As military tensions between the U.S. and Israel against Iran escalate, Korean financial firms operating in the Middle East have mandated that all personnel work remotely, with some staff relocating to alternate locations nearby. The Financial Services Commission convened on the 19th to assess the financial sector's risk response amid the rising tensions. Although the ongoing circumstances are influencing fluctuations in exchange rates and rising international oil prices, the Commission believes that the risks will not significantly impact the domestic financial system.

Currently, the exposure of the local financial sector to the Middle East remains limited, with six major banks reporting an exposure of 4.3 trillion KRW, accounting for only 0.3% of the overall risk-weighted assets. Specific exposure tied to Iran and Israel is as minimal as 1 billion KRW. The life insurance sector shows an exposure of 5.1 trillion KRW (0.6% of managed assets), and non-life insurance firms report 2.4 trillion KRW (0.7%). Following a special travel advisory issued by the Ministry of Foreign Affairs on the 2nd of this month, financial institutions have enacted emergency response strategies, leading to remote work for local employees and the evacuation of their families to South Korea.

Moreover, the insurance industry aims to enhance its support for companies in the region, ensuring rapid compensation in the event of incurred damages while also providing information on the potential surge in insurance premiums. The Financial Services Commission reassured that, despite heightened volatility in exchange rates and interest rates, the current impact on the financial sector remains manageable, pledging to continuously monitor the risks associated with different sectors as the situation develops.