United Kingdom - Facing up to fraud - The need for a risk-based approach

FSA
Originally uploaded by governancefocus.

Times are changing fast. In October 2004 the Financial Services Authority (‘FSA’) unveiled its new regulatory approach to dealing with financial fraud. The FSA has now put financial fraud risk management on its agenda of ‘risk-based’ regulation through its existing supervisory regime it will seek to measure and evaluate the degree of compliance with expected best practice.

Notwithstanding this announcement, the FSA also published a report in November 2004 highlighting concerns over poor IT security which may be exploited to commit financial fraud through internal or external attacks on firms’ IT infrastructure.

Equally publications such as ISA 240 and the Basel Committee on Banking Supervision’s paper number 96 on Operational Risk have underlined the critical nature of internal and external fraud risks and the need for institutions to have appropriate fraud risk management systems in place with appropriate management responsibility and oversight to manage these vulnerabilities.

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