After experiencing losses from exchange-traded funds (ETFs) last year and entering an emergency management mode, Shinhan Investment Corp has taken decisive action to strengthen its internal controls. The company has decided to deduct performance bonuses for all executives, including top management, in the event of any issues. This move reflects CEO Sunhoon Lee's determination to make internal control not just a slogan but the highest priority, positioning this year as the starting point for restoring trust.
On the 22nd, Shinhan Investment Corp announced that it has introduced a strict internal control policy, making the evaluation and compensation of all executives contingent on internal control, including the collective deduction of performance bonuses in the event of an internal control issue. Since the ETF liquidity provider (LP) loss incident in October last year, the company has operated a crisis management and normalization task force (TF) to drive improvements in internal controls, organizational culture, and human resources innovation.
This new measure, which deducts performance bonuses for all executives when a problem occurs, marks a significant departure from the previous practice of limiting responsibility to specific executives. It is seen as a strong declaration of collective responsibility, with all executives sharing the burden. However, executives directly responsible for internal control are excluded from this policy due to the nature of their duties.
Department evaluations will also focus primarily on internal control. The weight given to internal control in performance assessments will be significantly increased, and if a department is found lacking, its performance rating can be downgraded to the lowest level regardless of other scores.
The company has also strengthened incentives, not just penalties. To emphasize the importance of middle and back office roles related to internal control, Shinhan Investment Corp has established a new "Internal Control Platinum" category in its year-end achievement awards, recognizing outstanding departments and employees in this area.
Sunhoon Lee, who took office earlier this year as a "relief pitcher" and emphasized "restoring trust" in his inaugural address, stated, "For financial institutions, customer trust is an invaluable asset that cannot be exchanged for anything else." He added, "By directly linking internal control to evaluation and compensation in this emergency management system, we have maximized our commitment to action." He further emphasized, "We will continue to actively implement measures to strengthen internal controls, believing that only by addressing even invisible potential risks can we truly restore trust."
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