The financial crisis of 2008 has highlighted the importance of
thorough risk management processes, especially in the real estate
sector. For too long, risk management of real estate funds has been
purely a qualitative exercise, owing to lacking data and lacking
methods. As risks have become more and more complex and
interrelated, this approach has reached its boundaries... while the
risks have not reached theirs.
Besides portfolio management, risk management is the core
business function of alternative investment fund managers (AIFMs).
In this respect one of the main objectives of an AIFM is to
establish and maintain a permanent risk management function as a
central component of a sound internal control system. Such a system
must, among other duties, have effective risk management policies
and procedures in order to identify, measure, manage and monitor,
on an ongoing basis, all the risks relevant to each AIF investment
strategy and that each AIF is or may be exposed
