• RM-1.1 RM-1.1 Risk Management

    • Board of Directors' Responsibility

      • RM-1.1.1

        The Board of Directors of licensees must take responsibility for the establishment of an adequate and effective framework for identifying, monitoring and managing risks across all its operations.

        October 2010

      • RM-1.1.2

        The CBB expects the Board to be able to demonstrate that it provides suitable oversight and establishes, in relation to all the risks the licencee is exposed to, a risk management framework that includes setting and monitoring policies, systems, tools and controls.

        October 2010

      • RM-1.1.3

        Although authority for the management of a firm's risks is likely to be delegated, to some degree, to individuals at all levels of the organisation, the overall responsibility for this activity should not be delegated from its governing body and relevant senior managers.

        October 2010

      • RM-1.1.4

        A licencees's failure to establish, in the opinion of the CBB, an adequate risk management framework will result in it being in breach of Condition 6 of the Licensing Conditions of Section AU-2.6. This failure may result in the CBB withdrawing or imposing restrictions on the licensee, or the licensee being required to inject more capital.

        October 2010

      • RM-1.1.5

        The Board of Directors must also ensure that there is adequate documentation of the licensee's risk management framework.

        October 2010

    • Systems and Controls

      • RM-1.1.6

        The risk management framework of licensees must provide for the establishment and maintenance of effective systems and controls as are appropriate to their business, so as to identify, measure, monitor and manage risks.

        October 2010

      • RM-1.1.7

        An effective framework for risk management should include systems to identify, measure, monitor and control all major risks on an on-going basis. The risk management systems should be approved and periodically reviewed by the Board as outlined in HC-1.1.5.

        October 2010

      • RM-1.1.8

        The systems and controls required by Paragraph RM-1.1.6 must be proportionate to the nature, scale and complexity of the firm's activities.

        October 2010

      • RM-1.1.9

        The processes and systems required must enable the licensee to identify the major sources of risk to its ability to meet its liabilities as they fall due, which include but are not limited to the following:

        (a) Counterparty Risk;
        (b) Liquidity Risk;
        (c) Market Risk; and
        (d) Operational Risk.
        October 2010