Operational risk involves many qualitative elements such as an investment manager’s controls, design and implementation of systems, and oversight of employees. It is considered an uncompensated business risk because taking on additional risk of this nature is never expected to improve returns. Implementing a strong operational due diligence process creates an opportunity to strengthen internal systems and procedures and implement safeguards that preserve the investment mandate and minimize uncompensated risks.
In this presentation from a recent industry conference, Thomas A. Peters reviewed the causes of investment mandate violations and increased risk as well as the objectives of operational due diligence. He also outlined the due diligence process and discussed samples of past findings in operational risk assessments.
View the slides from the presentation.
We will be happy to provide further information relating to this subject. For more information, contact Thomas A. Peters, Director, Audit & Accounting at tpeters@kmco.com or 215.441.4600.
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