The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is launching a Common Supervisory Action (CSA) on risk management function of UCITS management companies and Alternative Investment Fund Managers (AIFMs) across the European Union. The CSA will be conducted throughout 2026 and 2027, in close collaboration with National Competent Authorities (NCAs).
The objective of the CSA is to assess how market participants comply with key risk-related provisions under the UCITS and AIFMD frameworks. The focus will be on the effectiveness, independence and expertise of the risk management function.
Risk management is a core function of investor protection and financial stability. It ensures that material risks, such as market, credit, liquidity, counterparty, and operational risks, are properly identified, measured, monitored, and managed.
As part of this exercise, NCAs will focus on three key areas:
- governance and organisation of the risk management function;
- identification, measurement and monitoring of risks; and
- reporting to senior management and governing bodies.
The CSA will be conducted using a common assessment framework developed by ESMA. This framework sets out the scope, methodology, supervisory expectations, and supervisory expectations and timeline for the exercise, ensuring a comprehensive and convergent approach across the EU.
Throughout the exercise, NCAs will share knowledge and supervisory experiences through ESMA, further supporting supervisory convergence in the oversight of risk management function.
Next steps
ESMA will publish a final report with the results of the exercise in 2028.
