ESMA launches Common Supervisory Action with NCAs on the risk management function

The objective of the CSA is to assess how market participants comply with key risk-related provisions under the UCITS and AIFMD frameworks. The focus will be on the effectiveness, independence and expertise of the risk management function.

Risk management is a core function of investor protection and financial stability. It ensures that material risks, such as market, credit, liquidity, counterparty, and operational risks, are properly identified, measured, monitored, and managed.

As part of this exercise, NCAs will focus on three key areas:

• governance and organisation of the risk management function;
• identification, measurement and monitoring of risks; and
• reporting to senior management and governing bodies.

The CSA will be conducted using a common assessment framework developed by ESMA. This framework sets out the scope, methodology, supervisory expectations, and supervisory expectations and timeline for the exercise, ensuring a comprehensive and convergent approach across the EU.

Throughout the exercise, NCAs will share knowledge and supervisory experiences through ESMA, further supporting supervisory convergence in the oversight of risk management function.

Next steps

ESMA will publish a final report with the results of the exercise in 2028.

Further information:

Ana Dilaverakis

Communications Officer
[email protected]