If you are based in the North West of England, it will be likely that you will be one of the firms included in the first tranche of the FSA's Business Risk Review. You will have already attended a workshop and will now be waiting for confirmation of the date of your assessment. The Business Risk Review is a major piece of work being undertaken by the FSA and it is scheduled to span several years and follow the same format as the TCF initiative. The format will include preliminary workshops, assessments (face to face, via telephone or, in some instances, online), validation visits of approximately 10% of firms and, where concerns are identified, supervisory visits. The Business Risk Review is designed to test what the FSA considers to be the three fundamental aspects of any business and these are referred to as the 'cornerstones' and are split into three areas; . good Governance, . good Culture and . good Controls. FSA believe that if you focus on getting these 3 aspects of your business right, this will lead to good business practice and in turn good risk management. The cornerstones are equally important whether you run a multi-adviser firm or whether you are a sole trader.So what do you need to consider when you review these aspects of your business?Governance - The Financial Reporting Council has stated: 'The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company.'In other words, the FSA need firms to ensure that the decisions made, management processes, the accountability and oversight within a company are considered and designed to take account of business development. As well as taking into account how your business can adapt to changes in the ever changing market place. Culture - A good business culture is one that has open channels of communication throughout the company. This should relate to all levels of communication and should not only relate to communication from the management team downwards. The management team should set the example of good behaviours, demonstrating what these look like whilst ensuring that employees are clear about the standards of behaviour expected of them and what is considered to be acceptable within the company. If you are successful in building a culture which is open and promotes good behaviours, this will help to motivate employees to work towards individual goals and contribute to the overall success of the company. High standards and good behaviours are equally applicable to all firms, regardless of size.Controls - Every firm should understand the importance of having suitable controls in place and that these should be continually reviewed and tested. Where gaps or issues are identified then actions to rectify this should be completed in a timely manner. Management Information is a vital tool in measuring both individual and overall business performance. It can help the firm to determine what they can do better as well as more efficiently. Ongoing training and competence as well as appropriate supervision will ensure that competency and capability is embedded at all levels, as this is fundamental to the success and development of the business. Once the cornerstones are in place you have the fundamental building blocks for good business practices. Continued review will allow you to consider and take account of risks which may affect your business either from internal sources which you can monitor and control or from external sources. There will be risks to your business over which you have no control, such as economic changes or regulatory changes but you can mitigate the effects of such risks through good forward planning.To assist with your preparation Bankhall Compliance Support Unit can provide detailed guidance and support on what a firm can expect. The CSU can be contacted on 0845 300 5326 (Option 2) or email csu@bankhall.co.uk, for further information.Some services may be subject to additional cost. ARE YOU CONFIDENT THAT THE CORNERSTONES OF YOUR BUSINESS ARE IN PLACE?The FSA has indicated that during 2012 they will commence with undertaking Business Risk Assessments in the following areas: The North West, The West Country, The West Midlands, Scotland and Northern Ireland and, possibly, the South West. LINDA TODDCompliance Support Manager Bankhall

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