Risk Based Supervision in Guernsey (Version 1.0, February 2016)

Summary

This is explanatory guidance from the Guernsey Financial Services Commission describing its risk based supervisory framework, PRISM (Probability Risk and Impact SysteM), and how it is used to allocate supervisory resources across the finance sector in the Bailiwick of Guernsey. It does not impose new rules or filing requirements; it explains the methodology firms can expect to encounter during supervision.

• Impact categorisation: Firms are categorised by impact (based on the potential damage their failure could cause) using data from regulatory returns, which determines the intensity of supervisory engagement.
• Engagement levels: High impact firms receive the most intensive, structured engagement; medium high impact firms get full risk assessments every two to four years; medium low impact firms roughly every five years; low impact firms are supervised reactively and via thematic work.
• Probability assessment: Supervisors judge the likelihood of a firm failing across risk categories (credit, operational, governance, insurance, liquidity, market, strategy/business model, financial crime) to form an overall risk probability judgement.
• Thematic supervision: The Commission conducts thematic reviews across sectors on consumer, financial crime and prudential issues, which may lead to enforcement action against specific firms.
• Risk mitigation: Where supervisors identify unacceptable risks, they require firms to take outcome focused mitigating actions, escalating to enforcement where firms fail to comply.

The document is a descriptive overview of GFSC's supervisory approach rather than a set of binding requirements, and the Commission states it may amend its practices and this document without prior notice.

Applies to

banks, insurers, fiduciary/trust firms, funds, intermediaries, DNFBPs, all firms regulated by the Guernsey Financial Services Commission