Risk management for alternative investment funds
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Following the 2008 financial crisis, regulators across the globe have increased their focus on the Alternative Investment Funds (AIF) industry, an industry which until recently was less regulated. This has triggered the introduction of measures such as the Alternative Investment Fund Managers Directive (AIFMD) and other strong requirements pertaining to governance and risk management.
Risk management is one of the core functions of investment management under AIFMD, with the Directive stringently regulating risk governance in Alternative Investment Fund Managers (AIFM) and how risk management processes are designed and operated.
Increased demand from regulators for additional reporting and greater transparency in disclosing the risk profile of AIF calls for enhanced ability to provide meaningful and useful risk reporting. All stakeholders across the value chain have to adapt to this new environment. Past philosophies and processes might no longer comply with current requirements.