Sophisticated investors and regulators focus on key areas such as: fiduciary duty, conflicts of interest, trade processes and control, marketing solicitation practices, compliance, personal trading and valuation procedures, to name a few. Sophisticated investors place safety of assets on equal footing with performance and reputational risk.
- We offer benchmark to best practices review, gap analysis and recommendation report and upon request, implementation and execution of controls across area of stress;
- We offer real world, investor or SEC ready due diligence framework execution or augmentation upon request; or
- We offer cost analysis, cost inefficiencies, counter-party risk analysis across third parties, counter-parties or service providers
Best practices gap analysis, recommendation or support across manual, procedures, processes and controls
- Tailored to size of firm and team, benchmark to best practices processes and controls across front, middle and back office
- Enterprise level best practices diagnostic firm review, recommendation report analysis to close high risk gap(s)
- Ad hoc, interim or ongoing collaborative support
- outsourced or co-sourced C-suite support on a high level to project safety of assets relative to assets under management.
Risk management is not about eliminating risk but an understanding of the risk you are taking – risk rules should not extinguish return. The goal of risk management for either a startup hedge fund, emerging manager or large investment adviser is to minimize unanticipated, and inappropriate risks and insure return opportunities are consistent with risks that need to be taken to achieve desired returns. Reputational risk analysis i.e., disclosure documents, including prospectuses, marketing materials, request for proposals, and monthly letters, in addition to the currently required compliance checks, should be reviewed prior to use in order to ascertain the adequacy and accuracy of all such materials and to attempt to minimize inadvertent “reputational risk.”
How we help private funds and alternative investing asset managers:
- Enterprise level or focused analysis of counter-party, operational or reputational risk and their impact on existing or potential portfolio and regulatory risk;
- Review of third parties distribution or marketing of product and analysis of managers disclosed or undisclosed role to mitigate reputational and related risks;
- Review and identify categories of potential conflicts and support the execution of processes and controls;
- Best execution and credit quality processes and controls;
- How to create a risk conscious culture;
- Regulatory or best practices documented policies and procedures and back up recovery plan;
- Expert guidance on the due diligence of outside managers;
- Effective valuation methodologies, processes and controls to match investor concerns; and
- Separation of controls – effective processes and controls or outsource – see C Level support for early stage to emerging managers.
1. The majority of studies show the higher failure compared to established Firms is often due to business mistakes rather than investment issues (Christany, Dauland Giraus).
2. Red flags: top five reasons an investor will veto an investment, unwillingness to provide adequate transparency, inadequate or inappropriate compliance policies and procedures, poor separation of duties, inadequate personnel or lack or relevant experience in critical roles, inappropriate valuation policy (Annual Due Diligence Survey, Deutsche Bank).