387. In accordance with Article 39(2), point (b) of Directive (EU) 2019/2034, competent authorities …

In accordance with Article 39(2), point (b) of Directive (EU) 2019/2034, competent authorities may:

a. require the investment firm to make changes to its overall governance arrangements and organisation, by means including requiring:

•	changes to the organisational or functional structure, including reporting lines;
•	amendments to risk policies or how they are developed and implemented across the organisation; and/or
•	an increase in the transparency of governance arrangements;

b. require the investment firm to make changes to the organisation, composition or working arrangements of the management body;
c. require the investment firm to strengthen its overall risk management arrangements, by means including requiring:

•	changes to or reduction in risk appetite, or the governance arrangements for setting risk appetite, and the development of the overall risk strategy;
•	improvements to ICAAP or ILAAP procedures and models, where they are not deemed fit for purpose;
•	enhancement of stress-testing capacities and the overall stress-testing programme; and/or
•	enhancements to contingency planning;

d. require the investment firm to strengthen internal control arrangements and functions, by means including requiring:

•	the independence and adequate staffing of the internal audit function; and/or
•	improvements to the internal reporting process to ensure that reporting to the management body is appropriate;

e. require the investment firm to enhance information systems or business continuity arrangements, for example by requiring:

•	improvements in the reliability of systems; and/or
•	development and testing of business continuity plans.

1. Overview

Summary	Regulation

Requirements
Source	Requirement

Standards
Source	Requirement

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