KPMG: 'Progress to be made' in investment firms' management of risk

Not meeting regulator's expectations

Natalie Kenway
clock • 3 min read

Investment firms are often underestimating their liquidity risk by not fully identifying potential vulnerabilities and impacts, while they are also failing to fully embed risk management into their day-to-day operations, according to a report from KPMG UK.

Board responsibility

The research also found only 23% of boards are taking direct responsibility for dealing with risk information that gets escalated to them, with the vast majority leaving its risk team to determine the risks. This is despite the fact that wider risk issues were identified as a key concern in 88% of FCA visits.

"This could call into question the level of board engagement in firm-wide risk oversight," the report said.

"Since the financial crisis, the regulator's expectations for board engagement in enterprise-wide risk oversight has increased significantly. [Additionally], only two firms involve the compliance function in this process, despite the strong links between risk and compliance disciplines."

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