Operational Risk

Operational risk can be defined most broadly as all of a hedge fund’s non-investment related exposures. Corgentum’s approach begins by analyzing a hedge fund’s operational risks across a comprehensive spectrum of over 20 distinct risk categories including:

  • Valuation policies and processes
  • Legal and regulatory compliance
  • Information technology and business continuity
  • Counterparty management
  • Service providers review

Increased Awareness

Hedge fund investors are increasingly aware of the importance of monitoring a hedge funds operational risk exposures. With this awareness has come an ever increasing demand for both initial and on-going operational transparency as part of the due diligence process. Investors have placed a premium on those hedge funds which are able to effectively manage and reduce their operational risk exposures. In order to both attract and retain assets, hedge funds must be prepared to effectively communicate to investors, both their organization’s operational competencies as well as the steps which have been taken to mitigate the negative effects of operational risk.

Building Partnerships

We partner with our clients to diagnose and mitigate operational risk exposures and improve upon the overall efficiency and effectiveness of the operational due diligence process. As part of this process Corgentum works to develop operational risk solutions in order to increase a hedge funds operational efficiency and reduce the negative effects of Operational Drag® .

What is Operational Drag® ?

Operational Drag® is defined as the negative effects of operational risk on the efficiency of an organization. This concept can be analogized to the theory of drag in aviation. The higher the operational riskiness of an organization, the higher the Operational Drag®. By lowering the Operational Drag® throughout the organization, a hedge fund can increase its operating efficiency and subsequently lower its total operational risk. Corgentum works with investor to analyze and monitor Operational Drag® in hedge funds in order to reduce our client's exposure to hedge fund operational inefficiencies. To learn more about Operational Drag please read, Corgentum - Working with Investors to Evaluate and Monitor Operational Drag® in Hedge Funds .