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• The Internal Audit Department has continuously
improved the quality of internal audit through training
for general audit skills and specialized skills for
computerized inspection system such as the Web
Application Penetration Testing. The training took
74 man-days, including educational on-site visits
and exchanging internal audit experiences with the
Internal Audit Department of the Korea Exchange
(KRX), for six man-days.
• SET requires to have a Quality Assessment Review
(QAR) conducted by external independent appraisers
every five years. The last assessment was done in
2011, with continuous improvement taken into
consideration the suggestions from the assessment,
as well as the self-evaluation implementation.
Based on internal audit activities and implementation
of important projects, the Audit Committee viewed that
SET’s overall internal control system has functioned
adequately and appropriately. (Details are shown in
the Audit Committee report).
(6) Risk management
The BoG emphasizes the importance of systematic
risk management. The BoG is responsible for designating
risk management policies and framework for the
organization and appointing the Risk Management
Committee (RMC). The RMC, comprised of experts in
risk management, advises and makes recommendations
to management to ensure that SET’s risk management
process is in line with specified policies and international
standards. The RMC has to ensure complete coverage
of all enterprise-wide significant risks, consisting of
three levels: 1.Strategic risk 2. Business risk and
3. Process risk, via risk assessment and self-control.
Operationally, the management is responsible for
the risk management and sets up the policy in identifying
risks and assessing the level of risk according to the
defined criteria. The Risk Management Department
coordinates and supports management in the implementation
of risk management processes according to the
set policy. The risk management framework can be
summarized as follows:
• Identify and assess the probability of the risk and
the degree of its impact according to the established
criteria, and set measures to manage the risk at an
acceptable level. Follow up on the implementation
of the risk management plan by the management,
as project owner. Report the risk status which
covers a continuous and comprehensive review
of the adequacy and effectiveness of key risk
management measures to ensure that in case the
risk occurs, it will be managed in a timely manner.
Consider suitable risk management measures
required in preparation for the startup of the new
computerized system for clearing and settlement,
for delivery of new securities, and for the securities
depository system within the equity instruments
market. This system is scheduled to begin operation
in mid-2015, and is currently being tested among
all involved agencies in the industry.
• Establish a Business Continuity Plan (BCP), which
includes annually reviewing and practicing the
implementation of the plan with other agencies
in the capital market to cope with any crisis. SET
recognizes the importance of the readiness of the
staff and the system both in the main building and
the backup centers. SET conducts functional tests
on backup systems together with member companies
to manage any disaster that may affect the main
building. This is to ensure there is continuity in
securities trading. In 2014, SET was successful
in implementing the BCP in actual practice when
SET was able to provide securities trading services
to investors throughout the political crisis. This
demonstrated the readiness and viability of SET’s
BCP at world-class level.
• Monitor and report the status of major risks to the
SET Board of Governors, the Risk Management
Committee, and the Audit Committee on a regular
basis to keep them aware of the risks SET is facing.
• Create a culture that encourages SET executives
and staff to realize the importance of risk management
continuously, such as a training course on integrated
risk management and corporate strategy. This includes
being equipped for the ASEAN Economic Community