Protection against the growing range of operational risks faced by Investment Managers

Protecting the Investment Manager

There are complexities and exposures in an Investment Management business that necessitate a bespoke solution for the business and its directors. The combined experience of our team ensures a holistic approach to managing risk. The following are examples of key operational risks being faced today:

• Professional liability - Negligent advice, errors & omissions in the client services arena are common risks for any company providing financial services. This risk is potentially heightened for FinTechs who offer new products through new distribution models. FinTechs may also potentially assume additional liability where there is a reliance on third-party contractors.
• Directors & Officers liability - The personal assets of directors and non-executive directors can be at risk where they are held liable for legal costs and claim awards from third party claimants arising out of alleged or actual wrongful acts committed in their capacity as directors of the company. Whilst the business will normally indemnify the individual directors and officers, in some instances they may not be willing or able to indemnify (e.g. due to insolvency) and therefore having access to an insurance solution should be at the forefront of your consideration.
• Regulatory risk - New technology, new products and new distribution brings a wealth of opportunities, but also additional regulatory exposures. Investment Managers need to ensure they keep on top of the implementation of suitable and satisfactory risk management systems. Keeping pace with regulatory change and the need to consider differing regulations in multiple territories is challenging.
• Crime/Theft of funds – You may deal with a high frequency of funds movement. High volumes of payments, transactions and customer accounts can leave you vulnerable to theft. These thefts could be by an employee or external party.
• Cyber events - Given the nature of your business and the use of third-party service providers, you can be prime targets for cyber criminals. Network security, data breaches, ransomware or even a denial-of-service attack - as well as damage and rectification costs following these incidents - should be a major concern.
• Technology failures – Embracing technology is essential for Investment Management companies as they compete to stay relevant but reliance on new technology infrastructure means firms can be vulnerable. Technology failure can mean customers are unable to access services resulting in lost income or lost customers.
• People - Employers are beginning to take more seriously the need to place people, governence and the planet at the heart of their business. But it’s not without its challenges: rising costs, transient workforces, digital revolution, and cultural change to name a few – businesses are having to adapt, people are stretched beyond their limits, and customers are more discerning than ever before.