ESMA launches common supervisory action with NCAs on risk management function

The European Securities and Markets Authority (ESMA) has announced the launch of a common supervisory action (CSA), in collaboration with national competent authorities (NCAs), on the risk management function of undertakings for collective investment in transferable securities (UCITS) management companies and alternative investment fund managers (AIFMs) across the EU. The CSA, which will run throughout 2026 and 2027, will examine firms' compliance with key risk-related provisions under the UCITS and AIFM Directive frameworks, with a particular focus on the effectiveness, independence and expertise of the risk management function.

As part of this exercise, NCAs will focus on three key areas: (i) governance and organisation of the risk management function; (ii) identification, measurement and monitoring of risks; and (iii) reporting to senior management and governing bodies. ESMA intends to publish a final report with the findings of the CSA in 2028.

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