The Alternative Investment Management Association (AIMA), the global representative body for alternative asset managers, has released a new guide to operational risk management for asset management firms.
It says the AIMA Guide to Sound Practices for Operational Risk Management focuses on a wide variety of risks that could result in loss from inadequate or failed internal processes, people and systems or from external events.
This is the first time that AIMA has produced a guide covering all aspects of operational risk, the trade body adds. Previous AIMA guides have focused on certain features of this broad area including cyber security, valuation and business continuity management.
The new guide, which is available to AIMA member firms, includes sections on trading, execution and market manipulation risk, post-trading risk, legal, regulatory, and compliance risk, financial risk, technology and cyber security risk, business continuity and disaster recovery risk, insurance, communication risk, outsourcing risks, business conduct and reputational risk, outsourcing risk and counterparty risk.
Jack Inglis, Chief Executive Officer for AIMA, said: “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.”
The guide has been sponsored by Wells Fargo Global Fund Services group. Daniel Johnson, head of Wells Fargo Global Fund Services for Europe, said: “In today’s environment of increased regulatory and public scrutiny, it is imperative for small- to mid-sized alternative investment firms to stay abreast of best practices to enhance their operational risk management processes and procedures. This guide provides a basis from which managers can learn and adapt their operations to suit their ever-changing needs.”