Asset management

Business process improvement for asset management

Many asset managers are moving into new and more complex strategies, including hedge funds, liability driven investments and absolute-return retail products. The increasing complexity of business operations has increased demands for back-office operations and processing, including for UCITS III. There is a risk that an organisation’s existing systems and controls may be unable to deal with this increase in complexity of products and underlying assets.

Board members and senior executives need to ensure that their management teams have robust and ‘fit-for-purpose’ risk management processes in place across their organisation.

Reply works with organisations to ensure that their risk management processes are adequate to enable them to identify, measure, monitor and manage the risks they face, including (i) financial risks (global exposure, counterparty risk and concentration risk), (ii) operational risk, (iii) settlement risk, (iv) legal risk, etc. Reply offerings, supported by proprietary methodology and tools, include enhancing business processes (including increased automation) that establish and promote the following:

  • Astablishing or enhancing the risk management function, including (i) the governance framework (e.g., responsibility of and reporting to the Board of Directors, independence of those charged with portfolio management decisions), (ii) the remuneration policy (to ensure it is not likely to bring about dysfunctional returns), (iii) the staffing (e.g., sufficient number of qualified personnel, job descriptions,), (iv) IT resources, and (v) the possible outsourcing of risk management to a third party (e.g., oversight and monitoring of the outsourcing arrangement);
  • Investment portfolio pricing, systems to enhance existing capabilities to price collective investment funds, investment companies, unit-linked products, managed accounts, pension funds, including pricing based on external market data, internal and external valuation models;
  • Investment restriction control, communication protocols and procedures to address cases of non-compliance, including processes to ensure investments comply with the Fund’s investment policy and the law.

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