Our regulatory consulting expertise driven by Arendt Regulatory & Consulting S.A. (ARC) assists investment fund managers (AIFMs and UCITS management companies) and self-managed investment funds in the implementation of their risk management frameworks with a view to meeting the increasing standards of the Luxembourg and European regulators. We help our clients to define, assess, monitor and report on the risks inherent in the funds they manage, and assist them in compliance matters related to their regulated risk management activities across Europe.
Our service offering is delivered by a strong team of risk consultants, assisted as and when necessary by regulatory advisors and lawyers. Our core services include:
- Design and assessment of risk management frameworks
The CSSF will only issue a new or existing AIFM or UCITS management company a license to establish or extend its activities/strategies in Luxembourg if it has implemented a sound risk management framework.
We help clients to design this framework, draft the associated documentation and submit it to CSSF.
For existing Investment Fund Managers, we help review the body of risk-related documentation, amending specific sections on request and strengthening existing frameworks. This will be of particular relevance for clients whose strategies are more exotic or innovative, and for those who seek a fresh, independent perspective on their process following a wave of regulatory changes.
- Risk management implementation support
The increased frequency of financial crises has fuelled regulatory intent to reinforce and harmonise risk management practices across the European fund market. Investment Fund Managers now have to comply with a growing number of regulations that vary by fund type and asset class.
We support our clients by defining operational processes, drafting documentation and reviewing the appropriateness of existing risk controls to ensure compliance with the regulations and guidelines on risk management.
- Liquidity risk monitoring implementation
Recent regulatory developments in liquidity risk monitoring (CSSF Circular 19/733, ESMA Liquidity Stress Testing Guidelines) paired with the adverse impact of the COVID-19 crisis on the fund industry are forcing Investment Fund Managers to establish enhanced liquidity monitoring frameworks.
We help clients understand, assess and manage this risk based on their specific fund types and asset allocations.
In cooperation with Arendt Institute, Arendt’s professional training division, we provide our clients with training sessions on key risk management topics, up to the senior management lev
- Risk management reporting
Both the UCITS and AIFM regulations, expanded upon by the relevant CSSF circulars, require the Permanent Risk Management Function (PRMF) to report regularly to senior management on the level of risk incurred by each managed fund.
We help our clients meet this objective by implementing automated risk management reporting for AIFs.
The PRIIPs regulation and the obligation to produce and deliver a KID each time a packaged product is sold or advised to an non-“professional” investor require product manufacturers to compute new sets of metrics. For illiquid products in particular, manufacturers are faced with a lack of appropriate statutory methods and approaches for performance and cost estimates.
We help clients to produce risk, performance and costs indicators for Category 1 and 2 PRIIPs. In cooperation with the lawyers at Arendt & Medernach, we also assist with the production of the full KID (quantitative and narrative components).
For more information, contact us at RiskTeamARC@arendt.com
