The European Securities and Markets Authority (ESMA) is initiating a Common Supervisory Action (CSA) concerning risk management functions. This initiative will involve EU financial markets and will take place throughout 2026 and 2027. National Competent Authorities (NCAs) will collaborate closely with ESMA on this project. The CSA’s primary goal is to evaluate how market participants adhere to crucial risk-related rules within UCITS and AIFMD frameworks. A central focus will be placed on the effectiveness, autonomy, and knowledge of risk management operations. Risk management is vital for safeguarding investors and maintaining financial stability. It involves identifying, measuring, tracking, and managing significant risks like market, credit, and liquidity. NCAs will specifically examine the governance, organization, risk identification, measurement, monitoring, and reporting to senior management. ESMA has developed a common assessment framework to ensure a consistent approach across the EU. This framework outlines the scope, methodology, and timeline for the exercise. NCAs will exchange supervisory insights through ESMA to foster greater convergence in oversight. ESMA plans to release a comprehensive report detailing the findings in 2028.