AIFMD is complex, potentially intrusive and burdensome legislation designed to regulate managers of Alternative Investment Funds. The legislation codifies, to a large extent, what was previously seen as best practice in risk management.
At one level the legislation is prescriptive, for example instructing asset managers to monitor liquidity, however the legislation is also quite unspecific by insisting that managers monitor “all risks, at all times” with little guidance as to the definition of “all”.
AIFMD allows investment managers to delegate or retain risk management in-house.
So those managers who do not wish to go to the expense of building an in-house risk management capability can delegate it to dedicated risk professionals, safe in the knowledge that the wide-ranging solution an independent risk manager such as RiskSystem provides can pass regulatory scrutiny.
Thus RiskSystem could assume a manager’s independent risk management function with processes and escalation procedures tailored to their needs combined with robust reporting both for internal and regulatory purposes.
In some instances a RiskSystem representative can sit on an investment board as a risk director.
In others RiskSystem can act in a support capacity, reporting to the nominated
risk director on the board.
In all cases the objective is to ensure the fund manager meets the substance of the requirements thus avoiding any risk of the entity being deemed a letterbox.