What is a risk management framework for a SEMI?

A risk management framework is a structured approach by which a SEMI identifies, assesses, monitors and mitigates risks across its operations — including financial crime, operational, regulatory and reputational risks.

Why is governance structure important for SEMIs?

Strong governance ensures accountability, clear oversight, proper segregation of duties, decision-making authority, and ensures that risk policies are enforced and reviewed by the board or senior management.

What does risk appetite mean and how is it defined?

Risk appetite is the amount and type of risk a SEMI is willing to accept in pursuit of its objectives. It should be documented, approved by governance, with thresholds and triggers for escalation.

How do monitoring and reporting work in governance setup?

Monitoring involves collecting metrics and indicators of risk, reporting them regularly to relevant oversight bodies, and having escalation mechanisms in case risk thresholds are exceeded or incidents occur.

What role does staff training play in risk management & governance?

Training ensures that staff understand their risk responsibilities, policies, procedures and know how to identify, escalate, and respond to risks in their roles. It helps embed a risk aware culture throughout the organisation.

How often should governance & risk management structures be reviewed or updated?

They should be reviewed whenever there are significant business changes, regulatory updates, incidents or annually as part of internal audit / oversight to ensure relevance and effectiveness.

Risk Management Framework & Governance Setup for SEMIs

Risk Management Framework & Governance Setup

ABM supports Small Electronic Money Institutions (SEMIs) in building robust risk management frameworks and governance structures that meet FCA standards while ensuring operational resilience. Our approach integrates regulatory expectations with practical business needs, allowing firms to identify, mitigate, and manage risks effectively.

Developing Risk Management Policies and Procedures

We design tailored policies and procedures that address the full spectrum of risks faced by SEMIs, including financial, operational, technology, and reputational risks. These policies outline how risks are identified, assessed, monitored, and controlled, creating a structured and proactive approach to risk management. We also ensure that policies are embedded into day-to-day business operations, rather than being treated as a mere compliance exercise.

Financial Risk Assessment and Controls

Financial resilience is a key FCA expectation for SEMIs. We assist in conducting detailed financial risk assessments covering capital adequacy, liquidity, safeguarding of customer funds, and exposure to market fluctuations. Based on this analysis, we establish clear controls, stress-testing procedures, and contingency planning to ensure the business remains resilient under different market conditions.

Conduct Risk Frameworks

ABM helps firms design conduct risk frameworks that ensure fair treatment of customers, transparent pricing, and ethical product design. These frameworks outline the principles and processes through which firms manage customer outcomes, prevent mis-selling, and uphold trust in the e-money ecosystem. By embedding customer-centric values into governance, firms strengthen both regulatory compliance and long-term business reputation.

Governance Structures and Oversight

Strong governance is central to FCA expectations. We support SEMIs in establishing clear governance frameworks that define roles, responsibilities, and reporting lines across the organisation. This includes setting up effective boards, committees, and senior management oversight functions. We also ensure alignment with the FCA’s Senior Managers and Certification Regime (SM&CR), creating accountability and transparency in decision-making.

Roles, Responsibilities, and Accountability

ABM ensures that firms assign responsibilities across all key functions—including risk management, compliance, safeguarding, and operations—in a way that meets regulatory scrutiny. We assist in drafting governance charts, role descriptions, and accountability statements that clearly demonstrate who is responsible for which functions, reducing regulatory risk and enhancing operational efficiency.