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CESR proposed its level 3 measures on the risk management principles for UCITS and identified some key principles which should be complied with in order to ensure protection of UCITS investors.
These principles mainly relate to:
(i) the governance and organisation of the risk management process;
(ii) the identification and measurement of risks relevant to the UCITS;
(iii) the management of risks relevant to the UCITS;
(iv) monitoring and reporting.
All principles corresponding to these areas should be implemented as part of a coherent set of internal rules that govern the process of identification, measurement and management of the risks incurred by UCITS investors, hereafter referred to as the risk management policy of the Company.
Principles regarding risk management at the company level are supplemented by supervisory principles which should guide the review of these processes for the purpose of investor protection.