board members, was the only financial group where management experts (14) outnumbered financial experts (4).
Hanwha had 15 financial experts (48%) among its 31 board members, the highest proportion among financial groups. It also had 7 management experts (22%), 4 accounting experts (13%), and 1 legal expert.
Kyobo and DB each had 10 (36%) and 11 (39%) financial experts among their 28 board members, respectively. Mirae Asset showed a balanced distribution with 8 financial experts (33%), 4 management experts (16%), 4 accounting experts (16%), 3 economic experts (12%), 2 legal experts, and 1 IT expert among 24 members.
The role of the board of directors is becoming increasingly important in the internal control of financial groups. According to the "Act on the Supervision of Financial Conglomerates" implemented since June, internal transactions exceeding 5 billion KRW must be approved by the board.
Risk management officers of financial companies belonging to each financial group must conduct their own crisis situation analysis, report the results and countermeasures to the board, and then submit them to the risk management department of the representative financial company.
Also, in the risk management performance evaluations that financial groups must conduct, the authority and operation of internal control, including the board's authority and role, are key evaluation items.
Despite the critical role, controversy over the financial group boards being mere "rubber stamps" continues. Jeong Eun-bo, Governor of the Financial Supervisory Service, recently mentioned at a National Assembly audit, "Although there have been changes in the composition and operation of boards, they have not fully met public expectations," indicating that financial holding company boards are not functioning properly.
A financial industry official explained, "We try to invite experts from various fields, but we also consider the reality that the board must reflect the unique characteristics of finance when composing it."
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