Investment Adviser & Hedge Fund Operational Risk

Investment Advisers and Hedge Funds face a myriad of operational and compliance challenges.  Registered Investment Advisers must establish sustainable and cost-effective processes and controls to offer quality client service and reporting and stay in-step with regulatory expectations such as the Investment Advisers Act of 1940.  ALLIA provides the following sample services to mitigate operational, compliance, and financial risks utilizing a cost-effective approach:

  • Develop and implement a risk-based approach in assessing and addressing operational, compliance, and financial risks throughout your firm’s operations including portfolio management, risk management, fund accounting, fund administration, trade allocations, performance, compliance, technology, and reporting. 
  • Analyze and document process flows and controls to improve operational effectiveness and efficiencies in Performance, Assets Under Management, Trade Allocations, Portfolio Management, and Marketing and Advertising.

Our Experience

We have provided risk and operational assessments including:

  • Developed and implemented risk assessment models for a $47B AUM asset manager and a $10B AUM hedge fund that resulted in containing outsourced internal audit spend even though the business and regulatory environment grew more complex.
  • Mitigated future reputational risk and operational errors in Performance reporting by improving processes and controls in new fund setups, error corrections, and client services; reduced potential errors in Asset Under Management report by applying consistent controls and identifying up to 1200 monthly manual entries.
  • Identified and addressed misreporting of hedge fund investments in the company’s quarterly financial report’s Fair Value investments in Level 1 instead of Level 2; mitigated non-compliance with hedge fund investor agreements.
  • Mitigated potential invalid trade allocation overrides by implementing appropriate support for approvals and identifying gaps in the trading system’s user access administration function.


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