Operational due diligence

Operational risk is a key aspect of investment manager due diligence and portfolio monitoring. The Operational Risk Solutions (ORS) group supports investors with a range of operational risk needs, from one-off due diligence to ongoing risk assessments.

Flexible operational risk services

In today's complex investment landscape, operational due diligence (ODD) is a vital safeguard for institutional investors. bfinance Operational Risk Services (ORS) provides extensive support to address investors’ specific needs across all asset classes.

Ad hoc ODD services are designed to support investors through manager selection, either on a standalone basis or as part of a broader Investment Manager Due Diligence process. For longer-term engagements, bfinance ORS delivers operational risk assessments and monitoring. This can, if preferred, be structured as part of a broader Portfolio Monitoring programme.

Assets Governance Ownership Corporate Structure Execution Compliance Allocation Errors Trade settlement & reconciliation Valuation Accounting Cash controls Regulation Compliance programme Internal audit Controls reporting Liquidity Counterparty Investment Operational Crisis Management Business Continuity Logical Access Cyber Security Infrastructure CSR D&I ESG Liquidity Terms Investor Concentration Offering Documents Governance Structure bfinance ODD process Business FundStructure ESG Trading Operations Technology Risk Compliance

Operational due diligence tailored to clients’ needs

bfinance ORS delivers in-depth assessment of managers’ policies, procedures and resources related to key control functions. The breadth and depth of ODD is tailored to reflect the strategy type, asset manager and choice of vehicle. Client’s needs are further reflected in bespoke DD questionnaires. Reports highlight the information that is most pertinent to decision-making in each client’s case.

Where possible, the team works proactively with managers to resolve areas of weakness. We believe that direct engagement forms the cornerstone of an effective ODD process. bfinance is proactive in sharing emerging industry ‘best practice’ with asset managers that our clients wish to appoint, such as new tools for reducing ‘brand impersonation’ cyber risk or approaches to staff background checks.

An evolving operational risk challenge

Investing structures, financial instruments, regulatory frameworks and enforcement levels are continually changing over time. Technological progress continues apace. Meanwhile, investors’ portfolios are also becoming increasingly complex, with more clients using a wider range of asset classes, niche strategies and emerging managers. bfinance ORS covers all asset classes shown below and more.

These developments create new hurdles for investors that seek to evaluate and control operational risk. We see investors placing more focus on ODD considerations when making manager selection decisions, to reflect the shifting landscape of potential threats, and also seeking guidance on non-investment risks associated with their existing manager relationships.

Latest case studies

A reinsurer was looking to increase its allocation to multi-asset credit and took the opportunity...

A large UK corporate pension scheme appointed bfinance to conduct a deep dive ODD assessment of...

The investor, a German public pension scheme, was conducting a search for a global private equity...

The investor, a Dutch corporate pension scheme, was seeking outside support to review the...

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Portfolio solutions

Duncan Higgs

Duncan Higgs

Managing Director, Head of Portfolio Solutions

Matthew Siddick

Matthew Siddick

Senior Director, Operational Risk Solutions

Tom O'Donnell

Tom O'Donnell

Senior Associate, Operational Risk Solutions

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