Operational Risk Management in Practice: Implementation, Success Factors and Pitfalls
Dr. Claus Huber CEFA, CFA, FRM,Dr. Daniel Imfeld

According to the often-cited CapCo study (2003) about hedge fund failures, 50% of those failures were driven by operational risk. Operational risk management is increasingly important, not only for hedge funds, but also for other asset management companies, such as private equity companies, family offices or independent asset managers. Pressure from investors and regulators as well as increasing market competition require these institutions to have state-of-the-art operational risk management systems in place. In this article, we focus on operational risk management for mid-sized asset management companies that are not part of a large international banking organization and hence do not have fully developed staff departments for operational risk, compliance, or internal control.

 

Exploring Global Infrastructure
Daniel Ung, CFA, CAIA, FRM

After more than two decades of relative price stability, concerns over inflation have been growing since the 2008 financial crisis. Rebounding commodity prices, monetary easing by central banks, and excessive government debt have all played a role in heightening such concerns. Faced with these adverse conditions, investors are increasingly favoring real assets, which maintain their purchasing power and serve as portfolio diversifiers. The most frequently tracked real assets are often those deemed essential to the economy over the long term and include assets such as commodities, real estate, and infrastructure.

 

Investment Considerations in Illiquid Assets
Sameer Jain

Investing opportunity sets in inefficient market cycles tend to vary. Often, given market anomalies, they come to reside for extended periods in less liquid instruments such as distressed debt, private equity, certain types of loans, or in the securities of firms experiencing turnaround situations. These securities, because they are difficult to price (due to limited market participants, infrequent transactions, complex structures, or highly uncertain future performance), offer potential for excess returns over the risk free rate. Investors who have the ability to buy and hold these securities may thus stand to profit.

 

Investing in Infrastructure
Edward Szado

Inderst (2010) provides a comprehensive review of the major issues surrounding infrastructure investment. In particular, central to the paper is the question of whether infrastructure is a distinct asset class. Inderst discusses the evolution of infrastructure investment, the economic and financial characteristics, the investment vehicles and benchmarks, performance and risk, and the role of infrastructure in asset allocation.