Asset managers lack staff for certain operational risk challenges

Risk1Over half of investment managers say they have insufficient staff to manage operational risks associated with clients, products and business practices, a survey indicates.

But they do feel confident to deal operationally with internal fraud, execution, delivery, processing and disaster recovery, Investit, an asset management consultancy, found.

The consultancy says that although more than half of the 22 respondents appear to lack sufficient staff to support certain operational risk functions, only 14% are hiring.

Regulatory uncertainty emerges as a key obstacle. Investit says 75% of respondents say the emerging and still unclear regulations are “placing a strain on the operational risk function”.

Operational risk accounts for between 5% and 8% of the total operating costs, but respondents say they are struggling to get data needed to fuel operational risk exposure calculations.

“These costs are set to rise in the face of regulatory change and in the future firms will need to include operational risk management costs when evaluating new strategies, mergers, acquisitions or global expansion,” Investit says.

“Though firms suggest confidence in their ability to manage operational risk associated with internal fraud, execution, delivery, processing and disaster recovery, they are less confident in their ability to manage operational risk associated with clients, products and business practices – three areas where many pending regulations focus.”

Earlier research on regulation by Investit shows regulatory changes are among the top priorities for 85% of investment managers next year.

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