Over 240 delegates attended the ALFI/AFRiM European Risk Management Conference last week, which covered various topics, chiefly the evolution of Assets under Management (AuM) in the Luxembourg investment fund industry and the role of Risk Managers in the rapidly developing environment.

The Conference was opened with speeches by Director-General of ALFI, Camille Thommes and President of ALRiM, Marco Zwick. Throughout the day, topics addressed included:

- Operational risk

- Key findings in the implementation of the AIFMD risk management principles

- Current state of the financial landscape and potential triggers of the next financial crisis

- The relationship between the portfolio management and risk management activities

From these different sessions, some key points and messages were conveyed, which Risk Managers could retain and take on board to complete their roadmaps for the coming years.

Regarding Operational risk within the investment fund industry, panellists insisted on the fact that while most of the market, credit and liquidity risk factors are now usually properly monitored, the risks related to the distribution need require increased attention and more systematic monitoring.

If Risk Management is viewed as adding value to the business, the past experience and industry expertise of Risk Managers appeared as a key point to consider.

Looking for a Risk Manager who masters all investment strategies pursued by AIFs (Hedge Funds, Real Estate and Private Equity) seems an unrealistic challenge. It is then, probably recommended to look for a team of Risk Managers, specialised per asset class or that share the activity with other experts.

The relationship between the Portfolio Manager and the Risk Manager, the transparency requirements and the liability of the Risk Managers are all increasing and should not be underestimated or discounted.

The Conference ended with feedback from representatives of both Luxembourg and German regulators on technical issues, as well as on the next steps in the development of the regulatory environment.

Photos by ALFI Funds