Operational Risk Management in Practice: Implementation, Success Factors and Pitfalls: Efficient Implementation for Midsize and Small Asset Managers, Hedge Funds, Private Equity Funds, Family Offices

20 Pages Posted: 4 Nov 2012 Last revised: 26 Nov 2012

See all articles by Claus Huber

Claus Huber

Rodex Risk Advisers LLC

Daniel Imfeld

Risk and Finance Management (RFM)

Date Written: November 3, 2012

Abstract

According to the often-cited CapCo study (2003) about hedge fund failures, 50% of the failures were driven by Operational Risk. Not only for hedge funds, but also for other asset management companies – such as private equity companies, family offices or independent asset managers - operational risk management is increasingly important. In this article, we focus on Operational Risk Management for mid-sized Asset Management companies.

We take a practitioner’s view of how an operational risk framework can be implemented as part of an enterprise wide Risk and Control system in a “hands-on” approach. The focus of our contribution is on practical implementation with simple tools, like Excel, rather than trying to quantify operational risk with complex mathematical formulas. We outline how a mid-sized asset management organisation can develop systematically an integrated perspective on its main risks and set priorities on how to mitigate and control these risks.

Keywords: Operational Risk Management, Asset Management, Practical Aspects of Operational Risk

JEL Classification: G32, G15, G23, G30

Suggested Citation

Huber, Claus and Imfeld, Daniel, Operational Risk Management in Practice: Implementation, Success Factors and Pitfalls: Efficient Implementation for Midsize and Small Asset Managers, Hedge Funds, Private Equity Funds, Family Offices (November 3, 2012). Available at SSRN: https://ssrn.com/abstract=2170784 or http://dx.doi.org/10.2139/ssrn.2170784

Claus Huber (Contact Author)

Rodex Risk Advisers LLC ( email )

Breitenstrasse 15
Altendorf SZ, Schwyz 8852
Switzerland
41435397622 (Phone)

HOME PAGE: http://www.rodexrisk.com

Daniel Imfeld

Risk and Finance Management (RFM) ( email )

Kirchgasse 21
Risk and Financial Management
Baar, Zug 6340
Switzerland

HOME PAGE: http://www.rfm-imfeld.ch

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