Dear CEO Letter on Targeted Reviews on Control Frameworks and Risk Appetite Statements in MiFID Investment Firms & Market Operators
MiFID Firms
Date:
03 July 2023
On 29 March 2023 the Central Bank issued a Dear CEO letter to MiFID investment firms and market operators following a targeted review of the Control Frameworks and Risk Appetite Statements in a sample of firms.
As recently highlighted in both the Consumer Protection Outlook Reportand the Securities Markets Risk Outlook Report the changing financial landscape is creating new challenges for consumers. This is why it is important that firms have robust frameworks in place to support their customers and ensure they are acting in their best interests.
The Central Bank engaged with firms on the importance of managing risks to consumers and while some good practices were identified, we identified deficiencies in the areas of:
- Risk Management Frameworks and Governance
- Board Oversight of Risk and Compliance Matters
- Application of Risk Appetite Statement as a Risk Management Tool
- Poor Risk Appetite Statement Design
- Risk Appetite Reporting to the Risk Committee and Board
- Cascading of Risk Appetite through the Organisation