The Colombian artist Doris Salcedo, best known in the UK for her 167 metre (548ft) floor crack installation at the Tate Modern, has won the most lucrative contemporary art prize in the world, the Nomura Art Award, worth $1m (£770,000).

The inaugural prize was awarded to Salcedo for her body of work produced over the last 25 years, which has focused on the human cost of the conflict between successive governments and rebel groups in Colombia.

Salcedo is one of the country’s most prominent artists, whose work often confronts some of its most controversial issues.

Her work Fragmentos resulted in her being directly involved in the demobilisation process of the Farc, a leftist rebel group that disarmed following a 2016 peace deal, formally ending five decades of civil war which killed 260,000 people and displaced over 7 million.

The weapons turned over by 7,000 former fighters were melted down into tiles that now form an exhibition space in Bogotá. Salcedo has also been assisted by survivors of sexual violence during the conflict.

Doris Salcedo’s Sumando Ausencias project, in Bogotá, Colombia, filled a public square with the names of the victims of the Colombian civil war. Photograph: Felipe Arturo

“I believe works of art made with the collaboration of victims of political violence have the possibility to connect art and reality,” Salcedo told the Guardian. “In Colombia, a country trying to implement a peace agreement, certainly the pieces made now are an attempt to reconcile a society divided for more than 50 years.”

She continued: “In Colombia, like in any polarised society, there are different versions of our recent history. There are many attempts to deny that the war took place, and also an attempt to deny the existence of the victims. That’s why addressing war crimes in a work of art is at the centre of my practice as an artist.”

Salcedo said winning the award, which is funded by the Japanese financial services group Nomura, was “entirely unexpected”, and that she felt “overwhelming humility and gratitude”.

The award is aimed at providing artists with the means to produce ambitious work that they would struggle to complete without financial assistance. Once the project is finished, the artist can use the rest of the prize as they wish. Salcedo has said she will use the award to work on a piece about Cúcuta, a region where atrocities were carried out by right-wing paramilitaries during the conflict.

The Nomura Art Award dwarfs other contemporary prizes such as the Hugo Boss Prize ($100,000), the Don Tyson Prize ($200,000), the ArtPrize ($500,000) and the Plastov Award (£500,000). Like the MacArthur “Genius” Fellowship ($625,000), artists are not able to apply to be considered, with a jury, including the chair of the Arts Council England, Nicholas Serota, selecting the winner.

Serota said Salcedo’s work over the last three decades had “captured the anguish associated with the loss of loved ones and preserved the memory of traumatic events” in the Colombian civil war. He added that “her language has an empathy and her materials an everyday character that give her work a universal meaning that speaks to people across the world”.

Susan May, artistic director of White Cube, which represents Salcedo in the UK, said that the Colombian is “one of the most significant artists of our time” and the “unprecedented” award means she will be able to continue her “uncompromising and vital practice” for many years to come.

May said: “Salcedo’s sculptures and installations are the result of rigorous research with individuals who have gone through unspeakable trauma or suffering, and these investigations can take many years before they can be articulated into elegiac and politically charged works of art.”

The Bogotá-based artist took over the Turbine Hall at the Tate Modern in London in 2007 with her work Shibboleth, a crack that ran the full 167 metres (548ft) of the space, and was a comment on the deepening divide between Europeans and the rest of the world.

“It represents borders, the experience of immigrants, the experience of segregation, the experience of racial hatred,” she said at the time. “The space which illegal immigrants occupy is a negative space. And so this piece is a negative space.”

Doris Salcedo’s Noviembre 6 y 7 involved 280 chairs being lowered from the roof of the Palace of Justice in Bogotá, Colombia. Photograph: Sergio Clavijo

Nomura acquired the Asian operations of Lehman Brothers a week after the US investment bank collapsed in 2008. Japan’s biggest brokerage reported its first losses in a decade earlier this year as it struggled to adjust to what its chief executive, Koji Nagai, described as a “challenging environment”.

The company wants the art award to be seen in the same light as the Nobel Prize, and says it is a continuation of the support it has given the arts. Earlier this year the inaugural Nomura Emerging Artist Awards resulted in $100,000 given to two emerging artists, with US artist Cameron Rowland and the Chinese artist Cheng Ran winning the prizes.