Risk Management And The Codes Of Practice For Certified Funds

Taking considered risk is the essence of all business and investment activity. Managing business risk is a key to success. This applies as much to investment funds as it does to trading operations. But dealing with commercial and legal hazards within the context of a fund is not as straightforward as for "normal" businesses. Firstly, collective investment schemes may be regulated depending on their category. Secondly, they do not as a rule employ senior managers and staff directly. The investment vehicle will have a wholly non-executive board which will outsource all day-to-day functions to its investment manager, administrator and other service providers. Unless there are clear procedures in place, and responsibilities properly assigned, then risks will not be controlled with likelihood for serious adverse impact on the fund and its investors.