Arrow II Assessment

The FCA's 'Arrow II' risk assessment process informs its judgement of the risk that a firm poses to the FCA's statutory objectives. This judgement will then determine the intensity of the FCA's regulatory approach as well as determining what remedial actions the FCA expects the firm to undertake. It is essential that firms understand the process, and manage their risk and compliance arrangements in such a way to give confidence to the FCA the business is run in a well-controlled fashion.

The assessment is far wider than compliance risk and covers up to 48 risk elements determined by the FCA, and so is rarely addressed as part of compliance monitoring. Indeed it seeks to engage senior management in the FCA agenda.

This can be daunting for firms, particularly if they have not experienced the risk assessment process before. Even firms who have experienced a risk assessment using the latest Arrow II methodology will find the intensity of supervision in the FCA increasing as it continues to expand its supervision capabilities particularly in relation to the alternatives sector. Many firms, even those who are not yet relationship managed, find great value in asking IMS to undertake a 'pre Arrow II assessment".

IMS is the only specialist asset management consultancy to employ a significant number of senior ex-FSA staff who helped develop the Arrow II methodology and risk scoring model; as well as having conducted many Arrow II assessments. Therefore we are able to offer you a unique pre Arrow assessment.

The output from this assessment will be a report which scores each risk element in the same way the FCA scores, together with recommended actions that we believe would mimic the FCA's requested remedial action, and which help firms manage their business in the way the FCA demands.

If you would like to speak to someone about our Arrow II assessment support service please contact Jonathan Wilson on +44 (0)20 7408 2448.