Why Broker Dealers Need an Internal Risk Assessment Program

To understand the importance of risk assessment for broker dealers, it’s important to examine how the industry standards arose, how they’ve evolved, and what they look like today.

The SEC established a formal system of risk assessment for broker dealers nearly three decades ago, to prevent events like the self-liquidation of Drexel Burnham Lambert following the collapse of its holding company. Recently, broker dealer risk assessments have been a top priority of the SEC.

Due to rapidly changing market regulations and emerging technology, risk assessments are continuously evolving to keep up with the times. Broker dealers need to stay on top of internal risk operations and create internal assessment systems to avoid regulatory fines.

Firm58’s white paper, “Broker Dealer Risk Assessments: Where They Came From, Where They’re Going,” addresses the importance of creating internal risk assessment programs and offers strategic recommendations for implementing an assessment strategy.

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