With our clients, risk governance is top of mind. Almost daily examples in the financial and general press about governance gone wrong, and reputations and assets lost, both often build over many years in difficult markets, are mind boggling and scary.
Indeed, what are our clients typically facing:
In their respective market:
- Idiosyncratic risks, which are quite different from regular market- and credit risk, such as reputation-, fiduciary-, physical-, structuring-, technology-, transition-, transverse- and conduct risk
- A plethora of new and untested regulatory requirements continues to reshape global finance, and there is no end in sight
- Capital markets continue to be influenced by unresolved sovereign debt crises and politically motivated central bank interventions
- Lower for longer: uncertainties and difficulties
relating to achieving net yield, to service return and liability requirements
- Traditional asset class correlations tend to become perfect in times of distress leading to uncompensated illiquidity
- Increasing opportunities for product structuring to achieve alternative-based alpha, increasing the need for risk governance
- Individual and unique challenges for which a high level of continuity and judgment is required
- Governance, board dynamics, true independence and integrity moving up the ladder of investors’ concerns given attitude changes and low level of effectiveness during the last financial crises
In their operating models:
- Catching-up with core portfolio-, risk-, trading- and regulatory and client reporting technologies given previous reliance on excel sheets and underinvestment in the past
- Outsourcing questions, not only from back-office functions but well into middle- and front-office functions
- Facing new technology threats such as cyber security issues of investment managers and service providers
- The application of new technologies such as for data exchange, record retention, predictive sales analytics, modeling, but also artificial intelligence and maybe #blockchain?
In the light of these challenges, allocators, investors and regulators increasingly look into the robustness of investment governance and risk culture, not just fulfilling the basic minum regulatory requirements.
Whose best interests are being served and how, is there enough value for money, how independent and competent are boards really, how are conflicts of interest managed, how is accountability being executed, and so on. Doing things well is becoming a competitive edge enhancing investor trust.
Our clients all have a unique situation, which cannot be serviced by a one-size-fits-all solution typically provided by fiduciary “supermarket” service providers, with their built-in conflicts of interest (ask them about their package deal).
Navigating capital markets, idiosyncratic risks, regulatory regimes, stakeholder engagement, academic insights, technological innovation and legal and reputational ramifications require top-notch investment governance. This is prevalent with all our clients but means different things for different entities.
As such, our clients represent the whole investment universe, we have and are engaged with:
- on- and offshore firms such as asset managers, charities, crypto- and blockchain firms, family offices, fintech firms, foundations, holding companies, investment fund companies, management companies, pension funds, special-purpose vehicles, supranational entities, trusts, and umbrella structures
In investment strategies, managed accounts and structured products including:
- commodities, cryptocurrencies, emerging markets, frontier markets, hedge funds (in all shapes and forms), insurance-linked, microfinance, private debt, private equity, quant (incl. overlay strategies), real estate, and structured products