Home FCA Handbook PDCOB PDCOB 13 PDCOB 13.8 Systems, strategies, processes and reviews
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PDCOB 13.8 Systems, strategies, processes and reviews

Purpose

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In addition to adequate financial resources, adequate systems and controls are necessary for the effective management of prudential risks. This section therefore imposes requirements relating to such systems and controls.

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This section requires a firm to identify and assess:

  1. (1)

    risks to the firm being able to meet its liabilities as they fall due;

  2. (2)

    how the firm intends to mitigate these risks; and

  3. (3)

    the amount and nature of financial resources that the firm considers necessary to address any remaining risks.

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The FCA may review this assessment as part of its own assessment of the adequacy of a firm’s financial resources.

Systems, strategies and processes

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A firm must use sound, effective and comprehensive systems, strategies and processes to assess and maintain on an ongoing basis the amounts, types and distribution of financial resources that it considers adequate to cover:

  1. (1)

    the nature and level of the risks to which it is or might be exposed; and

  2. (2)

    the risk that the firm might not be able to meet its core capital resources requirement and general solvency requirement in the future.

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A firm should consider taking out professional indemnity insurance and insurance to cover the risk of cyber-attacks in relation to its regulated pensions dashboard activity.

Documentation of risk assessments

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The FCA may review the written record of the assessment in PDCOB 13.8.4R as required under PDCOB 16.12.1R as part of its own assessment of the adequacy of a firm’s financial resources as part of its day-to-day supervision of firms.