FSA gets tough on risk

The UK regulator has unveiled a new “intensive” approach to supervision in the wake of the financial crisis. In this extract, FSA chief executive Hector Sants explains what this will mean for governance and expectations for risk management, which he argues should be a board level responsibility

It has been demonstrated that firstly, albeit with the benefit of hindsight, there are some management decisions that have revealed a degree of incompetence, and at times a rather cavalier approach regarding risk management; secondly, regulators must be careful not to place excessive reliance on senior management judgements; thirdly, the necessary challenge was missing from governance structures, in particular boards, and finally there may well be questions that can reasonably be asked about the openness and thus, arguably, the integrity of firms dealings with regulators, shareholders and their customers.