Document ID: chunk:federal_register_of_legislation:F2022L01492:body:0:p3
Version: federal_register_of_legislation:F2022L01492
Segment Type: other
Provision Reference: 
Character Range: 6084–9487

investment risk.[6]

    12.         The Board is ultimately responsible for the establishment, implementation, oversight and maintenance of an RSE licensee's investment governance framework.

    13.         An RSE licensee's investment governance framework must, at a minimum, include:

       (a)          investment objectives for each investment option offered by the RSE licensee;

       (b)          a methodology for determining investment reporting measures[7];

       (c)          the investment strategy for the whole of each RSE and for each investment option as required by section 52(6) of the SIS Act;

       (d)          all Board policies relating to investment activities;

       (e)          role statements that include the details of each role's responsibilities and reporting structures for all roles related to investment activities;

       (f)           structures, policies and processes relating to investment activities, including for investment performance and risk measurement, assessment, stress-testing, valuations and reporting to the Board and senior management; and

       (g)          a review process to ensure that the investment governance framework remains effective.

    14.         An RSE licensee's investment governance framework must be appropriate to the size, business mix and complexity of the RSE licensee's business operations.

    15.         An RSE licensee must have procedures to ensure that all persons in roles related to investment activities of the RSE licensee are made aware of, and have processes and controls for monitoring compliance with, the RSE licensee's investment governance framework.

Review of the investment governance framework
    16.         An RSE licensee must ensure that the appropriateness, effectiveness and adequacy of its investment governance framework are subject to a comprehensive review by operationally independent, appropriately trained and competent persons at least every three years.

    17.         The scope of the review of an RSE licensee's investment governance framework must have regard to the size, business mix and complexity of the RSE licensee's business operations, the extent of any change to those operations and any changes to the external environment in which the RSE licensee operates.

Investment objectives

    18.         An RSE licensee must, when formulating the investment strategy for each investment option, set investment objectives that are:

       (a)          aligned with the size, business mix and complexity of the RSE from which the investment option is offered; and

       (b)          specific and measurable and, at a minimum, include:

           (i)            a return objective; and

           (ii)         a risk objective.

Formulating the investment strategy

    19.         When formulating each investment strategy for the whole of the RSE, and for each investment option, an RSE licensee must document how it has regard to each of the factors in section 52(6) of the SIS Act.

    20.         An RSE licensee must, when determining an appropriate level of diversification for each investment strategy[8]:

       (a)          identify the risk factors, and sources of return with which the risk factors are associated;

       (b)          where the strategy includes multiple assets and/or asset classes, identify how sources