What does the FCA expect from risk management?

The FCA expects firms to identify, assess and manage risks in a structured way, supported by clear governance, effective oversight and appropriate management information.

Do we need a risk register?

Yes. Most FCA-regulated firms are expected to maintain a risk register, but it should be actively used and regularly reviewed, not treated as a static document.

How should risks be assessed and rated?

Risks are typically assessed based on likelihood and impact, but the approach should be tailored to your business and clearly documented.

How often should risk frameworks be reviewed?

Risk frameworks should be reviewed periodically and whenever there is a material change to the business, such as new products, services or operating structures.

Do we need Key Risk Indicators (KRIs)?

In most cases, yes. KRIs help demonstrate that risks are actively monitored and provide early warning indicators where exposure is increasing. They are particularly important for Board reporting and showing how risk appetite is being managed in practice.

Do smaller firms need a formal risk management framework?

Yes, but it should be proportionate. The FCA does not expect smaller firms to have overly complex frameworks, but they do expect clear identification of risks, appropriate controls, and evidence of oversight.

FCA Risk Management & Corporate Governance

Effective risk management is central to how firms make decisions. It is not just about documenting risks, but about showing how risks are identified, assessed, monitored and managed in practice.

We provide specialist FCA risk management support to help firms design, implement and maintain risk and governance frameworks that reflect how the business operates.

We support firms at authorisation stage, where risk and governance arrangements need to be clearly structured and defensible, and on an ongoing basis, where the challenge is ensuring those frameworks continue to operate effectively as their risk profile and business activities evolve.

Our focus is on helping firms clearly understand where their risks sit, who owns them and how they are monitored, challenged and managed across the business.

Contact us to discuss your compliance requirements and how we can support your firm.

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Designing and Building Your FCA Risk Management Framework

Risk management is not a single document or register. It requires a structured framework that is applied across the business and aligned with governance, decision-making and regulatory expectations.

We advise firms on designing and implementing risk management frameworks that are proportionate, usable and aligned with FCA expectations.

This typically includes:

Identifying and categorising risks across the business, including regulatory, operational, financial and conduct risks
Designing business-wide risk registers with clear risk ownership, scoring and control mapping
Developing risk assessment methodologies based on impact, likelihood and risk rating criteria
Establishing control frameworks, including preventative, detective and corrective controls
Applying risk management into business processes, governance forums and decision-making

Our approach ensures risk management is not treated as a standalone exercise, but as part of your firm’s wider systems and controls.

FCA Risk Management Support: Monitoring, Reporting & Risk Appetite

The FCA expects firms to demonstrate how risks are identified, monitored and managed over time, and how this supports decision-making and senior management oversight.

We work with firms in building practical risk management frameworks that provide clear visibility of risk exposure and enable effective control in practice.

This includes:

Designing risk dashboards that provide clear visibility of risk exposure and trends
Developing Key Risk Indicators (KRIs) aligned to risk appetite and regulatory expectations
Supporting Top Risk Assessments to identify and review material risks
Establishing structured reporting to Boards and governance committees
Defining risk appetite statements aligned to business strategy and objectives
Setting clear thresholds and escalation triggers for risk exposure
Aligning risk appetite with risk scoring methodologies and reporting
Supporting risk-based decision-making across products, operations and strategy
Linking risk monitoring to escalation, remediation and governance oversight

Our focus is on ensuring risk management is actively used by the business, supporting oversight, challenge and decision-making, rather than existing as a static framework.

Corporate Governance & Oversight

Strong governance is central to effective risk management. Firms must be able to demonstrate how oversight is exercised, how decisions are made and how accountability is structured across the business.

We support firms in reviewing and strengthening governance arrangements, including Board and Committee structures, reporting lines and escalation processes. We also ensure governance frameworks align with SM&CR requirements and support effective challenge and oversight at senior management level.

The focus is on making governance clear, workable and aligned with how the business operates.