The London-based Alternative Investment Management Association (AIMA) has published a “Guide to Sound Practices for Business Continuity Management for Hedge Fund Managers.”
AIMA says that, with the growing use of hedge funds by institutional investors, fund managers are now required to build, test and review their contingency plans to identify any threats to the smooth operation of their business.
Others, including regulators, also expect managers to have contingency plans in place to allow the continued management of investor’s money in a reliable and effective way, despite any threat to the fund’s operation, says AIMA. This will also be a requirement under MiFID.
The AIMA guide, which is available to AIMA members only, was written specifically for hedge fund managers, and the organisation says it is based on an understanding of investor requirements and regulatory expectations.
“Like any other part of the financial services industry, hedge fund managers are affected by disruption and emergency,” says Florence Lombard, Executive Director of AIMA. “This is particularly relevant when managers are based in major financial centres, where the threat of terrorism is real and/or where the transport system and power supply play a crucial role. It is now imperative that financial services companies have a tested business continuity management plan in place to ensure the preservation of essential data and functions and a timely resumption of their investment activities and services. We hope that this guide, aimed at and designed for small – medium size hedge fund managers employing between 5 to 50 people, will act as a practical tool and stimulate them into ensuring their own plans are robust.”
The guide covers:
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Identification of risk
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Identification of systems, processes and the other information that make up the enterprise
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Definition of recovery requirements*
Development of recovery plans
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Testing and providing the plans to ensure they work
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Maintenance and updating of the plan.