Jurisdiction(s):
United Kingdom

Key definition

risk definition

What does risk mean? In legal practice, risk describes the possibility that a reasonably foreseeable circumstance or event could adversely affect legal rights, regulatory compliance, business operations, or the security of systems and data. The term is widely used across legal contexts, with certain regimes articulating it expressly. Cybersecurity: In the EU NIS2 framework (as transposed in Ireland), risk means any reasonably identifiable circumstance or event having a potentially adverse effect on the security of network and information systems. In the UK, the Network and Information Systems Regulations 2018 adopt a comparable risk‑based approach to security and incident handling; while “risk” is not defined as...

UK financial services risk control: FCA SYSC and PRA Rulebook obligations, CRR and MIFIDPRU requirements, SMCR governance, and PRA private equity review, including post-October 2025 MiFID II organisational changes

Published by a LexisNexis Financial Services expert

Practice notes

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This practice Note considers the requirements and guidance on risk control (the risk control rules) relevant to firms, drawn from the Senior Management Arrangements, Systems and Controls sourcebook in the Financial Conduct Authority (FCA) Handbook (SYSC) and the Prudential Regulation Authority (PRA) Rulebook, and includes measures that will replace Commission Delegated Assimilated Regulation (EU) 2017/565 (the UK MiFID II Organisational Regulation) upon its revocation on 23 October 2025.

Risk control rules applying to UK financial services firms

The risk control rules applicable to firms are contained in:

the overarching obligation to maintain effective risk control processes in SYSC 4.1.1R
SYSC 7 Risk control
SYSC 21 Risk control: guidance on governance arrangements

Dual-regulated firms should also be mindful of parallel provisions in the following sections of the PRA Rulebook:

Risk Control (which applies to CRR firms, as defined in the PRA Rulebook Glossary)
Group Risk Systems (which applies to CRR firms)
Credit Unions—11 General organisational requirements (which applies to credit unions)

In this Practice Note, links to the rules in SYSC 7 are presented alongside links to the corresponding provisions in...

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Web page updated on 22/05/2026

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