Risk management frameworkRisk management framework

Risk management framework

14. An RSE licensee’s risk management framework must enable the RSE licensee to develop and implement strategies, policies, procedures and controls to appropriately manage different types of material risk.

15. An RSE licensee’s risk management framework must provide reasonable assurance that each material risk to the RSE licensee’s business operations is being prudently and soundly managed, having regard to the size, business mix and complexity of those operations.

16. An RSE licensee’s risk management framework must, at a minimum, include:

(a) the risk appetite statement;

(b) the risk management strategy (RMS);

(c) a designated risk management function that meets the requirements of paragraph 25;

(d) all risk management policies, procedures and controls to identify, assess, monitor, report on, mitigate and manage each material risk;

(e) clearly defined and documented roles, responsibilities and formal reporting structures for the management of material risks throughout the RSE licensee’s business operations; and

(f) a review process to ensure that the risk management framework remains effective.

17. Where an RSE licensee is part of a corporate group and any element of the RSE licensee’s risk management framework is controlled or influenced by, or is subject to approval by another entity in the group, the RSE licensee’s risk management framework must specifically take into account risks arising from group policy objectives and strategies, and clearly identify:

(a) whether the RSE licensee’s risk management framework is derived wholly or partially from group risk management policies or functions;

(b) the linkages and significant differences between the RSE licensee’s risk management framework and group risk management policies or functions; and

(c) the process for monitoring by, or reporting to, the group on risk management including the key procedures, the frequency of reporting and the approach to reviews.