RMC Wise FAQs

A risk is any event that occurs which leaves an element of uncertainty in the process of achieving the company’s objectives. When evaluating any risk, the role of the Risk Manager is to assess the probability of an event occurring and its possible consequence.

The ultimate goal of managing and mitigating risks is to ensure less disruption to an organisation’s processes, reduce the element of uncertainty, improve the decision-making process of the organisation and ultimately ensure greater assurance to all stakeholders of the company. Through sound risk management practices, RMCWise has both the capability and capacity to enhance any companies’ objectives and successes.

When managing risk, there are two approaches a Risk Manager should follow. The qualitative aspect is more of a subjective approach that focuses on assessing the probability and impact of risks in a more descriptive manner, whilst a quantitative approach is more objective in its nature. A quantitative approach to risk management identifies and assesses the time and cost effect of risk in a numerical manner, allowing the organisation to quantify its exposure, whilst simultaneously increasing clients’ risk adjusted returns through sound risk management practices.   An effective approach to risk management should incorporate both the qualitative and quantitative aspect in order to ensure adequate decision-making capabilities and a more forward-looking approach to identifying and managing risks.

Compliance is ensuring that the line of business adheres to a number of external rules and internal controls.  Depending the line of business, compliance departments will work to meet key regulatory objectives that would ultimately protect investors and ensure that markets are fair, efficient and transparent. Above all, effective compliance will aim to reduce the possibility of systemic risk and work against financial crime practices.

The Compliance Function should advise and assist relevant personnel who are responsible for carrying out Investment Services and Activities. All activities carried out should comply with the Licence Holder’s legal and regulatory obligations. The Compliance Function within any organisation monitors and on a regular basis assesses whether the measures and procedures already in place are adequate and effective with respect to detecting the risk of failure by the Licence Holder. Any License holder is to be fully compliant with any relevant legislation, regulations and rules applicable to it. The Compliance Function is also responsible of devising a Compliance Monitoring Plan to ensure full compliance with the MFSA Rules and Procedures Manual. Above all, any Compliance Function is to be truly independent in order to carry out its Function adequately.

A risk-based approach allows financial institutions to identify, assess and understand the risks associated with illegal activities like money laundering and terrorist financing. This approach will help take adequate and appropriate mitigation measures in accordance to the level of risk your organisation is exposed too.

Taking such an approach, will help identify the highest compliance risks your organisation faces and set adequate controls, policies and procedures to help mitigate such risks. This approach will help your business avoid unnecessary disruptions, with less time and money spent on investigations, regulatory settlements and reputational damage.

ESMA has issued guidelines that apply to fund managers and provide guidance on how they should carry out liquidity stress tests on the individual funds that they manage and how depositaries should fulfil their obligations regarding these stress tests. The Guidelines, are supplementary to the requirements on liquidity stress testing (“LST”) in the AIFM and UCITS Directives and may be applied proportionately, having regard to the nature, scale and complexity of each fund. The Guidelines apply to all UCITS and AIFs, with ESMA clarifying that this includes those funds established as money market funds, ETFs, and leveraged closed-ended AIFs. Fund Managers are required to stress test the assets and liabilities of the funds they manage, which includes redemption requests by investors. Managers should be aware of the liquidity risk of the funds they manage and use stress testing as a tool to mitigate this risk.

We are ambitious professionals and capable of tailoring solutions in the three areas where RMC Wise specialises.

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