Swiss Risk Management System for asset management companies
Writing a comprehensive Swiss Risk Management System for asset management companies is a complex and highly individualised process that requires careful analysis of a company’s specific business, risks, and strategies. Therefore, it is important to consult with a qualified legal and/or financial professional to ensure that your risk management system is tailored to your specific needs and complies with relevant regulations and guidelines. The following is a general outline.
Introduction
The purpose of the risk management manual is to outline the procedures and practices for implementing an effective risk management system for the specific type of assets and asset management the firm wishes to conduct. The manual is designed to ensure that the company meets its legal and FINMA regulatory obligations, and that its risks are identified, measured, monitored, and controlled effectively.
Risk Management Policy
The company’s risk management policy should be clearly defined and communicated to all relevant employees. The policy should outline the company’s risk management objectives, risk tolerance levels, and the procedures for identifying, measuring, monitoring, and controlling risks.
Swiss Risk Management System – Risk Identification
The company should have a systematic process for identifying and assessing the risks associated with its asset management activities. This process should involve a thorough analysis of the company’s operations, products, services, markets, clients, and the economic and regulatory environment. The company should maintain a comprehensive list of all identified risks, which should be reviewed and updated regularly.
Swiss Risk Management System – Risk Measurement
The company should have a robust system for measuring the risks it faces. This should involve the development of appropriate risk metrics, such as Value-at-Risk (VaR), stress testing, and scenario analysis. The company should regularly measure and assess the risks it faces against its risk tolerance levels, and take appropriate action to mitigate risks that exceed these levels.
Swiss Risk Management System – Risk Monitoring
The company should have a system for monitoring its risks on an ongoing basis. This should involve regular reviews of risk reports, risk dashboards, and other relevant information. The company should also ensure that its employees are aware of the risks associated with their roles and responsibilities, and that they have the necessary skills and tools to manage these risks effectively.
Swiss Risk Management System – Risk Control
The company should have appropriate risk control measures in place to mitigate the risks it faces. This should involve the development and implementation of policies, procedures, and systems that are designed to reduce the likelihood and impact of risks. These measures should be regularly reviewed and updated to ensure that they are effective and in line with the company’s risk management objectives.
Swiss Risk Management System – Reporting and Communication
The company should have a system for reporting and communicating risks to relevant stakeholders, including clients, investors, regulators, and senior management. This should involve the development and regular dissemination of risk reports, risk dashboards, and other relevant information. The company should also ensure that its employees are aware of the risks associated with their roles and responsibilities, and that they have the necessary skills and tools to manage these risks effectively.
Management Questionnaire
Here is a starting point for gathering the information needed for creating a risk management system procedures manual:
- Risk Identification
- What are the main risks associated with your asset management activities?
- How do you identify and assess these risks?
- What is the frequency of risk assessments?
- What are the most significant risks that you have identified?
- Risk Measurement
- How do you measure and quantify the risks associated with your asset management activities?
- What are the main risk metrics that you use?
- How do you determine the risk tolerance levels for your company?
- How do you determine the probability and impact of each identified risk?
- Risk Monitoring
- How do you monitor your risks on an ongoing basis?
- What are the key risk indicators that you track?
- How do you ensure that your employees are aware of the risks associated with their roles and responsibilities?
- How do you communicate risk management information to stakeholders?
- Risk Control
- How do you control and mitigate the risks associated with your asset management activities?
- What policies and procedures do you have in place to manage each identified risk?
- How do you ensure that these policies and procedures are effective?
- Reporting and Communication
- How do you report and communicate risk management information to stakeholders?
- What types of reports and dashboards do you provide?
- How frequently do you communicate this information?
- How do you ensure that your stakeholders understand the risks associated with your asset management activities?
- Risk Management Framework
- What is your overall risk management framework?
- How does your framework align with regulatory requirements?
- How often do you review and update your risk management framework?
- Compliance
- How do you ensure that your asset management activities comply with legal and regulatory requirements?
- What compliance policies and procedures do you have in place?
- How do you monitor and measure compliance with these policies and procedures?
- Personnel
- What professional qualifications and experience do your employees have in asset management?
- What training and development programs do you have in place to ensure that your employees have the necessary skills and tools to manage risks effectively?
- How do you ensure that your employees are aware of their roles and responsibilities in risk management?
- Technology
- What systems and technologies do you have in place to support your risk management activities?
- How do you ensure that these systems and technologies are effective and secure?
- How often do you review and update your technology infrastructure to ensure that it remains effective?
- Insurance
- What types of insurance coverage do you have in place to cover potential liability related to your asset management activities?
- How do you ensure that your insurance coverage is adequate?
- How do you ensure that your insurance coverage complies with legal and regulatory requirements?
Please note that this questionnaire is not exhaustive, and there may be additional questions that are relevant to your specific circumstances.
Conclusion
The procedures outlined above are designed to help a Swiss asset management company develop its required Risk Management System in order to manage its risks effectively and in compliance with relevant regulations and guidelines. The company should regularly review and update its risk management system to ensure that it remains relevant and effective in the face of changing business, regulatory, and economic environments. Ultimately, any manual and set of procedures should be regularly reviewed and updated to ensure that it remains accurate and up-to-date.