Australia: ASIC finalises guidance on risk management systems for responsible entities


  • Responsible entities who currently operate registered managed investment schemes.
  • It will also be of interest for responsible entities who do not currently operate any schemes and Australian financial services (AFS) licencees who operate unregistered schemes, IDPSs or MDAs.


  • ASIC has released its long-awaited regulatory guide setting out its expectations of the systems and procedures responsible entities should have in place to meet their obligation to maintain adequate risk systems.


  • If you are a responsible entity operating a registered scheme, you will need to review (and, if necessary, revise) your risk management system.
  • Operators of unregistered schemes, investor directed portfolio services (IDPSs) and managed discretionary accounts (MDAs), and other responsible entities should have regard to ASIC's guidance.

Following extensive consultations under ASIC Consultation Papers 204 and 263, ASIC has finally released Regulatory Guide 259 Risk management systems of responsible entities (RG 259).

RG 259 is substantially in the same form as the draft regulatory guide attached to Consultation Paper 263. It provides specific guidance on ASIC's expectations of what is required by responsible entities of registered schemes to comply with their existing obligation under s912A(1)(h) Corporations Act 2001 (Cth) to have adequate risk management systems in place.


ASIC has previously provided guidance on risk management systems for all AFS licensees under Regulatory Guide 104 Licensing: Meeting the general obligations.

In light of the particular risks faced by responsible entities because of the nature of their business and the schemes they operate, ASIC has taken the view that responsible entities would benefit from additional guidance in relation to their obligation to have adequate risk management systems in place.

Although RG 259 only formally applies to responsible entities who currently operate registered schemes, ASIC considers that responsible entities who are authorised to, but do not currently, to operate any registered schemes, as well as AFS licensees who operate unregistered schemes, IDPSs or MDAs should also have regard to the requirements set out in RG 259.

Immediate compliance required - no transition period

As foreshadowed in Consultation Paper 263 there is no transition period and responsible entities are required to comply with RG 259 immediately. However, ASIC has indicated that it will adopt a facilitative approach for 12 months and not take action for breaches of RG 259 where a responsible entity can demonstrate it is taking steps to comply with RG 259.

Requirements set out in RG 259

Under RG 259, ASIC expects that responsible entities must have in place:

  • documented risk management systems
  • processes for identifying and assessing risks, and
  • processes for managing any identified risks,

which are appropriate for the nature, scale and complexity of the scheme or schemes they are operating.

A general summary of each of these requirements is set out below:

Requirement Obligation
Establish risk management systems

Responsible entities should:

  • maintain documented risk management systems that address the matters outlined in RG 259
  • foster a strong risk management culture
  • take into account relevant industry, local and international guidance
  • include a liquidity risk management process, and
  • regularly review their risk management systems to ensure that they are current, relevant, effective and complied with, and if using an external service provide for risk management functions, regularly review the performance and ongoing suitability of the service provider.
Identify and assess risks

Responsible entities should:

  • maintain one or more risk registers as part of their risk identification and assessment process
  • ensure that their risk management systems address all material risks
  • have consideration to certain factors listed in RG 259 when choosing methodologies for identifying and assessing risks, and
  • adopt appropriate methods to assess risks.
Manage identified risks

Responsible entities should:

  • implement appropriate strategies for managing identified material risks
  • have adequately experienced staff regularly review and monitor identified risks
  • ensure regular reporting and escalation of issues to the board, risk committee and compliance committee as appropriate, and
  • ensure compliance with other relevant obligations as an AFS licensee.

ASIC has also set out additional good practice guidance under RG 259. These are not mandatory requirements but rather outline measures which can be adopted to enhance risk management systems and operate at a level above a responsible entity's statutory obligations.

How McCullough Robertson can assist

Responsible entities will need to review and, if necessary, revise their risk management systems to ensure compliance with RG 259.

We can assist you to:

  • understand, in detail, the requirements under RG 259
  • determine whether your current risk management system meets the requirements under RG 259
  • review your risk management policy or policies to assess whether amendments are required to comply with RG 259, and
  • prepare amendments to your existing risk management policy or policies or draft new risk management documents to bring your risk management system into compliance with RG 259.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions