ASIC releases risk management guidance for RE
The Australian Securities and Investments Commission (ASIC) has released new guidance on risk management of responsible entities aimed at early identification of potential risks and provided measures to help reduce the negative consequences of such risks for investors.
The Regulatory Guide RG 259 Risk Management systems of responsible entities would be also aimed to ensure that the new risk management systems of responsible entities were adaptable to changing market conditions.
ASIC said that the new rules were compiled in response to a number of collapses of responsible entities which resulted in significant losses to investors and where inadequate risk management systems had played a role.
According to the guide, responsible entities should have:
- Overarching risk management systems in place;
- Processes for identifying and assessing risks; and
- Processes for managing risks.
ASIC said prior to the release of the guidance it had held a round of informal consultations with a selection of industry stakeholders and that its guidance was intended to act in unison with the Australian Prudential Regulation Authority (APRA) risk management requirements.
“Our intention is to take a constructive and facilitative approach to any breaches of the guidance for a period of 12 months from today, if a responsible entity can show that it is taking steps to bring its risk management system into compliance with the guidance,” ASIC said.
The corporate regulator would not provide any formal transition period for compliance with the guidance.
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