The Alternative Investment Management Association (AIMA), the global representative body for alternative asset managers, on Tuesday released a new guide to operational risk management for asset management firms.
This is the first time AIMA has produced a guide dealing with all aspects of operational risk, rather than targeting particular areas such as cyber security, valuation and business continuity, the organization’s announcement says.
The new guide covers everything from trading, execution and market manipulation risk to business conduct and reputational risk, outsourcing risk, and counterparty risk.
“With the increased scrutiny of hedge fund managers by institutional investors, regulators and the media, particularly post-2008, the focus on a hedge fund manager’s operational risk management processes and procedures has multiplied,” the AIMA guide says. “AIMA hopes that this guide will provide additional insights for its manager members looking to improve their operations, and understand what next steps could be considered as an investment manager’s AUM grows,” the guide adds.
The guide is designed to be as “jurisdiction neutral” as possible to allow fund managers from around the world to make use of it.
“Operational risk is an increasing focus of investors and regulators alike. Both of these groups will expect managers to have sound operational risk frameworks and will also be expecting next generation managers to be progressing along the spectrum of increasingly sophisticated approaches as they grow,” says Jack Inglis, AIMA’s CEO, in a statement.