Fund managers switch focus to risk transparency

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LONDON - Hedge funds and asset managers are increasingly prioritising transparency to address the lack of investor confidence in their risk management standards, according to a study by risk software provider Sophis.

Sophis says a collapse in investor confidence over risk management within the sector is causing a cultural shift, with 67% of asset managers planning to embrace transparency by increasing investor reporting.

Hedge fund and asset management - dubbed 'shadow banking' during the crisis - has historically been associated with a lack of transparency by secretive fund managers, and has faced investor and regulatory pressure over poor risk management and heavy losses in the current volatile market. Sophis says 63% of fund managers believe their risk management requirements have been changed by the crisis.

Furthermore, 73% of respondents said an integrated view of risk was necessary, including for the use of derivatives. The survey confirms industry moves toward an enterprise-wide view of risk management to embrace operational, counterparty, market and liquidity risks.

Sophis itself has expanded its operational risk and regulatory compliance emphasis for its own trading and risk management platform targeted at the capital markets and asset management industry.

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