Article 42 | Delegated Regulation 231/2013

Article 42 - Functional and hierarchical separation of the risk management function

Article 42

Functional and hierarchical separation of the risk management function

The risk management function shall be considered as functionally and hierarchically separated from the operating units, including the portfolio management function, only where all the following conditions are satisfied:

(a)

persons engaged in the performance of the risk management function are not supervised by those responsible for the performance of the operating units, including the portfolio management function, of the AIFM;

(b)

persons engaged in the performance of the risk management function are not engaged in the performance of activities within the operating units, including the portfolio management function;

(c)

persons engaged in the performance of the risk management function are compensated in accordance with the achievement of the objectives linked to that function, independently of the performance of the operating units, including the portfolio management function;

(d)

the remuneration of senior officers in the risk management function is directly overseen by the remuneration committee, where such a committee has been established.

The functional and hierarchical separation of the risk management function in accordance with paragraph 1 shall be ensured throughout the whole hierarchical structure of the AIFM, up to its governing body. It shall be reviewed by the governing body and, where it exists, the supervisory function of the AIFM.

The competent authorities of the home Member State of the AIFM shall review the way in which the AIFM has applied paragraphs 1 and 2 on the basis of the criteria laid down in the second subparagraph of Article 15(1) of Directive 2011/61/EU.

CHAPTER I - DEFINITIONS (Article 1)

CHAPTER II - GENERAL PROVISIONS (Article 2-15)

CHAPTER III - OPERATING CONDITIONS FOR AIFMs (Article 16-82)

SECTION 1 - General principles (Article 16-29)

SECTION 2 - Conflicts of interest (Article 30-37)

SECTION 3 - Risk management (Article 38-45)Article 38 - Risk management systems GL Article 39 - Permanent risk management function GL Article 40 - Risk management policy GL Article 41 - Assessment, monitoring and review of the risk management systems Article 42 - Functional and hierarchical separation of the risk management function Article 43 - Safeguards against conflicts of interest Article 44 - Risk limits GL Article 45 - Risk measurement and management GL

SECTION 4 - Liquidity management (Article 46-49)

SECTION 5 - Investment in securitisation positions (Article 50-56)

SECTION 6 - Organisational requirements — general principles (Article 57-66)

SECTION 7 - Valuation (Article 67-74)

SECTION 8 - Delegation of AIFM functions (Article 75-82)

CHAPTER IV - DEPOSITARY (Article 83-102)

CHAPTER V - TRANSPARENCY REQUIREMENTS, LEVERAGE, RULES RELATING TO THIRD COUNTRIES AND EXCHANGE OF INFORMATION ON THE POTENTIAL CONSEQUENCES OF AIFM ACTIVITY (Article 103-116)

CHAPTER VI - FINAL PROVISIONS (Article 117)

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Article 42 - Functional and hierarchical separation of the risk management function

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