Superannuation (prudential standard) determination No. 3 of 2019
Risk appetite statementRisk appetite statement
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Risk appetite statement
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An RSE licensee must maintain an up-to-date risk appetite statement that covers the RSE licensee’s business operations and each category of material risk. The risk appetite statement must be approved by the Board.
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An RSE licensee’s risk appetite statement must, at a minimum, articulate:
(a) the degree of risk that the RSE licensee is prepared to accept in pursuit of its strategic objectives and business plan, giving consideration to the interests of beneficiaries (risk appetite);
(b) for each material risk, the maximum level of risk that the RSE licensee is willing to operate within expressed as a risk limit that, where possible, is based on a measurable limit of the risk remaining, after taking into account the mitigants for the risk where appropriate (risk tolerance);
(c) the process for ensuring that risk tolerances are set at an appropriate level, based on an estimation of the impact on the interests of beneficiaries in the event that a risk tolerance is breached and the likelihood that each material risk is realised;
(d) the process for monitoring compliance with each risk tolerance and taking appropriate action in the event of a breach of the RSE licensee’s risk tolerance; and
(e) the timing and process for review of the risk appetite and risk tolerances.