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Unterforen: Obligations regarding Risk Management, Person responsible for the Permanent Risk Management Function, Risk Management Policy, Risk Management Procedure (RMP), Use of Third-party Experts

aims to monitor risk and enhance transparency for the derivatives world
Unterforen: Clearing Obligations, Risk Mitigation Techniques, Reporting Obligations, EMIR REFIT (EMIR REgulatory FITness Program)

UK EMIR imposes requirements to improve transparency and reduce the risks associated with the derivatives market.
The European Market Infrastructure Regulation (EMIR) has been onshored into UK legislation via a number of statutory instruments (SIs) and Binding Technical Standards (BTS).
UK EMIR imposes requirements to improve transparency and reduce the risks associated with the derivatives market.
It applies indirectly to non-UK firms trading with UK firms. UK EMIR also establishes common organisational, conduct of business and prudential standards for central counterparties (CCPs) and trade repositories (TRs).
UK EMIR requires entities that enter into derivative contracts, including interest rate, foreign exchange, equity, credit and commodity and emission derivatives, to:
• report details of derivative contracts to an FCA registered, or recognised, TR
• clear, via a CCP, those OTC derivatives subject to a mandatory clearing obligation
• implement risk mitigation techniques, including operational processes and margining, for bilateral over-the-counter (OTC) derivatives that are not cleared by a CCP
Unterforen: Clearing Obligations, Risk Mitigation Techniques, Reporting Obligations, UK EMIR REFIT (UK EMIR REgulatory FITness Program)

IFMs and investment funds are different from banks and insurance companies and are therefore also subject to specific targeted regulatory requirements and macroprudential policies. More particularly, IFMs manage investment funds on behalf of investors who own the assets and benefit from the return of the investments on the basis of a pre agreed investment policy and risk profile (so-called “agency model”). IFMs therefore have to comply with fiduciary obligations with the objective of acting in the best interest of their investors. In relation to investment funds, some vulnerabilities have been identified.
Unterforen: Interconnectedness , Leverage, Liquidity Mismatch

monitor risk and enhance transparency in the financing and reuse of securities and repos (repurchase agreements), securities lending activities, and sell/buy-back transactions
Unterforen: Securities Financing Transactions (SFTs), Reporting Obligations, Reuse of Collateral, Transparency in Periodic Reports and Pre-Contractual Documents

financial statement disclosures, investor reporting requirements

oversees the process of determining the risks of assets and that risks are properly managed; maintains the integrity and reliability of risk measures; ensures the organization is prepared for potential challenges

The risk management function is responsible for the identification of risks relevant to the fund. Its advice should therefore help the Board of Directors to provide a meaningful description of the risk profile of the fund which should reflect the level of the identified relevant risks that arise from its investment strategy, as well as their interaction and concentration at portfolio level.
However, this identification process should not be a static exercise but, on the contrary, should be periodically revised to allow for possible changes to market conditions or the fund's investment strategy.

Enterprise risk management (ERM) is a methodology that looks at risk management strategically from the perspective of the entire entity. It is a top-down strategy that aims to identify, assess, and prepare for potential losses, dangers, hazards, and other potentials for harm that may interfere with an organization's operations and objectives and/or lead to losses.

lack of AI transparency and explainability; biases due to AI; financial crises brought about by AI algorithms

An entity’s capital structure risk is defined as the risk that the entity has to change its capital structure under unfavourable conditions. This risk measure is modelled by the market price fluctuations of the entity’s debt and equity and can be regarded as an extension of the ideas that lie beneath the market timing and pecking order theory.

Concentration risk is a general term denoting a condition where excess concentration of a value or attribute of a system is the cause of risk. The concept is applicable across various risk types and may signify excessive dependence and/or sensitivity on specific risk factors. Managing concentration risk in its various manifestations is typically one of the key objectives of risk management and/or portfolio management.

Counterparty risk is the likelihood or probability that one of those involved in a transaction might default on its contractual obligation. Counterparty risk can exist in credit, investment, and trading transactions.

arises from political risk factors, and economic or financial risk factors; hence, political risk is a subset of country risk arising from political risk factors
Unterforen: Political Risk

Credit risk is the probability of a financial loss resulting from a borrower's failure to repay a loan. Essentially, credit risk refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection. Lenders can mitigate credit risk by analyzing factors about a borrower's creditworthiness, such as their current debt load and income.

Currency risk is commonly referred to as exchange-rate risk. It arises from the change in price of one currency in relation to another. Investors or entities that have assets or business operations across national borders are exposed to currency risk that may create unpredictable profits and losses.

Cyber risk means any risk of financial loss, disruption or damage to the reputation of an entity from some sort of failure of its information technology systems.

Interest rate risk is the potential for investment losses that can be triggered by a move upward in the prevailing rates for new debt instruments. If interest rates rise, for instance, the value of a bond or other fixed-income investment in the secondary market will decline. The change in a bond's price given a change in interest rates is known as its duration.

Issuer risk means a risk of the issuer’s insolvency, changing of credit and other ratings of the issuer, bringing suits or claims against the issuer that may result in dramatic decrease of value of the issuer’s securities or failure to redeem the debt securities.

Key Person Risk indicates the Risk generated when significant organizational knowledge, visibility, status or performance rely to a significant degree on a single individual. The reliance on a key person exposes the organization to the risk of significant financial or reputational loss if (1) the individual ceases to be part of the organization (e.g. due to health, career choices etc.), or (2) stops performing or behaving according to expectations and agreements, issues and challenges.
Key person risk is a form of concentration risk, but it is not traditionally discussed alongside the traditional types of concentration as the structure of an organization is usually not subject to formal risk analysis.

The risk that a counterparty to a transaction will not be liable to meet its obligations under law. Such difficulties may arise from a number of causes, one of the most common being that the transaction was not sufficiently well-documented to be legally enforceable.

Liquidity risk refers to the potential difficulty an entity may face in meeting its short-term financial obligations due to an inability to convert assets into cash without incurring a substantial loss.
Liquidity risk is often characterized by two main aspects: market liquidity risk and funding liquidity risk. Market liquidity risk is associated with an entity's inability to execute transactions at prevailing market prices due to insufficient market depth or disruptions. On the other hand, funding liquidity risk pertains to the inability to obtain sufficient funding to meet financial obligations.
Unterforen: Funding Liquidity Risk, Market Liquidity Risk, Liquidity Management Tools (LMTs)

Market risk is the possibility that an individual or other entity will experience losses due to factors that affect the overall performance of investments in the financial markets.

considering (aggressive) marketing has been identified as a risk by the NCAs
Unterforen: Bluewashing Risk, Greenwashing Risk, Pinkwashing Risk (aka Rainbow Washing), Purplewashing Risk

the risk of losses caused by flawed or failed processes, policies, systems or events that disrupt business operations; employee errors, criminal activity such as fraud, and physical events are among the factors that can trigger operational risk

the risk posed to an entity by non-performance, or poor performance, by a service provider of a function transferred to the service provider under a material outsourcing arrangement

Regulatory risk is the risk that a change in laws and regulations will materially impact a security, business, sector, or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of an investment, or change the competitive landscape in a given business sector. In extreme cases, such changes can destroy a company's business model.

uncertain social or environmental event or condition that, if it occurs, can cause significant negative impact; it also includes the opportunity that may be available to an organisation because of changing social or environmental factors

Volatility risk is the risk of an adverse change of price, due to changes in the volatility of a factor affecting that price. It usually applies to derivative instruments, and their portfolios, where the volatility of the underlying asset is a major influencer of option prices. It is also relevant to portfolios of basic assets, and to foreign currency trading.