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SEC Directs Capital Market Operators On Enterprise Risk Management



Enterprise Risk Management

The Securities and Exchange Commission (SEC) has directed all Capital Market Operators (CMOs) to implement an Enterprise Risk Management (ERM) framework that conforms to international standards.

The commission gave the directive via a circular, a copy of which was sighted by The Eagle on its platform.

SEC, in giving the directive, mentioned the ERM to include those of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the International Organization for Standardization (ISO 31000), Financial Action Task Force (FATF) Recommendations and any other internationally recognized risk management standards.


According to it, adoption of comprehensive risk management practices had become imperative in minimizing systemic impact and safeguarding the interests of all stakeholders.

“Taking into account an entity’s operational structure, business activities, clients’ demography, products and services including delivery mechanism among others, the ERM framework shall be developed to encompass the following:

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“Risk governance structure with clear roles and responsibilities, including the formation of a risk management committee.


“Systematic processes for identifying, analyzing, and prioritizing risks that may impact the organization’s objectives.

“Strategies to manage and mitigate identified risks.

Risk appetite and tolerance statements.


“Monitoring of risk factors and regular reporting to senior management and the board of directors.

“Organizational risk-awareness programmes”.

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According to the commission the directive was aimed at strengthening implementation of Risk-Based Supervision (RBS) including Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT)/Countering Proliferation Financing (CPF) measures in the capital market, according consequently, that all CMOs are required to submit a Board-approved risk management policy (selectable and searchable PDF format) on or before September 30, 2024”.


The agency went ahead to provide an official email for the purpose.

The Eagle reports that Enterprise Risk Management is a key issue in the financial services sector of any economy.

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