20.4 RMF’s role in unapproved exposures

The RMF should independently assess breaches of risk appetite or limits (including ascertaining the cause and undertaking a legal and economic analysis of the actual cost of closing, reducing or hedging the exposure against the potential cost of keeping it). The RMF should inform the business units concerned and the management body, and recommend possible remedies. The RMF should report directly to the management body in its supervisory function when the breach is material, without prejudice for the RMF to report to other internal functions and committees.

The RMF should play a key role in ensuring a decision on its recommendation is made at the relevant level, complied with by the relevant business units and appropriately reported to the management body and, where established, the risk committee.