EThe European Securities and Markets Authority (ESMA) has launched a Common Supervisory Action (CSA) to assess the effectiveness of risk management functions across UCITS management companies and Alternative Investment Fund Managers (AIFMs). The review will take place throughout 2026 and 2027, with the final report expected in 2028.
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.
The review will focus on whether firms have established risk management functions that are:
✅ Independent from operational activities
✅ Effective in identifying, measuring, monitoring and managing material risks
✅ Equipped with sufficient authority, expertise and resources
✅ Able to provide timely and meaningful reporting to senior management and governing bodies
The results of the exercise are expected to provide valuable insights into supervisory expectations, highlight common weaknesses, and promote stronger risk management practices across the EU investment management sector.
