Overview:
The Securities and Exchange Commission (SEC) has mandated all capital market operators (CMOs) to implement an enterprise risk management (ERM) framework that aligns with internationally recognized standards. This directive aims to bolster risk management practices within the capital market, minimize systemic impacts, and safeguard stakeholders’ interests.
Key Points:
- International Standards: The ERM framework must conform to standards set by:
- Committee of Sponsoring Organisations of the Treadway Commission (COSO)
- International Organisation for Standardisation (ISO 31000)
- Financial Action Task Force (FATF) Recommendations
- Framework Requirements:
- Consider operational structure, business activities, client demographics, products, services, and delivery mechanisms.
- Establish a comprehensive risk governance structure with clear roles and responsibilities, including a risk management committee.
- Define risk appetite, tolerance statements, and ensure consistent reporting to senior management and the board of directors.
- Implement risk-awareness programmes to foster a culture of risk management throughout operations.
Implementation Deadline:
- CMOs must submit a Board-approved risk management policy in selectable and searchable PDF format by September 30, 2024, via email to rbs@sec.gov.ng to obtain a ‘No Objection.’
Annual Requirements:
- CMOs are required to submit an annual risk profile by January 31 of each year.
- Assess and report emerging threats and mitigation measures to the SEC for review.
Strategic Objective:
This directive is part of SEC’s broader strategy to enhance risk-based supervision in the capital market, including anti-money laundering, counter-terrorism financing, and countering proliferation financing measures.
Engagement with Stakeholders:
The SEC emphasizes that adoption of comprehensive risk management practices is crucial for minimizing systemic impacts and safeguarding stakeholders' interests, thus reinforcing the integrity and stability of the capital market.
Conclusion:
The SEC's mandate for CMOs to implement an ERM framework aligned with international standards is a significant step towards enhancing risk management and ensuring the robustness of the capital market. This initiative underscores the importance of proactive risk management in protecting the interests of all stakeholders involved.
The Securities and Exchange Commission (SEC) has mandated all capital market operators (CMOs) to implement an enterprise risk management (ERM) framework that aligns with internationally recognized standards. This directive aims to bolster risk management practices within the capital market, minimize systemic impacts, and safeguard stakeholders’ interests.
Key Points:
- International Standards: The ERM framework must conform to standards set by:
- Committee of Sponsoring Organisations of the Treadway Commission (COSO)
- International Organisation for Standardisation (ISO 31000)
- Financial Action Task Force (FATF) Recommendations
- Framework Requirements:
- Consider operational structure, business activities, client demographics, products, services, and delivery mechanisms.
- Establish a comprehensive risk governance structure with clear roles and responsibilities, including a risk management committee.
- Define risk appetite, tolerance statements, and ensure consistent reporting to senior management and the board of directors.
- Implement risk-awareness programmes to foster a culture of risk management throughout operations.
Implementation Deadline:
- CMOs must submit a Board-approved risk management policy in selectable and searchable PDF format by September 30, 2024, via email to rbs@sec.gov.ng to obtain a ‘No Objection.’
Annual Requirements:
- CMOs are required to submit an annual risk profile by January 31 of each year.
- Assess and report emerging threats and mitigation measures to the SEC for review.
Strategic Objective:
This directive is part of SEC’s broader strategy to enhance risk-based supervision in the capital market, including anti-money laundering, counter-terrorism financing, and countering proliferation financing measures.
Engagement with Stakeholders:
The SEC emphasizes that adoption of comprehensive risk management practices is crucial for minimizing systemic impacts and safeguarding stakeholders' interests, thus reinforcing the integrity and stability of the capital market.
Conclusion:
The SEC's mandate for CMOs to implement an ERM framework aligned with international standards is a significant step towards enhancing risk management and ensuring the robustness of the capital market. This initiative underscores the importance of proactive risk management in protecting the interests of all stakeholders involved.