Despite a seemingly casual approach by several firms, two recent PRA fines have caught the attention of Chief Risk Officers across the financial services landscape. This is because it is the first time the PRA has fined firms in each of the specific sectors. It’s also the first time the regulator has fined a financial market infrastructure firm; that firm being a “specified service provider to a certain recognised payment system” and the first time a firm operating purely as a reinsurer has been fined.
The decision notices go into substantial detail, but it’s the root cause that highlights the key learning points. These notices regularly indicate it’s the foundations of risk management frameworks that lie at the heart of the issue, including the robustness of each line of defence and the separation and independence of each line. Regulators often remind firms of the need for risk-based decisions to be taken with the close involvement of a firm’s second line of defence and that there are centralised processes and controls in place to adequately quantify, track and interrogate such decisions.
As an independent risk consultancy our strengths include evaluating internal process effectiveness, testing adherence to regulatory frameworks and challenging the status-quo with impartial rigor, free from the shackles of operational and/or managerial conflict. Our oversight enhances accountability, detects emerging risks early and fosters a culture of sustained regulatory compliance.
We have conducted independent reviews and due diligence analyses on over £400bn of loans across the UK and Europe, establishing ourselves as the longest-running specialist provider of risk consultancy and management services in this market. Whether you are a lender, investor, funder, or Chief Risk Officer in any regulated business, our technical experts can assist you in refining risk models, improving data quality and enhancing analytics.
We’ve been helping regulated firms grow safely since 2008, so give us a call to discuss these and other emerging risks.
