This document outlines an operations risk assessment program for hedge fund managers. It discusses applying a risk paradigm focused on processes, people, and systems based on the Basel II framework. The opportunity is to develop an integrated operations risk approach that incorporates institutional best practices to provide comparability across fund managers. The approach assesses operational risks and controls through a standardized framework involving risk mapping, control evaluation, and testing operating effectiveness. This allows managers to demonstrate robust risk management to investors.
This presentations tells the story of the Risk-led transformation that HML has undertaken over the last 18 months. It outlines some of the key challenges, how they were overcome and the benefits delivered.
1. Learn about the evolving role of the chief risk officer (CRO) both before and during the current global economic crisis.
2. Develop an understanding of the complementary aspects of the CRO and chief audit executive (CAE) roles, as well as the potential conflicts to avoid.
3. Discover strategies and critical success factors for an effective CRO and CAE partnership.
This presentations tells the story of the Risk-led transformation that HML has undertaken over the last 18 months. It outlines some of the key challenges, how they were overcome and the benefits delivered.
1. Learn about the evolving role of the chief risk officer (CRO) both before and during the current global economic crisis.
2. Develop an understanding of the complementary aspects of the CRO and chief audit executive (CAE) roles, as well as the potential conflicts to avoid.
3. Discover strategies and critical success factors for an effective CRO and CAE partnership.
June 9-11, 2009 – Conference: Lean Government Exchange (Des Moines, Iowa) Session: "How To Scope a Lean Event"
Presented by Brent Jameson, Managing Director of Technology and Strategic Alliances of Guidon
A dynamic, best process improvement conference focused on implementing Lean in government.
Energy efficiency projects are often derailed by legitimate concerns regarding financial risk. Will the initial capex outlay be offset by future opex savings? And how well will new energy efficient equipment and systems perform over time? At Optimum Energy, we take these questions seriously, and we've developed an approach for minimizing risk: the three laws of optimization. This presentation gives an overview of the three laws and how they form a foundation for managing financial risk.
Follow up with us:
Email: info@optimumenergyco.com
Web: http://optimumenergyco.com/
Twitter: https://twitter.com/TrueOptimize
An overview of risk management for undergraduates at the University of Wisconsin, Eau Claire. Also includes thoughts on the credit crisis. Preseted on 11.17.09.
June 9-11, 2009 – Conference: Lean Government Exchange (Des Moines, Iowa) Session: "How To Scope a Lean Event"
Presented by Brent Jameson, Managing Director of Technology and Strategic Alliances of Guidon
A dynamic, best process improvement conference focused on implementing Lean in government.
Energy efficiency projects are often derailed by legitimate concerns regarding financial risk. Will the initial capex outlay be offset by future opex savings? And how well will new energy efficient equipment and systems perform over time? At Optimum Energy, we take these questions seriously, and we've developed an approach for minimizing risk: the three laws of optimization. This presentation gives an overview of the three laws and how they form a foundation for managing financial risk.
Follow up with us:
Email: info@optimumenergyco.com
Web: http://optimumenergyco.com/
Twitter: https://twitter.com/TrueOptimize
An overview of risk management for undergraduates at the University of Wisconsin, Eau Claire. Also includes thoughts on the credit crisis. Preseted on 11.17.09.
ASC 606 Implementation Strategy with Connor Group and Leeyo SoftwareMatt Ream
Connor Group experts present ideas for developing your own ASC 606 implementation strategy. These slides are from a Leeyo Software webinar. You can watch the full event at http://leeyo.com
Content personalisation is becoming more prevalent. A site, it's content and/or it's products, change dynamically according to the specific needs of the user. SEO needs to ensure we do not fall behind of this trend.
Panel Moderator: Diana McClure, IBHS Business Resiliency Program Manager
Panelists: Tim Lovell, Executive Director, Tulsa Partners;
Paul Ford, Director of Safety and Security, Tampa General Hospital, and Carol Fox, Director, Strategic and Enterprise Risk Practice, RIMS
Governance, Risk, and Compliance ServicesCapgemini
Capgemini’s integrated and centralized approach to Governance, Risk, and Compliance (GRC) breaks through traditional functional silos to deliver effective enterprise risk management and compliance as a continuous process. We help organizations manage a range of enterprise risks in the areas of IT, finance and accounting, operations, and regulatory compliance with flexible solutions comprised of a highly qualified CPA and CISA talent pool, innovative tools, and our unique collection of GPM best practice processes and controls.
Corporate trainings provide tomorrow\'s leaders with skills and knowledge required to make an impact in the business world, Well trained managers develop their competence to think strategically, function more efficiently while gearing up to be instrumental in long-term overall business leadership success.
We’re pleased to launch our comprehensive industry wide ‘Risk Training services’ customized as per your organizational needs which covers entire spectrum of functional, professional knowledge building & skills development areas suitable for your workforce capability enhancement leading to deliver high performance business results.
This is a partial preview of the document found here:
https://flevy.com/browse/business-document/Cost-Drivers-Analysis-76
Description:
Competitive Cost Analysis is a valuable strategic business framework, as it helps identify potential areas of competitive advantage. Competitive Cost Analysis requires the analysis of relative cost structures of competitors (or potential competitors) within our industry. The relevant unit of analysis should be as focused and specific as possible—for instance, at the business unit or the product level.
There are three techniques primarily used when conducting Competitive Cost Analysis: Financial Ratios Analysis, Value Chain Analysis, and Cost Drivers Analysis. This document will focus on Cost Drivers Analysis.
Deloitte’s risk management philosophy – Risk Intelligence (RI), focuses on maintaining the right balance between risk and reward. Asking the right questions and finding effective answers to them is critical to developing the right risk management capabilities. Most organizations already have a multitude of Enterprise Risk Management (ERM) practices and processes to address risks but the lack of a strategic view to an ERM program, can expose risk management gaps and redundancies and prevent sufficient insight into key risk interdependencies
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
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how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...
1.1.2010 Ops Risk
1. Operations Risk Assessment Program
For Hedge Fund Managers
January 2010
Developed by Scott Lane
HEDGE FUND OPERATIONS RISK - 1
CONFIDENTIAL
2. Contents
• Background
• The Opportunity
• Risk Paradigm
• Institutional Paradigm
• A New and Comprehensive Approach
• Examples
HEDGE FUND OPERATIONS RISK - 2
CONFIDENTIAL
3. Background
• Basel II Definition for Operational Risk for Financial Institutions:
“…the risk of loss resulting from inadequate or failed internal processes, people and
systems…”
• While Basel II applies to financial institutions, the principles can be applied
to any financial services firm, including hedge fund managers
• Take Away from Basel II: Paradigm that Focuses on Processes, People,
and Systems and Infrastructure
Operational Risk
Systems and
Processes People
Infrastructure
HEDGE FUND OPERATIONS RISK - 3
CONFIDENTIAL
4. Background (continued)
• Institutional investors continue to demand ever more formalization and
sophistication for operations risk management by hedge fund managers
• The Great Recession we are beginning to exit will only increase the importance
of and scrutiny on operations risk
• Much more U.S. and European regulation of hedge funds expected
• Increased focus on risk management expected
• Fund managers will increasingly need to demonstrate that they are adequately
managing their operational risks to retain and attract capital
• Consequently there is an opportunity to develop an integrated operations risk
program that:
• Incorporates risk management principles and looks and feels like an institutional program
• Is a consistent approach to applying judgment, resulting in increased comparability of fund
managers
• Not only assesses control design but also assesses and tests operating effectiveness
HEDGE FUND OPERATIONS RISK - 4
CONFIDENTIAL
5. The Opportunity
Hedge Fund
Practices
Risk Institutional
Paradigm Practices
Develop
Integrated
Operations Risk
Approach
Increased Need for
Regulation Comparability
HEDGE FUND OPERATIONS RISK - 5
CONFIDENTIAL
6. Risk Paradigm
Operations
Risk Level Resources:
Mix of people, processes,
and systems are the
hedge for operations risk
Risk Reduction
Resources Allocated to
Mitigate Operations Risk
Equilibrium where cost of control measures balances
operations risk
Question 1: is the operations risk adequately reduced / managed?
Question 2: has the optimal mix of people, processes, and systems been
applied to manage operations risk?
HEDGE FUND OPERATIONS RISK - 6
CONFIDENTIAL
7. Risk Paradigm (continued)
Low High
Automation Automation
Systems
• Non-routine transactions • Routine transactions
• Illiquid positions • Highly liquid Positions
• High judgment required • Low judgment required
• Example strategy: • Example strategy: Long-Short
distressed Market-Neutral Equity
• Automate to extent • Automate everything
possible but limited
HEDGE FUND OPERATIONS RISK - 7
CONFIDENTIAL
8. Risk Paradigm (continued)
High Skills / Lower Skills /
Experience of Experience of
Operations Team Operations Team
People
• Non-routine transactions • Routine transactions
• Illiquid positions • Highly liquid positions
• High judgment required • Low judgment required
• Example strategy: distressed • Example strategy: Long-
Short Market-Neutral Equity
• Hire seasoned and skilled
professionals at all levels • Hire seasoned at top levels,
less experienced and skilled
at lower levels
HEDGE FUND OPERATIONS RISK - 8
CONFIDENTIAL
9. Risk Paradigm (continued)
Processes
• The mix of systems and people necessary to optimize control
depends on the situation / investment strategy
• Key processes should be formalized, well documented, and
communicated regardless of the situation
• The only question is whether those processes are executed and
monitored by people or systems
HEDGE FUND OPERATIONS RISK - 9
CONFIDENTIAL
10. Risk Paradigm (continued)
• Borrowing from how credit risk is assessed, each operational area /
operations risk driver can be assessed for the frequency of failure and the
impact stemming from failure
• These assessments can then be aggregated to build a heat map of the
entire operations of a firm Example Only
Once a Transaction
Week Processing
Frequency / Probability
Once a Level 1 Level 2
Month Valuation Valuation
Once a Level 3
Quarter Valuation
Once a Compliance
Year
Once a Natural
Decade Disaster
$10,000 $100,000 $1,000,000 $10,000,000 > $10,000,000
Impact / Severity
HEDGE FUND OPERATIONS RISK - 10
CONFIDENTIAL
11. Institutional Paradigm – Sarbanes Oxley
• Sarbanes-Oxley 404 has been executed by the PCAOB who issued the
following guidance
• PCAOB Auditing Standard No. 5, An Integrated Audit of Control Over Financial Reporting
That Is Integrated with An Audit of Financial Statements
• Top Down Approach to Scoping:
• Identify entity level controls
• Control environment
• Routine vs. non-routine
• Identify significant accounts / risk areas
• Control Testing and Assessment
• Design effectiveness
• Operating effectiveness
• Walkthroughs
• Key take away: apply a top down approach to identifying risk areas then
assess both control design and operating effectiveness, not just design
HEDGE FUND OPERATIONS RISK - 11
CONFIDENTIAL
12. A New and Comprehensive Approach
Standardized Operational Footprint for Comparability
Operational Area Operational Area Operational Area
A B C
People
Risk
Test and
Paradigm of
Processes Assess Using
People,
Institutional
Processes, &
Methods
Systems
Systems & Infrastructure
HEDGE FUND OPERATIONS RISK - 12
CONFIDENTIAL
13. A New and Comprehensive Approach (continued)
1. Define operational areas common across fund managers
2. Perform a risk assessment for each operational area, summarized via a heat
map, to determine relative and absolute risk while considering the following
for each area:
a) Probability or likelihood that an operational breakdown could occur (probability of error)
b) Impact or consequences if that area were to breakdown (severity)
3. Assess operational control design across operational areas considering
controls composed of:
a) People
b) Processes
c) Systems and Infrastructure
4. Perform walkthroughs for moderate and high risk areas to ensure controls
are operating as designed
5. Score each area and document work performed, conclusions reached
6. Apply this framework consistently to allow for comparability of fund
managers
HEDGE FUND OPERATIONS RISK - 13
CONFIDENTIAL
14. Example – Operational Heat Map
• Whether outsourced or not, the operational areas (blue boxes) should be
common operational areas across hedge funds
• Sub-areas would presumably be fairly consistent as well but would likely
vary to some extent
Example Only
Fund and
Marketing & Portfolio Legal & Human Information Investor
Trading Settlement Investor Risk Mgmt Office Mgmt
Fundraising Mgmt Compliance Resources Technology Relations
Accounting
Performance Trade Cash Levels 1 and 2 Regulatory Records Investor
Deal Sourcing Liquidity Risk Hiring Process User Support
Presentations Execution Movement Valuation Compliance Management Reporting
Due Diligence Portfolio
Underwriting & Credit & Investor
Facilitation - Trade Level 3 Management Performance Systems Vendor
Initial Cash Custody Counterparty Liquidity
Prospective Allocation Valuation & Trading Measurement Maintenance Management
Investing Risk Monitoring
Investors Support
Entity and
Investment Fund Ad Hoc
Terms & Position Alliance Systems Travel
Tracking & Accounting & Market Risk Firing Process Marketing
Structuring Custody Formation and Development Management
Monitoring NAV Analysis
Governance
Due Diligence
Subscription / Business Investor Managerial
Administrator Management Disaster Accounts Facilitation -
AML Process / Partners & Accounting & Reporting &
Mgmt Company Recovery Payable Existing
KYC Alliances Allocations Analysis
Investors
Business
External Facilities
Mgmt Continuity
Auditor Mgmt Management
Planning
Green = low risk
Yellow = moderate risk HEDGE FUND OPERATIONS RISK - 14
Pink = high risk
CONFIDENTIAL
15. Example – Risk Weighting
• There are many ways in which one could rate operational areas and controls
• However, the key is to (a) have a consistent approach, (b) apply a risk
weighting to the assessment, and (c) actually test the control design via
walkthroughs to ensure the ratings assigned are indeed valid
Example Only
Risk Risk Mitigation
Liklihood of Severity from Gross Risk Risk
Operational Area Failure Failure Score Weighting People Processes Systems Total
Marketing & Fundraising 2.00 4.00 8.00 8.3% 5.00 1.00 1.00 7.00
Portfolio Mgmt 3.00 5.00 15.00 15.6% 4.00 1.00 1.00 6.00
Trading 3.00 3.00 9.00 9.4% 3.00 2.00 4.00 9.00
Settlement 2.00 3.00 6.00 6.3% 4.00 2.00 4.00 10.00
Fund and Investor Accounting 3.00 4.00 12.00 12.5% 4.00 3.00 4.00 11.00
Risk Mgmt 3.00 5.00 15.00 15.6% 3.00 1.00 2.00 6.00
Legal & Compliance 2.00 4.50 9.00 9.4% 5.00 5.00 1.00 11.00
Human Resources 2.00 4.00 8.00 8.3% 2.00 1.00 2.00 5.00
Information Technology 2.00 3.00 6.00 6.3% 5.00 2.00 3.00 10.00
Office Mgmt 2.00 1.00 2.00 2.1% 3.00 2.00 1.00 6.00
Investor Relations 2.00 3.00 6.00 6.3% 4.00 1.00 1.00 6.00
Total Operations 96.00 100.0% 3.80 1.86 2.21 7.88
Liklihood of Failure People, Processes, Systems
Once a week 5.00 Excellent 5.00
Once a month 4.00 Very good 4.00
Once a quarter 3.00 Good 3.00
Once a year 2.00 Fair 2.00
Once a decade 1.00 Poor 1.00
Severity from Failure
> $ 10,000,000 5.00
$ 10,000,000 4.00
$ 1,000,000 3.00
$ 100,000 2.00
HEDGE FUND OPERATIONS RISK - 15
$ 10,000 1.00
CONFIDENTIAL
16. Example – Supporting Work Example Only
SECTION: FUND AND INVESTOR ACCOUNTING People Process System
Valuation: Rating Rating Rating
Is there a formal valuation committee? (scale of 1 (scale of 1 (scale of
Who is on the valuation committee, is the ultimate decision making independent from portfolio to 5) to 5) 1 to 5)
management function?
Are there minutes taken at the valuation committee?
Is there a documented valuation policy?
What is the most recent valuation level composition? 4 3 4
How is level 1 pricing determined and supported?
How is level 2 pricing determined and supported?
How is level 3 pricing determined and supported?
Have the external auditors provided any management letter comments on the valuation
process?
Have the external auditors noted an significant deficiencies or material weaknesses in the
valuation area?
How often are marks updated?
Who is responsible for determining the marks and what are their qualifications?
Who is responsible for supporting the marks and what are their qualifications?
Approximately how many hours per month / year does operations spend on supporting
valuation?
What systems are used in the valuation process and how automated is the process?
How may prices per position are usually obtained?
When was the most recent price override by operations (that being operations overriding
portfolio management)?
Are any third party experts used in the valuation process? If so how close have their results
been to management’s?
Have there been any NAV restatements due to valuation?
Have there been any significant estimate to actual variances due to valuation?
Summary of Analysis Conducted and Conclusions Reached
[insert text]
Has the Control Design Been Tested (i.e., walkthrough) and are the Controls Operating as Designed?
[insert text]
List of Attachments and Supporting Schedules
[insert text]
HEDGE FUND OPERATIONS RISK - 16
CONFIDENTIAL
17. Example – Comparing Fund Managers
• Once a standardized approach is applied, fund manages can be more
easily compared
• The below example compares fund managers who aren’t even in the
same investment strategy
• One has a focus on people (distressed) while the other has a focus on systems (LSMN) to
manage their risk as would be expected
• Ultimately they have similar total scores but they take a different path to get there
Example Only
DISTRESSED EXAMPLE LONG-SHORT MARKET-NEUTRAL EQUITY EXAMPLE
Risk Mitigation Risk Mitigation
Operational Area People Processes Systems Total Operational Area People Processes Systems Total
Marketing & Fundraising 5.00 1.00 1.00 7.00 Marketing & Fundraising 4.00 1.00 2.00 7.00
Portfolio Mgmt 4.00 2.00 1.00 7.00 Portfolio Mgmt 4.00 1.00 5.00 10.00
Trading 3.00 2.00 4.00 9.00 Trading 2.00 2.00 5.00 9.00
Settlement 4.00 2.00 4.00 10.00 Settlement 2.00 2.00 5.00 9.00
Fund and Investor Accounting 4.00 3.00 4.00 11.00 Fund and Investor Accounting 2.00 3.00 4.00 9.00
Risk Mgmt 3.00 1.00 2.00 6.00 Risk Mgmt 4.00 1.00 4.00 9.00
Legal & Compliance 5.00 5.00 1.00 11.00 Legal & Compliance 2.00 3.00 3.00 8.00
Human Resources 2.00 2.00 2.00 6.00 Human Resources 2.00 1.00 3.00 6.00
Information Technology 5.00 2.00 3.00 10.00 Information Technology 3.00 2.00 4.00 9.00
Office Mgmt 3.00 2.00 1.00 6.00 Office Mgmt 1.00 2.00 2.00 5.00
Investor Relations 4.00 2.00 1.00 7.00 Investor Relations 3.00 1.00 2.00 6.00
Total Operations 3.80 2.17 2.21 8.18 Total Operations 2.90 1.68 3.80 8.38
Difference 0.91 0.49 (1.59) (0.20)
HEDGE FUND OPERATIONS RISK - 17
CONFIDENTIAL