Koramco Advances Internal Control System

Full-Scale Implementation of Responsibility Structure Chart
Collaboration with Jipyong to Address New Financial Governance Law
Aiming to Secure Leadership in Risk Management Initiatives

Koramco REITs Management & Trust and Koramco Asset Management are responding swiftly to the Financial Supervisory Service's call for enhanced internal controls in the financial sector by introducing a "responsibility structure chart."

On October 29, Koramco announced that it is actively establishing a responsibility structure chart that clearly defines each executive's internal control and risk management responsibilities, in accordance with the revised Act on Corporate Governance of Financial Companies.

The amended law requires that the CEO of a financial company prepare a responsibility structure chart that allocates internal control work to executives without overlap or omission, and mandates submission of this chart to the Financial Services Commission by early July next year. In response, Koramco is collaborating with law firm Jipyong to design the responsibility structure chart and upgrade its internal control management system.

Recently, there have been a series of sanctions in the financial sector due to insufficient internal controls. Some trust companies and asset management firms have been criticized for inadequate asset soundness assessments, improper management of internal information, and repeated violations of disclosure obligations. There have also been warnings against unsound business practices. According to the Financial Supervisory Service's tally of sanctions against financial firms, the number of sanctions against asset management companies increased from 6 cases in 2023 to 51 cases in 2024, an approximately 8.5-fold increase.

Financial authorities are strongly urging financial institutions to strengthen internal controls and establish responsibility structure charts. Last month, the Financial Supervisory Service inspected 13 real estate trust companies for risks in completion-guaranteed and debt-type land trusts, demanding the establishment of a system where the roles and responsibilities of each executive are clearly distinguished and effective controls are in place.

In line with the direction set by supervisory authorities, Koramco is working to establish a practical internal control system that exceeds the standards targeted by the Financial Supervisory Service. To this end, Koramco is leveraging the consulting expertise of law firm Jipyong, which has extensive experience advising on internal controls and responsibility structure charts in the financial sector, to design a practical responsibility structure chart tailored to its organizational structure and business characteristics.

Jipyong, which has integrated advisory capabilities in financial company governance, risk management, and compliance, as well as experience in numerous financial group projects, is closely analyzing Koramco's internal control measures.

Among domestic real estate trust companies, Koramco is recognized as one of the most stable in terms of risk management capabilities. Even as some trust companies face business disruptions due to high interest rates and a downturn in the real estate market, Koramco continues to maintain stable business operations based on conservative investment standards and multi-layered risk response procedures.

The establishment of the responsibility structure chart is a strategic initiative to both internally advance management systems and internal controls, and externally demonstrate the stability of its governance, thereby aiming to set the standard for risk management in the industry.

Under a CEO-centered integrated management system, Koramco is clearly distinguishing the responsibilities and authorities of each executive and is building an integrated system that organically connects internal control, risk management, and compliance functions. By linking with external advisory systems and independent audit bodies, Koramco is enhancing the effectiveness of internal controls, while also reinforcing business stability in high-risk areas such as completion-guaranteed and debt-type trust businesses through thorough inspection and response systems.

Jung Seunghoe, CEO of Koramco REITs Management & Trust, stated, "Koramco has already been operating a stable management system, but we will not stop here-we will build an even more advanced internal control system," adding, "We aim to strengthen investor trust and establish ourselves as a model for the industry."