KBank has applied the Three Lines of Defense guidelines to our risk management to ensure that our risk management process is efficiently supervised, controlled and examined by responsible units. Our organizational structure focuses on clearly defined segregation of duties at each level, and each unit is independent of the management and reports directly to the Board of Directors.

KBank has in place a risk management process comprising risk identification, assessment, monitoring, controlling and reporting. This process also includes ESG risks.

KBank also places significance on early warning and monitoring of risk position and overall concentration. We regularly review the adequacy of our risk management system and efficiency of risk management via relevant committees.

Risk Management Structure
KBank has applied the Three Lines of Defense model to our risk management to ensure that our risk management process is effectively supervised, controlled and examined by responsible units. Our organization structure focuses on clearly defined segregation of duties at each level. Each unit is independent from the management and reports directly to the Board of Directors. Moreover, the board and senior management are defined duties and responsibilities in risk management process appropriately. The Board of Directors is ultimately responsible for formulating sound risk governance framework, overseeing the instillation of risk-based organization culture, approving risk appetites and policies as well as ensuring capital adequacy including appropriate capital assessment process to accommodate our current and future business operation. The Board of Directors has delegated authority to the Risk Oversight Committee to oversee overall risk management, review and examine the adequacy and effectiveness of policies, strategies, and risk appetites. The Risk Oversight Committee receives monthly risk dashboard for monitoring and managing risk exposure within approved risk appetite, and report significant risk position, risk management efficiency as well as corrective actions to address any risk policies or strategies to the Board of Directors on quarterly basis. Overall risk management policies and strategies, including the risk appetites are reviewed and examined the adequacy and effectiveness at least once a year or upon significant changes. In addition, the sub-committees are established for monitoring and managing various types of risk closely to ensure that KBank manages risk appropriately on a timely manner. All staff in the organization are accountable for taking part in risk management per the three lines of defense model. Roles and responsibilities of KBank units regarding risk management include:

1. First Line of Defense: Business units are accountable for the risk they assume, and responsible for actively managing all relevant risk exposures in day-to-day operation. So that risks and returns are optimally managed in line with our risk appetite. Meanwhile, support units that provide services to core business units are accountable for managing business-related operational risks.
2. Second Line of Defense: Risk management and control units are independent and responsible for establishing the policies and framework for risk management, including monitoring and reporting risk to relevant committees/sub-committees. And providing independent and objective views of specific risk-bearing activities while also ensuring that risk levels are in line with our risk appetite.
3. Third Line of Defense: Internal Audit is independent and responsible for evaluation of the effectiveness and sufficiency of our risk management and internal controls.