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Ripe For Innovation – Enterprise Performance and Risk

As Dylan sang the times are a’changing

The investment industry is undergoing a revolution, and performance & risk measurement within investment operations is ripe for change. 

The performance and risk functions play a critical role in the overall information flow of an asset owner, being one of the functions that can effectively see the “end to end” flow of data from trade to final client reporting.

As many long-suffering performance and risk analysts will attest that over the years performance and risk operational functions have typically been overlooked, in terms of opex within asset management firms.  

As investment markets have evolved, new technologies have appeared and the regulatory environment has shifted, increasing demand for high quality, flexible, near real time performance and risk data by both internal and external asset manager stakeholders.

Performance and risk deliverables must now support a variety of stakeholders (investment teams and other internal stakeholders through to clients), methodologies and quality requirements. Gone are the days of static paper-based performance and risk reports that have an occasional chart or two.

Consequently, firms are now playing catch-up to meet these demands. As part of this process many asset managers are now taking a fresh look at these key operational functions, and are embarking on a journey to transform their performance and risk functions.

Current State of Play

For any transformational project the starting point is understanding the current state of play.  From Shoreline’s experience in many cases, the current state of play for the performance and risk operational functions can be best described as:

  • Fragmentated rather than benefiting from the latest technology and streamed lined processes, there has been continued reliance on a patchwork legacy systems and processes
  • Having Poor Data Management – The aggregation of data from multiple sources can present a major challenge for performance and risk teams due to complexity and manual processing, which increase effort and errors. Many performance and risk teams spend a significant amount of time on data management when their focus should be on value adding activities
  • Are Lagging the Digital Revolution – The digital revolution has created the expectation of higher quality information, delivered near real-time and neatly packaged for instant use. Many asset owners have been slow to keep up with technological changes and there is widespread usage of user defined applications (aka spreadsheets)
  • Can be Slow to Respond to Customisation – Internal and external stakeholders of asset management firms are starting to require higher quality performance and risk data with varying methodologies. They are wanting a self-service model with almost real time data and analytics delivered to their desktops or mobiles that is more flexible and insightful and gives them the ability to slice and dice to meet their requirements

A fresh look is required

In the race to identify opportunities for improvement asset management firms are acknowledging that a fresh look at their enterprise wide performance and risk functions is required. Particularly in the areas of:

  • Developing better data management capabilities
  • Redesigning the performance and risk operating model
  • Enhancing technology to provide an uplift

As with many transformational projects the first step of this process is an operational review to assess the current state of play, identify gaps and conduct industry benchmarking. This provides the basis upon which the transformation planning can begin.

The time to act is now as we are seeing new innovations in the areas of performance and risk appear at a rapid pace and the gap between old, legacy processes and the new is widening. Shoreline can help. With a cross section of expertise in Performance and Risk, Investment Management, Operations, and Data Governance we have the necessary experience required to work with you to transform your performance and risk functions. Please contact us if you require further information.

Chris Robertson

Associate Director

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