CySEC alerts fund managers to EU-wide risk management review

Nicosia, Cyprus. The Cyprus Securities and Exchange Commission has informed Cyprus fund managers that European regulators are launching an EU-wide review of investment firms’ risk management, with local checks expected to begin in late 2026 or early 2027.

CySEC said the review will assess whether risk management arrangements at UCITS management companies and alternative investment fund managers are appropriate for the scale and nature of their businesses.

EU supervisory action

In a circular, CySEC said the European Securities and Markets Authority has launched its 2026 Common Supervisory Action with national regulators across the European Union.

The exercise will examine the risk management functions of UCITS management companies and alternative investment fund managers, with CySEC participating in the EU-wide review.

Focus of the review

ESMA considers risk management central to investor protection and financial stability. This includes how firms identify, assess, monitor and manage risks that could affect funds and investors.

The review will cover market, credit, liquidity, counterparty and operational risks. It will focus on whether risk management functions are effective, independent and suitably skilled, rather than only whether firms have the required structures in place.

Regulators will also examine how risk management functions are governed and organised, how risks are identified, measured and monitored, and how risk information is reported to senior management and governing bodies.

CySEC position

CySEC said risk management is an important part of the governance and internal control framework for Cyprus investment fund managers.

An effective risk management function helps ensure that UCITS and alternative investment funds are managed in a sound and prudent manner, the regulator said.