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Global investment compliance monitoring (ICM) survey 2017

ICM infrastructure efficiency and effectiveness

Investment managers are facing more pressure for greater ICM infrastructure efficiency and effectiveness. But where should they focus their efforts?

Prioritizing ICM infrastructure

An investment manager’s ICM capabilities can play a critical role in helping manage and mitigate key risks. Facilitating operational readiness and organizational responses to rapidly changing market conditions, new regulatory requirements, and shifting investor behavior can help make ICM a strategic imperative.

Yet in a difficult cost environment, investment in ICM infrastructure may not be prioritized compared to other infrastructure investments being made by investment managers. Not appropriately prioritizing ICM may generate inefficiencies, costs, and breaches of investment restrictions, which may lead to financial, reputational, and regulatory risks.

Even as executives take steps to tackle identified investment compliance monitoring pain points, they’re encountering a new and more challenging set of issues as ICM continues to evolve in the marketplace.

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Six key focus areas

Our third global investment compliance monitoring survey, conducted in the second half of 2016, assessed ICM practices at a range of investment management firms with global operations. We found that many executives could potentially benefit by augmenting their ICM practices in the following ways:

  1. Enhance the current state operating model of the ICM function through organizational changes and infrastructure realignment.
  2. Align risk-based resource allocation processes with the ICM function’s objectives and risks.
  3. Increase the accuracy of rules coded in the automated investment compliance system(s) with a well-defined and consistent approach throughout the ICM lifecycle.
  4. Improve data quality and assessment processes by treating data as an organizational asset.
  5. Understand and assess ICM costs during the client and product lifecycles to understand the profitability of client and product mandates and the impact to the organization.
  6. Improve scenario response testing to enrich organizational resiliency.

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Moving forward

Pressures in the industry will continue to evolve—particularly with respect to competition for new clients in light of evolving regulations and changing investor behavior. Focusing on the strategic importance of investment compliance monitoring by enhancing current capabilities can provide organizations with direct and indirect benefits to address those pressures.
 
Investment compliance monitoring plays a critical role in managing financial, regulatory, operational, and reputational risk. Excellence in these risk management areas reflects the industry’s commitment to invest client assets in accordance with their investment objectives and guidelines, adhere to regulatory requirements, and pursue operational excellence for shareholders and other stakeholders.
 
Making ICM a strategic priority assists investment managers in living up to customer and regulatory commitments. It can also position investment managers to be more competitive and profitable.

Learn how your organization can improve its ICM infrastructure.

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Meet the authors

Antonio Crombie
Manager | Deloitte Advisory
Deloitte & Touche LLP
+1 617 437 3923
Email | LinkedIn

Mike Fay
Principal | Deloitte Advisory
Deloitte & Touche LLP
+1 617 437 3697
Email | LinkedIn

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