Article 45
Risk measurement and management
1.
AIFMs shall adopt adequate and effective arrangements, processes and techniques in order to:
(a)
identify, measure, manage and monitor at any time the risks to which the AIFs under their management are or might be exposed;
(b)
ensure compliance with the limits set in accordance with Article 44.
2.
The arrangements, processes and techniques referred to in paragraph 1 shall be proportionate to the nature, scale and complexity of the business of the AIFM and of each AIF it manages and shall be consistent with the AIF’s risk profile as disclosed to investors in accordance with point (c) of Article 23(4) of Directive 2011/61/EU.
3.
For the purposes of paragraph 1, the AIFM shall take the following actions for each AIF it manages:
(a)
put in place such risk measurement arrangements, processes and techniques as are necessary to ensure that the risks of positions taken and their contribution to the overall risk profile are accurately measured on the basis of sound and reliable data and that the risk measurement arrangements, processes and techniques are adequately documented;
(b)
conduct periodic back-tests in order to review the validity of risk measurement arrangements which include model-based forecasts and estimates;
(c)
conduct, periodic appropriate stress tests and scenario analyses to address risks arising from potential changes in market conditions that might adversely impact the AIF;
(d)
ensure that the current level of risk complies with the risk limits set in accordance with Article 44;
(e)
establish, implement and maintain adequate procedures that, in the event of actual or anticipated breaches of the risk limits of the AIF, result in timely remedial actions in the best interest of investors;
(f)
ensure that there are appropriate liquidity management systems and procedures for each AIF in line with the requirements laid down in Article 46.