Introduction: Our client is a mid-tier broker in the UK that needed to comply with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) regulations for risk management and reporting. They needed to capture their three-level Risk Taxonomy, which is required for regulatory reporting in the UK. Additionally, they needed to capture their board’s appetite for risk and their operating alignment.
Challenges: The client faced several challenges when it came to managing risk, including:
- Capturing their three-level Risk Taxonomy accurately
- Capturing their board’s appetite for risk and operating alignment
- Complying with FCA and PRA regulations for risk management and reporting
Solution: To achieve these objectives, the broker decided to leverage the Risk Cockpit, a risk management tool that provides a powerful risk assessment workflow. The Risk Cockpit allowed the broker to capture their Risk Taxonomy and board’s appetite for risk accurately by engaging the first line of defence and senior management.
The Risk Cockpit allowed the broker to quantify their risk assessments using their organization’s risk matrix, which reduced the time taken to produce reports and provided operational evidence should it be required. The tool provided a single source of truth for all risk assessments, ensuring consistency across the organization and reducing the risk of errors.
Results: Since implementing the Risk Cockpit, the broker has been able to manage their risks more effectively, reducing the risk of non-compliance with FCA and PRA regulations. The broker can be confident that their risks are being assessed accurately, thanks to the engagement of the first line of defence and senior management in the risk assessment process. Through the implementation, the firm has been able to reduce ensure they are operating within their company’s risk appetite.
Conclusion: The Risk Cockpit has proven to be a highly effective tool for managing risk in compliance with FCA and PRA regulations. By providing a powerful risk assessment workflow, the tool has enabled our client to accurately capture their Risk Taxonomy and board’s appetite for risk. The tool’s ability to quantify risk assessments using the organization’s risk matrix has also reduced the time taken to produce reports and provided operational evidence when required. Overall, the Risk Cockpit has helped our client manage risk in a more effective and efficient manner, and we highly recommend it to other organizations in the financial services industry.