法律與法規命令
1.
Identify economically significant risks with specificity.2.
Confirm the allocation of economically significant risks arranged by contract.3.
Through a functional analysis, confirm the actual economic behavior of the participants of the Controlled Transaction, and whether they perform functions of risk assumption and risk management.4.
Based on the evaluation results of the preceding three subparagraphs, analyze whether the participants of the Controlled Transaction abide by the terms of the contract, and whether the advocate of risk assumption actually controls risk and has the financial ability to assume the risk, so as to confirm whether the contractual risk assumption is consistent with the behavior of the transaction parties.5.
If it is confirmed that the advocate of risk assumption does not exercise control over the risk or does not have the financial capacity to assume the risk, then the risk should be allocated to the party exercising control and having the financial capacity to assume the risk. If multiple parties are identified that all exercise control and have the financial capacity to assume the risk, then the risk should be allocated to the party exercising the most control. The other parties performing control activities should be remunerated appropriately, taking into account the degree of the control activities performed.6.
Repricing of the transaction, taking into account the consequences of risk allocation according to the results confirmed in the preceding five subparagraphs. The party assuming a risk should be compensated with an appropriate anticipated return, and the party mitigating risk should be appropriately remunerated.1.
The following factors shall be considered when judging whether the participants perform functions of risk assumption:(1)
Take on the upside and downside consequences of the risk.(2)
Have the financial capacity to assume risk, which can be defined as access to funding to take on the risk or to lay off the risk, to pay for mitigating the risk and to bear the consequences of the risk if the risk materializes.2.
The following factors shall be considered when judging whether the participants perform functions of risk management:(1)
The capability to actually control risk:i.
the capability to make decisions to take on, lay off, or decline risks, together with the actual performance of that decision-making function, andii.
the capability to make decisions on whether and how to respond to the risks, together with the actual performance of that decision-making function.(2)
The capability to mitigate risk, that is the capability to take measures that are expected to affect risk outcomes, including measures that reduce the uncertainty or measures that reduce the consequences in the event that the downside impact of risk occurs, together with the actual performance of such risk mitigation.1.
Where the participants of the Controlled Transaction provide funding but do not actually control the financial risk associated with the provision of funding or any other specific risk, only a risk-free return could be generally expected.2.
Where the participants of the Controlled Transaction provide funding and actually control the financial risk associated with the provision of funding, but without the assumption of, including the control over, any other specific risk, only a risk-adjusted return on its funding (i.e. the reasonable return of controlling financial risk) could be generally expected.