What does risk management framework & governance setup involve for an AEMI?

It involves establishing structured oversight and governance, defining how risks are identified, assessed, addressed, monitored and reported, setting clear roles and responsibilities, and embedding these into policies and controls.

Why is governance structure important for AEMIs?

A strong governance structure ensures accountability, clear decision-making, proper oversight, helps with compliance with regulator expectations, and fosters risk awareness at the senior level.

What is risk appetite and how is it defined?

Risk appetite is the level of risk an AEMI is willing to accept in pursuit of its objectives. It should be documented, approved by governance, have measurable thresholds, and trigger escalation when exceeded.

How does policy & procedure alignment work in this setup?

It means ensuring that your internal policies, procedures, and controls reflect the governance and risk framework: roles/responsibilities, risk assessment, escalation, monitoring, and oversight are clearly defined and functioning.

What monitoring & reporting mechanisms are typically required?

Usually, dashboards or reports to management and board covering risk metrics, incidents, control effectiveness, compliance issues, and escalation logs; along with periodic reviews.

Is staff training part of the governance & risk framework setup?

Yes. Training ensures that those involved (board, senior management, compliance, risk, operations) understand their roles, the framework, their risk responsibilities, reporting lines and how to use the controls in place.

Risk Management Framework | Governance Setup AEMI

Risk Management Framework & Governance Setup

ABM provides comprehensive support in designing and implementing risk management frameworks that are tailored to the unique needs of financial institutions. Our approach encompasses all critical risk areas, including financial crime, operational, liquidity, and technological risks, ensuring that your organisation operates securely, efficiently, and in full regulatory compliance.

Risk Identification & Assessment

We begin by conducting a detailed assessment of your business operations to identify potential risks across financial, operational, technological, and regulatory domains. This involves evaluating processes, systems, and controls to determine areas of vulnerability and exposure. By understanding the specific risk profile of your organisation, we help design strategies to mitigate threats effectively, ensuring proactive risk management rather than reactive measures.

Risk Mitigation & Control Design

ABM assists in developing robust risk mitigation strategies and controls tailored to your institution’s needs. For financial crime, we implement anti-money laundering and fraud detection measures; for operational risks, we establish process controls and contingency plans; for liquidity and technological risks, we design monitoring mechanisms and IT security frameworks. Each control is aligned with industry best practices and regulatory expectations, providing confidence that risks are managed comprehensively and systematically.

Governance Structure & Policy Development

Strong governance is critical to effective risk management. ABM supports the creation of clear governance structures, including well-defined roles, responsibilities, and reporting lines. We help draft governance policies, board charters, and oversight mechanisms in accordance with FCA Senior Management Arrangements, Systems and Controls (SYSC) requirements. Our guidance ensures that your board and management team have the tools, accountability, and oversight capabilities necessary to maintain regulatory compliance and operational resilience.

Monitoring, Reporting & Continuous Improvement

Our framework includes ongoing monitoring and reporting mechanisms that allow your organisation to track risk exposures and control effectiveness in real time. We design dashboards, reporting templates, and escalation procedures that ensure timely communication of risks to senior management and the board. Additionally, our approach emphasizes continuous improvement, with periodic reviews and updates to risk management policies and governance structures to respond to emerging threats and regulatory changes.