18.1 RMF’s role in risk strategy and decisions

The RMF should be actively involved at an early stage in developing the investment firm ’s risk strategy and ensuring that the investment firm has effective risk management processes in place. The RMF should provide the management body with all relevant risk-related information to enable it to set the investment firm ’s risk appetite level. The RMF should assess the robustness and sustainability of the risk strategy and appetite. It should ensure that risk appetite is appropriately translated into specific risk limits. The RMF should also assess the risk strategies of business units, including targets proposed by the business units, and should be involved before a decision is made by the management body concerning the risk strategies and risk appetite. Targets should be plausible and consistent with the investment firm ’ s risk strategy and risk appetite.

The RMF’s involvement in decision -making processes should ensure that risk considerations are taken into account appropriately. However, accountability for the decisions taken should remain with the business and internal units, and ultimately the management body.