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KDIC CEO vows to strengthened risk management
Korea Deposit Insurance Corp. (KDIC) CEO Wi Seong-bak speaks at a press meeting at the Korea Press Foundation in Seoul, Dec. 13. Courtesy of KDIC
By Lee Kyung-min
By Lee Kyung-min
Korea Deposit Insurance Corp. (KDIC) CEO Wi Seong-bak vowed, Thursday, to strengthen preventative measures against financial firms' credit default in Korea by upgrading its risk assessment and monitoring system.
To that end, KDIC will seek to institute risk reduction program (RRP), a comprehensive recovery measure against possible credit risk of major financial firms, defined by active involvement of the financial authorities, he added.
“A possible default by a large financial firm deeply intertwined with the country's economy is sure to have far-reaching consequences in the market. We will seek to increase our readiness in the event of such an occurrence,” he said in a press meeting at the Korea Press Foundation in Seoul.
Wi also said the state-run organization will introduce a more sophisticated risk assessment method under which it will apply seven grades of differential insurance premium rates depending on future insolvency risks.
“Starting 2019, we will increase the number of insurance premium brackets to up to seven from the current three. We expect much protest from the affected financial services firms, but will continue to have open communication channels and listen to their shared concerns throughout the process.”
Under the current three-grade system, firms that received the lowest grade must pay 5 percent more than those that received the second grade, and 10 percent more than those that received the top grade.
Financial firms deemed vulnerable to credit risks will be more promptly identified following strengthened on-site inspections based on more tailored risk factor assessment models.
“We have received necessary information from the Financial Supervisory Service (FSS) thus far, but more efforts will be made to receive them directly from the firms without the middleman. Information and data sharing will be strengthened among relate bodies including Financial Services Commission and the Ministry of Economy and Finance.”
Wi also pledged to pursue the organizational reform by breaking barriers between risk monitoring and management.
“The new structure will help with effective and efficient work process without wasting time. Their functions will be more clearly defined through more direct chain of communications which will help them focus more on tasks at hand.”
The KDIC also plans to introduce a new program to help customers who send cash to the wrong account by mistake.
Under the program, a group of KDIC officials will seek to file a suit to represent those customers to help them recover the funds, in a broader move to better exercise their rights as a public entity.
“It will be an enormous burden for such people to individually file a suit. The cases can be resolved more easily with our help.”