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A risk management process is key in protecting investors from risks to which UCITS are exposed in relation to the performance of the activity of collective portfolio management. Recent market turbulence events have emphasised the need for a comprehensive approach to risk management and for high standards of risk management.
CESR, through its Investment Management Expert Group , carried out a survey on how the 2004 Recommendation had been implemented in the different EU jurisdictions. On the basis of the priorities expressed by CESR Members, it was decided that CESR would embark on further work, the result of which is published today.
In particular, this paper proposes a framework for guidelines concerning risk management, providing principles and an outline of the key elements for a standard in the risk management process.
The following principles should apply to both designated asset management companies and investment companies that have not designated a management company (self-managed UCITS). Definitions of key terms used in this paper are included in the following section (“Definitions”).
The principles proposed by CESR reflect the need to ensure, on the one hand, that investors are adequately protected and, on the other hand, that the risk management process is appropriate and proportionate in view of the nature, scale and complexity of the asset management company’s activities and of the UCITS it manages.
The advice published today is accompanied by a feedback statement.
