Michael Moore’s Outlook on getting the balance right on risk and regulation

One of the absolute joys of any executive or board meeting is the moment when it is time to consider the risk register. ‘Joy’ may be pushing it, I accept. Like the Scottish Presbyterian church services of my youth, it is not designed to be a period of fun.

But as the key to good governance, assessing risk in a disciplined, methodical way has to be at the core of any serious organisation. Or any important system within the economy, including our own private capital industry. While the most appealing discussions will always be about investment opportunities, they are rightly set in the wider context of different kinds of risk – macro, micro, specific, unspecific, near term, long term. And so on.

Right now there is an important debate underway in the UK about risk and our appetite for it. The government a year ago challenged all the regulators to demonstrate that they were focused on supporting economic growth by introducing ‘secondary objectives’ to guide their efforts.

The requirements have been embraced reasonably enthusiastically in the period since. To be clear, the Financial Conduct Authority and the Competition and Markets Authority, to zoom in on two bodies with whom our industry has a lot of interaction, have not reduced their energy levels when it comes to their core responsibilities. But there has been a welcome evolution of their language, and a clear sense that they are taking the challenge to facilitate economic growth seriously.

So far so good – striking a balance between keeping financial systems functioning or ensuring markets are competitive on the one hand, and not restricting the ability to invest in high growth opportunities on the other, is no easy matter.

So where is the sweet spot? The regulators’ judgements do not mimic the situations found in business: there the assessment of risk has to be serious, but at the same time must not squeeze out the ability to deliver the mission to grow, especially in the world of private capital. This approach of ‘opportunity first, but wrapped appropriately by risk mitigation’ is never the position regulators will start from, and nor should it be. But finding a new centre of gravity seems to be on the cards.

However, they are now attracting attention from other stakeholders who are concerned they will end up going too far. Some senior parliamentarians have questioned if businesses and individuals will now become financially exposed and left vulnerable in an economic downturn. Specifically, the government has been criticised for failing to ‘draw the line of acceptable harm’, leaving the regulators uncertain about where they stand, while still being on the hook when things go wrong.

Meanwhile, as I explored here a couple of months ago, the Bank of England has been developing its separate assessment of the risks presented to the financial system as a whole by the growth of private markets, at the heart of which our industry sits.

Theirs is not simply a concern about ‘the line of acceptable harm’ to consumers, but the need to understand a sector which has become a much bigger part of the global economy in the generation since the ‘Great Financial Crisis’. As I made clear in January’s column, we get it – this is a legitimate area of enquiry, so long as the exam questions are clear and the expectations about the answers are reasonable and the demands proportionate.

These very different, if related, lenses on the risk debate, one concerned about the micro, the other about the macro, are applied at a time when society’s appetite for risk, and demands on politicians to squeeze it out, has been heavily influenced by dire experiences, which live long in the collective memory, such as the GFC and the pandemic.

Perhaps in this context, we should be more understanding of the pressures on regulators, parliamentarians and government to find the balance in the risk appetite debate. But we cannot leave the debate to them alone, as we cannot presume that the direction of travel to find a new balance will be maintained. As we know already, it can be an awkward juxtaposition between demands to deliver economic growth and to maintain appropriate protection from risk.

The need to ensure all the issues for private capital are properly understood, and that regulation remains appropriate and competitive, is driving a huge amount of our activity at the moment, and will continue to do so.

In the meantime, maybe this whole debate is a timely reminder to look more fondly on the time spent with our risk registers after all. OK, that might still be a stretch.

Michael Moore
Chief Executive, UK Private Capital

This article was originally published on 4 March 2026 on the Private Equity News website here.