7. Collective suitability criteria

The management body should collectively be able to understand the institution's activities, including the main risks. Unless otherwise indicated in this section, these criteria should be applied separately to the management body in its management function and the management body in its supervisory function.

The members of the management body should collectively be able to take appropriate decisions considering the business model, risk appetite, strategy and markets in which the institution operates.

Members of the management body in its supervisory function should collectively be able to effectively challenge and monitor decisions made by the management body in its management function.

All areas of knowledge required for the institution’s business activities should be covered by the management body collectively with sufficient expertise among members of the management body. There should be a sufficient number of members with knowledge in each area to allow a discussion of decisions to be made. The members of the management body should collectively have the skills to present their views and to influence the decision-making process within the management body.

The composition of the management body should reflect the knowledge, skills and experience necessary to fulfil its responsibilities. This includes that the management body collectively has an appropriate understanding of those areas for which the members are collectively accountable, and the skills to effectively manage and oversee the institution, including the following aspects:

• a. the business of the institution and main risks related to it;
• b. each of the material activities of the institution;
• c. relevant areas of sectoral/financial competence, including financial and capital markets, solvency and models, environmental, governance and social risks and risk factors;
• d. financial accounting and reporting;
• e. risk management, compliance and internal audit;
• f. information technology and security;
• g. local, regional and global markets, where applicable;
• h. the legal and regulatory environment;
• i. managerial skills and experience;
• j. the ability to plan strategically;
• k. the management of (inter)national groups and risks related to group structures, where applicable.

While the management body in its management function should collectively have a high level of managerial skills, the management body in its supervisory function should collectively have sufficient management skills to organise its tasks effectively and to be able to understand and challenge the management practices applied and decisions taken by the management body in its management function.