SOUTH KOREA Law and Practice Contributed by: Bo Hee Park, Minhyun Cho, Ian Kim and Jun Hee Kwon, Jipyong LLC
8. Artificial Intelligence 8.1 Board Oversight of AI
parency, safety, risk management, user protection and human oversight. For AI systems that may materially affect rights or safety, these requirements are directly relevant to corporate risk management. In the finan - cial sector, AI use is also addressed through internal control and risk management frameworks, including oversight of algorithmic risk, data bias, model risk and consumer protection. A key recent development is that Korea’s AI govern - ance regime has begun to move from policy-level dis - cussion to statutory implementation, with the AI Basic Act forming the basis for further subordinate rules, guidance and public-sector governance structures. Within companies, management typically leads AI strategy and day-to-day implementation. The board oversees AI use where it creates material business, regulatory, operational or reputational risk. In finan - cial companies, risk management committees, inter - nal control committees, where applicable, and audit committees may have more specific roles. Korean law does not generally require a dedicated AI committee, although companies may establish AI ethics, technol - ogy or similar committees voluntarily. 8.3 Liability Exposures Arising From AI Use In Korea, liability exposure for boards and officers aris - ing from AI use is not governed by a single AI-specific regime; instead, it is addressed through existing legal frameworks. The main areas of exposure include: • breach of directors’ duty of supervision under the KCC, where adequate internal control systems for AI-related risks are not established or properly overseen; • disclosure failures under the Capital Markets Act, particularly where AI-related risks, incidents or capabilities are misstated or not disclosed in a timely manner; • data breaches or failures to implement appropriate safeguards under the Personal Information Protec - tion Act; • unfair practices, including algorithm-driven market misconduct or consumer protection issues; and • liability for safety incidents under general tort prin - ciples.
Korean law does not currently impose a general AI- specific board oversight regime. There is no statu - tory requirement for companies generally to appoint AI-specialist directors or establish a dedicated AI committee. AI-related oversight is instead addressed through a combination of the Framework Act on the Development of Artificial Intelligence and the Creation of a Foundation for Trust (the “AI Basic Act”), privacy rules on automated decision-making, and directors’ general duties to supervise risk and internal controls. The position is more developed for financial com - panies. Under the Act on Corporate Governance of Financial Companies, boards must approve and oversee internal control standards, risk management standards and related policies, and supervise the representative director and other executives’ overall internal control responsibilities. Certain financial com - panies must also operate risk management, internal control and audit committees. AI algorithm risk, data bias and model risk may therefore fall within these existing control structures. In addition, the accountability map regime introduced in 2024 requires responsibilities for internal control and risk management to be allocated among the executives and approved by the board. Where AI use creates material operational, regulatory or consumer protection risk, AI-related risk responsibilities may need to be reflected in that allocation. 8.2 AI Use-Related Risks Korea’s AI governance framework addresses AI use- related risks through a combination of public regula - tion and corporate internal controls. The main risks include explainability, bias and discrimination, privacy, safety, consumer protection, model risk and reputa - tional harm. These risks are managed through the AI Basic Act, privacy rules on automated decision-mak - ing, the Act on Corporate Governance of Financial Companies and directors’ general oversight duties under the KCC. The AI Basic Act provides the central framework for high-impact AI and generative AI, focusing on trans -
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