89% of Respondents Say Technology Solutions Will Assist in Managing and Mitigating Risk in the Future
Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services for the global investment management industry, today unveiled the results of a survey indicating that risk management is a critical challenge at investment firms, and that a majority of respondents believe the answer lies largely in new technology.
Conducted by Advent and Beacon Consulting Group, “Navigating Risk: An Operational Risk Survey” is intended to provide investment firms with a perspective for comparing their situations and practices with those of their peers. Among its key findings:
• 71% of firms surveyed had planned, initiated or completed a formal risk assessment in the six months preceding the survey; larger firms were more likely to have done so than smaller ones due to resource constraints.
• 93% of respondents anticipate a moderate to significant impact to their operations from pending regulatory changes.
• 79% of investment managers surveyed experienced an increase in operational due diligence inquiries from investors.
• 89% of respondents say new technology solutions will assist in managing and mitigating risk in the future.
The study analyzed investment managers’ preparedness to ten variants of risk: valuation, counterparty, trading and execution, credit, capital and liquidity, technology, data, resource (“key man”), third party and operational risk. Across all categories, an average 55% of respondents considered themselves only “partially prepared” to manage the risks.
“This survey underscores the need for firms to take their own measures to enhance their risk management practices,” noted Chris Momsen, senior vice president and general manager of Global Accounts at Advent. “The survey also uncovered the value of systems that support transparency, investor confidence and regulatory readiness, as these are the big issues looming today. Technology is critical in strengthening a firm’s controls and minimizing potential failure points.”
The majority of investment managers surveyed believe they are dependent on technology to assist in risk mitigation. They view technology as playing an especially valuable role in mitigating trading and execution, data and operational risk. Around 80% of respondents said their technology providers are involved to some degree in their risk mitigation efforts.
The findings are based on responses from senior executives at 45 investment firms, ranging from just under $5 billion to over $100 billion in assets, and representing a spectrum of firm types including asset management, mutual funds and alternative investments.
