Case Study: Risk Governance and Management Practice of the Hana Financial Group

Joon-Hui Yoon, Eun-Sok Kim and Ki-Sik Min

This article was first published as a chapter in Managing Illiquid Assets: Perspectives and Challenges, by Risk Books.

We discuss the general practice of management and valuation of illiquid assets by the Hana Financial Group (HFG) with particular focus on risk governance and management procedures. We analyse HFG’s risk governance and management practice on five key areas – governance, culture and compensation, assessment, limit management and an early warning system – all of which are critical components for managing potentially illiquid assets.

The main features of the HFG’s risk practice are the matrix organisation, centralised risk governance, proactive involvement by senior management in risk issues, detailed risk assessment and limit management and extensive applications of an early warning system. These enabled HFG to avoid crises and generate reliable profit without any loss for over 40 years in the business.

The implication of HFG’s practice on management and valuation of illiquid assets is that mutual improvement of risk management practice between business functions and risk management, backed by senior management’s continuous attention, can achieve a balanced