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Risk Function inside the AIFM,
Is the Risk Manager the only function of the company controlling the risks?
Risk Management inside the AIFM is structured in a way to detect and prevent possible risks in course of the activity of the AIFM. It covers risks of organization, risk of operation, risk of counterparties, risk of markets, credit risk and risk of liquidity. The function of risk is structured in a way to prevent the risks already at a very early stage of operation, through implementation of numerous policies and procedures governing daily operations of the AIFM and is paralleled by compliance.
Three lines of defense existing and implemented within AIFM cover and involve all functions in the prevention of arising of risk situation at all stages of the funds management process from collecting funds, through the whole process of its investment and distribution.
First line is risk assessment within client onboarding process by operational teams through KYC and customer due diligence in accordance with the policies and procedures set up by the Management Company. This role is ensured by client relation function, either a customer administration center of the AIFM or distribution agent or other operating unit.
Second line of defense is internal risk function itself along with internal compliance, which are both responsible for timely review and appropriate alignment of adequate policies and procedures, set up of risk identification parameters in operation and review of
Third line of defense is internal audit function, which is usually performed by external provider, focused on review of the existing policies and procedures on their alignment with regulatory prescriptions and proper implementation in the daily life of the company.
Is the Risk Manager the only function of the company controlling the risks?
No, all of the units of the company are involved in risk process, Risk Manager is only directing the process to be properly implemented and applied by every business department.
About the XOLARIS Group
Founded in 2010, the XOLARIS Group stands with its AIFM for an independent white label investment company with a focus on Alternative Investment Funds (AIF) in the asset classes Private Equity, Real Estate, Renewable Energy and Shipping. With headquarters in Liechtenstein and subsidiaries in Germany, France, and Asia, the entire value chain of alternative investments can be represented, true to its motto: “Investment Quality — Made with Passion.”
Other units of the group offer services ranging from advice on launching, structuring and distribution to fund accounting and the administration of alternative investment funds and other real asset investments.
As a legally independent service provider for the conception, administration and management of alternative investments, the XOLARIS Group sees itself in its entirety as an “enabler” for initiators and investors.
Author Bio: Volodymyr Andrianov, MD in Risk Management with with more than 20 years of experience in cross boarder structures.
MUSIC: Envato Elements
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