The need for proper regulations and robust risk management has been further highlighted by the news that Woori Financial Holdings Co, the biggest banking group in South Korea, has suffered huge losses because of substandard practices.

It was reported by the Yonhap News Agency that state auditors found that Woori Finance's annual loan-loss reserves averaged two trillion won (£1.6 billion) between 2008 and 2012.

That equates to 31.2 per cent of the firm's annual profit during those four years, meaning that the future viability of the banking group and its subsidiaries could come under threat.

The audit also found that at the end June last year, Woori Finance had a bad-debt ration standing 2.05 per cent and the figure had been as high as 3.3 per cent in 2010.

Both those these are much greater than the 1.5 per cent average found in other South Korean banking organisations.

Auditors said that a rise in toxic loans is a result of subsidiaries not sharing data on corporate borrowers who are in financial difficulty because they do not have an adequate integrated risk management system in place.

Despite its woes, Woori Finance was found to have paid out more than 7.15 billion won in bonuses to its staff during 2011.

"We've notified the Woori Finance chief to come up with ways to boost its competitiveness and asked the head of the Korea Deposit Insurance Corporation to strengthen the management of and supervision over Woori Finance," a statement from the board of Audit and Inspection of Korea (BAI) said.

Since its inception in 2001, Woori Finance has received more than 12 trillion won of taxpayers' money from the South Korean government in an attempt to save the firm from bankruptcy. A proposed sell off the group has also failed on three occasions.

Christoph Schwager, chief risk officer at military contractor EADS, recently stated that a lack of risk management information currently presents the biggest threat to global businesses.

In a presentation given in conjunction with World Risk Day, he stated that managing risks needs to become the norm as no company is perfect and needs to conduct regular assessments.