Our Supervisory Framework is designed to identify the main risks to our statutory objectives as they arise and to help us plan how to address these risks in line with our regulatory approach.
Identifying risks to our statutory objectives involves drawing on a wide range of sources, including intelligence gathering while supervising firms, contacting consumers directly and monitoring markets and the economy. We use this information to assess the level of risk posed to our statutory objectives and to decide on what approach is needed (if any) to mitigate the risk.
Within the framework, we use two basic approaches to manage risks arising from sources external to the FSA: one for Firms and one for Themes. The Firms approach involves assessing and dealing with risks as they apply to an individual firm or group of connected firms. By contrast, under the Themes approach, we consider specific issues as they affect a number of firms, an entire sector, or the market as a whole. We choose one or the other of these approaches (or a mixture of the two) to deal with risks in the most efficient and effective way.
This framework links our statutory objectives to our regulatory activities, and involves identifying risks to our statutory objectives, assessing and prioritising the risks and deciding the appropriate regulatory response. For more detailed information on each stage of our risk management process see the risk management page.
