The FCA Doesn't Just Expect Firms to Manage Risk. It Expects Firms to Demonstrate They Have a System for Doing So.
PRIN 3 requires firms to take reasonable care to organise and control their affairs responsibly and effectively, with adequate risk management systems. SYSC builds on that with detailed requirements for governance arrangements, internal controls, and oversight proportionate to the nature and complexity of the business. What most FCA-regulated firms have is a list of risks somewhere and a vague understanding of who's responsible for them. What the FCA expects is a documented, operational framework — one that defines risk appetite, categorises risk systematically, applies a consistent scoring methodology, assigns ownership, establishes monitoring cadences, and feeds into board reporting through a structured three-lines-of-defence model. The gap between those two things is where supervisory findings are generated. This comprehensive Risk Management Policy gives FCA-regulated firms across every sector a complete, board-approved framework covering every dimension of risk governance — from risk appetite and identification methodology through assessment scoring, mitigation strategies, three-lines-of-defence accountability, data protection risks, KRI monitoring, escalation procedures, training requirements, and continuous improvement — built to satisfy FCA supervisory expectations and operate as a living management tool, not a shelf document.
A risk register without a risk management framework is just a list. This is the framework.
What's included: Full regulatory mapping — PRIN 3 (management and control/adequate risk management systems), PRIN 11 (regulatory relations), SYSC (governance/risk management/internal controls proportionate to nature/scale/complexity), COBS (investment business), CONC (consumer credit), ICOBS (insurance distribution), UK GDPR/DPA 2018/PECR (data protection risks), MLRs 2017, PSR 2017, EMRs 2011, Funeral Plan Regulations, Consumer Rights Act 2015, FSMA 2000 · Six-category risk taxonomy — Financial (credit/market/liquidity/interest rate/FX/capital adequacy), Operational (process failures/systems/human error/fraud/business continuity), Regulatory (FCA non-compliance/legislative change/supervisory action), Reputational (client confidence/stakeholder relationships/brand), Legal (proceedings/contractual disputes/enforcement), Ethical (conflicts of interest/market abuse/TCF/conduct) · Low-to-moderate risk appetite framework with quantitative metrics (capital ratios/concentration limits) and qualitative parameters (reputational considerations/regulatory expectations) · Five-point probability/impact risk scoring matrix — Rare through Almost Certain (probability) × Negligible through Catastrophic (impact) — with prioritisation thresholds: Critical 20-25 (immediate)/High 15-19 (30 days)/Medium 10-14 (90 days)/Low 1-9 (quarterly review) · Four mitigation strategies — Avoidance/Reduction/Transfer/Acceptance — applied against assessment outcomes · Three-category control framework — Preventive (authorisation/segregation of duties/system access)/Detective (transaction monitoring/reconciliations/exception reporting)/Corrective (incident response/recovery/remediation) · Three-lines-of-defence model — First Line (operational management: own and manage/self-assessments/real-time controls), Second Line (risk and compliance: independent oversight/monitoring/challenge/policy framework), Third Line (internal audit: independent assurance/governance review/board reporting — with proportionate alternative arrangements for smaller firms) · Risk Register structure — Risk ID/description/category/impact assessment/risk owner/identification date · Multi-layer monitoring — real-time operational/daily dashboards/weekly KRI trend analysis/monthly comprehensive assessment/quarterly strategic review/annual profile assessment · KRI suite — financial (capital adequacy/liquidity/credit exposure), operational (system availability/processing errors/complaint volumes), regulatory (breaches/near-misses/correspondence), reputational (media/customer satisfaction) · Four-tier reporting hierarchy — Operational daily (department heads)/Management monthly (senior management)/Board quarterly/Regulatory as required · Three-level escalation — Level 1 (24-hour departmental)/Level 2 (4-hour senior management)/Level 3 (immediate Board and regulatory consideration) · Data protection risk framework — DPIA requirements/72-hour ICO breach notification/privacy by design and default/Article 28 processor monitoring · Role-differentiated mandatory training — Senior Management (strategic oversight/regulatory accountability/crisis management), Risk and Compliance (advanced methodologies/regulatory updates), Front-line (operational identification/escalation/customer protection), Support Functions (function-specific exposures) · Review cycle — annual comprehensive/bi-annual targeted/event-driven/post-incident — with Chief Risk Officer, Compliance, Senior Management, and Risk Committee responsibilities defined
Built for: Chief Risk Officers, Chief Compliance Officers, SMF holders, board governance teams, and risk function personnel at FCA-regulated firms across all sectors who need a complete, board-approved Risk Management Policy that satisfies SYSC requirements, supports regulatory examination readiness, and functions as an operational management framework rather than a compliance filing exercise.
The FCA Doesn't Just Expect Firms to Manage Risk. It Expects Firms to Demonstrate They Have a System for Doing So.
PRIN 3 requires firms to take reasonable care to organise and control their affairs responsibly and effectively, with adequate risk management systems. SYSC builds on that with detailed requirements for governance arrangements, internal controls, and oversight proportionate to the nature and complexity of the business. What most FCA-regulated firms have is a list of risks somewhere and a vague understanding of who's responsible for them. What the FCA expects is a documented, operational framework — one that defines risk appetite, categorises risk systematically, applies a consistent scoring methodology, assigns ownership, establishes monitoring cadences, and feeds into board reporting through a structured three-lines-of-defence model. The gap between those two things is where supervisory findings are generated. This comprehensive Risk Management Policy gives FCA-regulated firms across every sector a complete, board-approved framework covering every dimension of risk governance — from risk appetite and identification methodology through assessment scoring, mitigation strategies, three-lines-of-defence accountability, data protection risks, KRI monitoring, escalation procedures, training requirements, and continuous improvement — built to satisfy FCA supervisory expectations and operate as a living management tool, not a shelf document.
A risk register without a risk management framework is just a list. This is the framework.
What's included: Full regulatory mapping — PRIN 3 (management and control/adequate risk management systems), PRIN 11 (regulatory relations), SYSC (governance/risk management/internal controls proportionate to nature/scale/complexity), COBS (investment business), CONC (consumer credit), ICOBS (insurance distribution), UK GDPR/DPA 2018/PECR (data protection risks), MLRs 2017, PSR 2017, EMRs 2011, Funeral Plan Regulations, Consumer Rights Act 2015, FSMA 2000 · Six-category risk taxonomy — Financial (credit/market/liquidity/interest rate/FX/capital adequacy), Operational (process failures/systems/human error/fraud/business continuity), Regulatory (FCA non-compliance/legislative change/supervisory action), Reputational (client confidence/stakeholder relationships/brand), Legal (proceedings/contractual disputes/enforcement), Ethical (conflicts of interest/market abuse/TCF/conduct) · Low-to-moderate risk appetite framework with quantitative metrics (capital ratios/concentration limits) and qualitative parameters (reputational considerations/regulatory expectations) · Five-point probability/impact risk scoring matrix — Rare through Almost Certain (probability) × Negligible through Catastrophic (impact) — with prioritisation thresholds: Critical 20-25 (immediate)/High 15-19 (30 days)/Medium 10-14 (90 days)/Low 1-9 (quarterly review) · Four mitigation strategies — Avoidance/Reduction/Transfer/Acceptance — applied against assessment outcomes · Three-category control framework — Preventive (authorisation/segregation of duties/system access)/Detective (transaction monitoring/reconciliations/exception reporting)/Corrective (incident response/recovery/remediation) · Three-lines-of-defence model — First Line (operational management: own and manage/self-assessments/real-time controls), Second Line (risk and compliance: independent oversight/monitoring/challenge/policy framework), Third Line (internal audit: independent assurance/governance review/board reporting — with proportionate alternative arrangements for smaller firms) · Risk Register structure — Risk ID/description/category/impact assessment/risk owner/identification date · Multi-layer monitoring — real-time operational/daily dashboards/weekly KRI trend analysis/monthly comprehensive assessment/quarterly strategic review/annual profile assessment · KRI suite — financial (capital adequacy/liquidity/credit exposure), operational (system availability/processing errors/complaint volumes), regulatory (breaches/near-misses/correspondence), reputational (media/customer satisfaction) · Four-tier reporting hierarchy — Operational daily (department heads)/Management monthly (senior management)/Board quarterly/Regulatory as required · Three-level escalation — Level 1 (24-hour departmental)/Level 2 (4-hour senior management)/Level 3 (immediate Board and regulatory consideration) · Data protection risk framework — DPIA requirements/72-hour ICO breach notification/privacy by design and default/Article 28 processor monitoring · Role-differentiated mandatory training — Senior Management (strategic oversight/regulatory accountability/crisis management), Risk and Compliance (advanced methodologies/regulatory updates), Front-line (operational identification/escalation/customer protection), Support Functions (function-specific exposures) · Review cycle — annual comprehensive/bi-annual targeted/event-driven/post-incident — with Chief Risk Officer, Compliance, Senior Management, and Risk Committee responsibilities defined
Built for: Chief Risk Officers, Chief Compliance Officers, SMF holders, board governance teams, and risk function personnel at FCA-regulated firms across all sectors who need a complete, board-approved Risk Management Policy that satisfies SYSC requirements, supports regulatory examination readiness, and functions as an operational management framework rather than a compliance filing exercise.
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