The Financial Stability Oversight Committee (FSOC) is exerting influence on Investment Advisors that looks and feels a lot like bank regulation. In the near future disciplines like operational risk management (ORM), liquidity management, and resolution planning are expected to play a bigger and bigger part of Investment Advisory regulation. This webinar will dig into recent SEC actions and rule proposals to explore what ORM and resolution planning exercises might mean for your firm, including hard and soft costs, business continuity plans in the event of a disaster or transition in leadership, and technology management. The webinar will address questions like: - What risk management programs will need the most attention? - How much detail, what format, and at what frequency will portfolio holdings and ownership need to be disclosed? - What do resolution plans look like at other institutions already participating in the exercise? - What additional resources will be required to meet both static and fluid documentation requirements?

1. www.nicsa.org
Expanded Risk Regulation
Assessing Resources &
Requirements
SPONSORED BY:

2. www.nicsa.org
Arthy Kumar
Chris Mancini
Senior Product Marketing Manager – Investments, Workiva
Senior Success Manager and Program Manager, Workiva
WELCOME OUR PANEL

3. www.nicsa.org
N-PORT
LQRP
RRP (proposed)
N-CEN

4. www.nicsa.org
N-PORT
Key Elements
• Monthly asset reporting at the security level
• Security attributes including
⦁ Currency exposure
⦁ Foreign security and standardized derivative exposure
⦁ Securities lending information
⦁ Future exposure detail
⦁ Liquidity risk categorization
Systems: 3-5 (portfolio acct., custodial files, accounting, risk, performance)
Departments: Portfolio mgmt., reporting, accounting, finance, fund admin., risk
Relative Resource Demand:

5. www.nicsa.org
Liquidity Risk Program (LQRP)
Key Elements
• Fund boards must maintain a program including
⦁ Appointed officer reporting to the board
⦁ Documented policies and methodology
• Review and assess program annually
• Must include
⦁ Security categorization (3 days to cash, 7 days to cash, 7 days to sell, 7+ to
sell)
⦁ Monthly monitoring, recategorizing, and documenting
Systems: 2-3 (portfolio acct., custodial files, risk, performance)
Departments: Portfolio management, new risk officer reporting to board, legal
Relative Resource Demand: Monthly,

6. www.nicsa.org
Resolution and Recovery Planning (RRP)
Key Elements
• Succession plans, ownership control, and transfer of ownership
• Recovery and continuity
⦁ Cybersecurity and systems compliance
⦁ Critical system inventory and backup
⦁ Data access management
⦁ Risks, monitoring, and testing
⦁ Vendor attestation
⦁ Alternative communication and ways to carry out critical business activities
Systems: All
Departments: Legal, technology, business lines
Relative Resource Demand: annual,

7. www.nicsa.org
N-CEN
Key Elements
• Financial affiliations
• Index tracking error
• Service providers
• Securities lending activity
Systems: 3-5
Departments: Legal, fund admin., accounting, portfolio management
Relative Resource Demand: annual, neutral because NSAR goes away

8. www.nicsa.org
Vendor
Attestation
The Wave

9. www.nicsa.org
The Ride

10. www.nicsa.org
The Challenges
Portfolio Accounting
Custodial Files
Risk and Performance
Reporting
Data resides in multiple systems
It's extracted and assembled into
unstructured data...formats, file
locations, or fields
Data is moved or copied multiple
times by different departments to
address a number of filings and/or
processes
And turnaround times are short
Accounting Financials
Multiple Data Sources Extracted & Assembled Data Proliferates & Is Over-handled

11. www.nicsa.org
Shared Data, Systems and Processes
From LQRP
N-PORT
Shareholders - N-
CSR(S)
N-CEN
RRP
Use smart database technology to more easily index and share
data across similar processes
Liquid & Securities
Details
Threshold
s
Test
Liquid & Securities
Details
Securities Info Performance Financials
Performance Financials
P & P
More Sec.
Detail
FinancialsServicer Info
Servicer InfoData Sec.
System
Backup
Succession
Entity
Affl.
Entity
Affl.
Sec.
Lending
MD, Notes, Other Operating detail
Board
Rpt.

12. www.nicsa.org
What you can do.
• Inventory your processes
⦁ create process flow maps
⦁ analyze to identify common service providers, systems, procedures,
functional contributors
• Determine where and in what systems to evolve
⦁ best location to store information
⦁ where logic will fit best to create automation
⦁ how flexible will it need to be
• Build high-level requirements and compare to alternatives

13. www.nicsa.org
Chris.Mancini@workiva.com
CHRIS MANCINI | Senior Product Marketing Manager – Investments, Workiva