Connecting Senior Managers and Certification Regime requirements with operational risk

Liezl De Villiers Getz
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Liezl De Villiers Getz: Head of Operational Risk Identification, Aviva Investors, UK

Journal of Securities Operations & Custody, 2020, vol. 12, issue 3, 207-218

Abstract: The asset management industry often faces an interesting question: How can firms demonstrate good risk culture? While a concentrated focus has revolved around establishing and building robust risk management models, firms are now evolving into the next level of demonstrating how risk culture revolves around the models developed. Senior Management and Certification Regime (SMCR) is intended to play a pivotal role in evidencing good risk culture at firms if appropriately integrated with risk management. As the Financial Conduct Authority (FCA) states, the SMCR aims to: • ‘encourage a culture of staff at all levels taking personal responsibility for their actions; and • Make sure firms and staff clearly understand and can demonstrate where responsibility lies’. If SMCR, governance and risk management are not integrated, it can result in wasting resources and time that could otherwise have been spent to grow the firm. This paper provides a solution in achieving such an integrated model. Please note this paper does not detail the regulatory steps (eg application forms, regulatory approvals or statements of responsibilities documented in role profiles) to be completed by firms. It rather discusses how SMCR can be integrated in practice into risk management.

Keywords: SMCR; risk culture; governance; personal responsibility; accountability (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2020
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