"As the North Korean regime has been repressing its people with its continued reign of terror while ignoring the livelihoods of its citizens, even the loyalty of North Korea's elites has begun to crumble," Park said during the session which was held as the annual South Korea-U.S. military drills kicked off its two-week run.

"As signs of serious cracks emerge, the likelihood of unrest in the regime is increasing," she added.

Thae Yong-ho, North Korea's deputy ambassador to Britain, recently defected to South Korea with his family -- a case that observers here say highlights that the loyalty of the North's elites towards its leader Kim Jong-un has been eroding.

Thae, who Seoul officials say has been "disillusioned" with the repressive regime, is among many other elites who have sought asylum in South Korea or elsewhere.

Park also stressed that to prevent internal unrest and further defections by North Koreans as well as create confusion in South Korean society, the North could undertake various types of provocations or terrorist acts, including those in cyberspace.

"Given that the possibility of North Korean provocations is higher than ever before, and North Korea's nuclear and missile threats are direct and real ones, our drills must be like real (battle operations)," Park said, referring to the Ulchi Freedom Guardian exercise, an annual war game jointly carried out by the South Korean and U.S. troops across the nation.

Following the NSC meeting, Park chaired a Cabinet meeting.

Calling for national unity in overcoming security challenges, the president noted that Pyongyang is moving on an "extremist path" that aims to keep South Korea on edge.

"I call on Cabinet members to accurately grasp the crisis situation and sternly respond to acts that foment internal division and conflict," she said during the Cabinet meeting.

Park, in addition, underscored that based on a robust defense posture, the South should make the North "clearly realize that it would self-destruct should it refuse to change tack" and move towards denuclearization. (Yonhap)