ASIC releases guidance on risk management systems of responsible entities

ASIC released Regulatory Guide RG 259 Risk Management systems of responsible entities to provide additional guidance to responsible entities on our expectations for compliance with their existing obligation under the Corporations Act 2001 to maintain adequate risk management systems.

The guide is aimed at ensuring that the risk management systems of responsible entities, including minimum procedures and practices, are adaptable to changing market conditions and remain effective in identifying and managing risks on an ongoing basis.

The guidance promotes the early identification and management of risks by responsible entities to help avoid the adverse consequences that may affect investors. There have been a number of collapses of responsible entities which resulted in significant losses to investors and where we consider inadequate risk management systems to have played a role.

The guide outlines our expectations for responsible entities to have:

  • overarching risk management systems in place;
  • processes for identifying and assessing risks; and
  • processes for managing risks.

ASIC have also included in the guide some additional good practice guidance. This guidance is not mandatory for responsible entities. It outlines measures that responsible entities can adopt to enhance their risk management systems and operate at a level above their statutory obligations.

The release of the guidance follows ASIC’s extensive consultation under Consultation Paper 263 Risk management systems of responsible entities: Further proposals and Consultation Paper 204 Risk management systems of responsible entities.


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