Samsung Securities [B3]

Internal Control

Operating a front office-centric internal control system

Diagnose and Revise Work Process

Check/fix weak points and strengthen preliminary-inspection

Inspected entire work procedure with KPMG(*'Jun-Dec 2018) to identify/analyze weak points and systematize work procedure

This table is Procedure Check, Work Manual Revision, Regularize Internal Control Council.
Procedure Check	Inspected entire company and identified 441 work procedures open to possible risk, 90% of revisions completed -Completed 396 out of 441 cases as of Dec 2019
Work Manual Revision	Over 2,300 work manuals modified to standardize work procedures -Revised 1,600 manuals at headquarters and 700 at branches
Regularize Internal Control Council	Held internal control council on a regular basis to strengthen pre-inspection function for new/modified businesses -Internal Control Council : Internal Control & Assurance team, Compliance team, Business Development team, Information Strategy team and other related departments -Number of meetings held increased from 13 times in 2018 to 53 times in 2019 *Work approval process Work approval process step one is plan work(relevant Department), step two pre-inspection(internal control council), step three develop system(business developent), step four initiate work(executive approval).

Execute self-diagnosis

Inspected each HQ divisions and introduced on-field self-inspection system to prevent incidents

Reviewed work procedures at each division and checked potential management risk in compliance with internal/external laws and regulations (capital market law, financial investment business regulations etc.)

This table is IB, S&T, Wholesale, PBS, Retail
IB	-Inspected traditional biz. for illegal activities, risk management status of capital biz., and internal process adequacy, etc
PBS	-Inspected overall risk management status of hedge fund brokerage, stock lending, swap, and credit offering operations
S&T/운용	-Inspected the appropriateness of risk management and internal control weaknesses related to trading -Checked the accident prevention system
Retail	-Conducted self-assessment to check probable violations that occur with brokerage biz. -Regularly revised special management accounts along with suspicious investments to prevent illegal activities in advance -Operated financial product committee and appoint new CCO directly under the CEO, to prevent mis-selling of high-risk products etc

Raise Employee Awareness of internal control Revamp Internal Control Structure