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GRC Professional : GRC Autumn 2013
7 ACI NEWS ACI has called on the Australian Securities and Investments Commission (ASIC) to clarify and expand several require- ments in proposed guidelines for Australian Financial Services (AFS) licensees to ensure they are complying with their risk management obligations. While generally supporting most of the issues outlined in Consultation Paper 204: Risk Management Systems of Responsible Entities, ACI believes there are some areas such as stress testing; what constitutes an independent risk review of the risk management system; and the relatively short timefra me for implementation, that need to be taken on board. ASIC sets out in its discussion paper that Australia's managed funds sector (outside superannuation assets management) has 500 responsible entities operating about 4,000 registered, investment schemes, collectively managing $513 billion of assets, ranging from infrastructure to fixed-interest products, mortgages, real property, cash and private equity. However, there is no industr y-specific guidance available for risk management systems to help them better manage the risks they face, both as responsible entities and the scheme(s) they operate. It is intended that new guidelines be applied by these entities according to the nature, scale and complexity of their operations so that investor and financial consumer confidence is assured through mitigating exposure to relevant risks. The guidelines are also intended to build confidence in the integrity of Australia's capital markets by better safeguarding the financial services industry from systemic risk. ACI's key issues with the proposals are: • How ASIC will approach the implementation of the guidance in respect to style. There needs to be consistency of approach with the Australian Prudential Regulatory Authority's (APR A's) guidance material • Clarifcation around the annual review of the risk management system to ensure it is actually a review of the Risk Management Strategy or framework • A quarterly review of risk management systems. ACI suggests an annual review or reviews if there is a significant change occurring to the entity or scheme's business operations structure, as APRA does • Expectations set about what constitutes an annual review • The need for more guidance around stress testing • The short timeframe for implementation of risk management system s in responsible entities. Full details are available on ACI's website under the 'submissions' menu item. Managed funds to get risk management guidance
GRC Summer 2013