[2023 Financial Forum] Citi Bank: "The Core of Internal Control is Risk Management... Every Employee is a Manager"

David Chu Citibank Hong Kong CCO

David Chu, Chief Compliance Officer of Citibank Hong Kong and Head of the Greater China and Korea Cluster, attended the "12th Seoul Asia Financial Forum" held on the 25th at the Chosun Hotel in Jung-gu, Seoul, and gave a presentation on the topic of "Corporate Risk and Compliance Risk Management System." Photo by Jinhyung Kang aymsdream@

"The core of internal control is risk management. Every employee must think of themselves as a risk manager."

David Chu, Chief Compliance Officer (CCO) of Citibank Hong Kong and Head of the Greater China and Korea Cluster, emphasized this on the 25th at the Westin Chosun Hotel in Sogong-dong, Jung-gu, Seoul, where he spoke at the 12th Seoul Asia Financial Forum on the theme of "Desirable Financial Company Governance and Internal Control Systems."

Having served as CCO at Citibank Hong Kong for several years, he identified risk management as the core of Citibank's internal control. The first point he particularly stressed was not various institutional devices or personnel composition, but culture itself. Chu CCO stated, "To properly implement internal control, it is the 'culture'?the values pursued by the bank, the principles of management, and the direction led by the board of directors." He emphasized, "If the right direction is not set and values are not established to build a culture, employees cannot be provided with a point of orientation for their behavior."

The culture emphasized by Citibank is primarily customer value orientation. It is the belief that all actions and decisions must align with the best interests of the customer. He explained that internalizing such a culture inevitably leads to taking responsibility for risk management as well. Chu COO said, "The bank is large in scale and always carries risks," adding, "It is not a matter of business planning but an operational issue, a compliance area issue. Instead of making excuses, employees should take ownership, detect problems early, and correct them. That is proper risk management and leadership."

He particularly urged the need for a culture where various concerns can be reported to higher-ups promptly when problems arise or conflicts of interest occur. He also advised that managers should create an environment where employees do not merely read the internal code of conduct but always keep it in mind and put it into practice.

Regarding governance, he mentioned the need for an environment where the board of directors can function soundly. The board must have the right information and be able to perform appropriate oversight functions. Chu COO explained, "The board should be consistently provided with properly summarized information so that it can ask appropriate questions about management strategies and conduct oversight," adding, "Only then can the board view issues in depth and carry out monitoring and supervision."

To this end, Citigroup has established within the board a Risk Management Committee, Audit Committee, Nominating and Governance/Public Policy Committee, Compensation Evaluation and Culture Committee, and Technology Committee. Additionally, the Group Executive Management Committee has detailed organizations for risk management, asset risk, business risk, reputational risk, strategic risk, etc., providing appropriate information and support to each board committee.

He also explained structural management methods involving defining, assessing, reviewing, adjusting, and reporting risks in cycles. He advised that if risks are identified during these cycles, reported to direct supervisors, and investigated with guaranteed anonymity and independence, internal control will be facilitated. Above all, since culture is important, talent management is also considered the most crucial factor. Chu COO stated, "Because business is led by people, evaluation and compensation are important," and added, "It is also important to educate employees so that they can aspire to the values pursued by management."

This content was produced with the assistance of AI translation services.