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Risk management for Alternative Investment Funds under AIFMD - Managing a wide range of risks | Deloitte solution


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Context

The Law on 12 July 2013 implementing the Alternative Investment Fund Managers Directive (“AIFMD”) in Luxembourg and the EU Commission Delegated Regulation 231/2013 have set the rules of the game for alternative investment fund risk management. In Luxembourg, “Man Cos” managing Part II funds and SIFs are likely to be impacted.

Key Issues

The AIFMD framework introduces stringent and new risk management requirements for alternative investment fund managers (“AIFMs”) but does not provide full detailed implementation measures with regards to risk measurement techniques or monitoring procedures. Implementing organisational and documentation requirements is already challenging in most cases, but identifying and implementing appropriate risk management procedures for alternative asset classes – private equity, real estate, infrastructure, is likely to be an additional significant amount of work for risk managers.

Our services

We offer our clients regulatory and quantitative risk solutions so as to facilitate the gradual movement towards new AIFMD requirements. Our services can be articulated over organisational and/or operational dimensions and cover all asset classes:

Scope assessment and gap analysis

- AIFMD gap analysis, recommendations and implementation roadmap
- Definition of each AIF’s risk profile and determination of qualitative/quantitative risk limits

Organisation of risk management activities

- Formalisation of roles and responsibilities, and of the oversight model at BoD level
- Identification of appropriate risk indicators and techniques
- Initial due diligence on delegates and drafting of delegates’ monitoring procedures

Development of risk measurement techniques

- Development of ex-ante quantitative risk techniques for private equity or real estate funds
- Development of ex-post risk indicators and control plans
- Design of stress-testing framework
- Independent risk model validation

On-going risk reporting support

- Periodic risk reporting to all stakeholders, including regulatory risk reporting
- Design of synthetic risk dashboard for senior management and directors

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Contacts

Name:
Xavier Zaegel
Company:
Deloitte Luxembourg
Job Title:
Partner - Capital Markets/Financial Risk Leader
Phone:
+352 451 452 748
Email
xzaegel@deloitte.lu
Name:
Michel Rothilde
Company:
Deloitte Luxembourg
Job Title:
Senior Manager - Capital Markets/Financial
Phone:
+352 451 454 364
Email
mrothilde@deloitte.lu
Name:
Sylvain Crépin
Company:
Deloitte Luxembourg
Job Title:
Senior Manager - Capital Markets/Financial Risk
Phone:
+352 451 454 054
Email
screpin@deloitte.lu

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