GRACE - ORM for Hedge Funds

GRACE-ORM has been built to help Hedge funds set up and ensure sound operational process that will allow them to face the stringent operational due diligence being done by investors. As is seen, capital introduction in the current environment is one of the biggest challenges the hedge fund industry faces. To raise and retain capital, implementation of best practices in Internal Operations and Risk management are key for all hedge fund organizations.

The regulatory examination focus is on the areas of trading allocation practices, quality of order processing, brokerage and fees calculations, employee personal trades, conformance to code of ethics, prevention of insider trading, side letters, faulty performance disclosures to investors, valuation including over or under valuation, safety of customers’ holdings, window dressing of the portfolio, quality of disclosures to investors, accuracy of books and records, disclosures during solicitation, management of privacy of customer information and business continuity practices. All of these are geared towards ensuring protection of investors from faulty practices and Ponzi schemes and reduction of systemic risk.

As is obvious from the above, each organization needs to have adequate and comprehensive policies and procedures in place and proof of their conformance in internal practices from assessments and audits to be provided to regulatory authorities during examination. The organization also needs to show the steps taken for mitigation to address the key risks identified in its internal practices.

The Managed Fund Association (MFA), Presidents’ Working Group (PWG), and Alternate Investments Management Association (AIMA) put together guidelines for the Alternate Investment industry for Operational risk management in early 2009.

GRACE-ORM has been created with the best practices suggested by these associations and the SEC’s Examination Focus Document 2009.

GRACE-ORM with its SaaS (software as a service) model helps you quickly put together a continuous risk assessment and monitoring process for all of these processes to enable you to identify problem areas and take remedial action in a business as usual way. It enables you to produce proof of your process in a visible way to the regulators during examination and proof of the best practices implemented in your organization to your investors. It brings you competitive advantage and attractiveness to investors as a well run organization that can answer the operational due diligence questions posed to them satisfactorily.

GRACE-CCO for compliance monitoring can help you build your compliance monitoring program at the transactional level. Together with GRACE-ORM , it can help you build up the total organization Governance, compliance and risk management process and present a unified repository for audits and regulatory scrutiny. It can be bought together with GRACE-ORM or as a separate product based on your need.

GRACE-ORM for hedge funds helps you put together your internal processes in a central place and provides you web based access to the information. It provides you the infrastructure for you to build with :

Be ready for SEC Audits at all times and meet the SEC requirements for risk management

Be operationally efficient in the risk and compliance management by consolidation of all information

centrally. Having them spread out in multiple excel files, documents and paper trails makes the process inefficient and labor intensive to retrieve and produce it for audit

Help senior management be confident that they are conforming to their fiduciary duties

Implement best practices in risk and oversight management and be able to provide the correct risk information to investors

Gain competitive advantage with investors as a well risk managed organization

Have integrated view of risks across Trading & Business Operations, Vendors, Counter-parties, Business

Operations, IT and Compliance Processes. This allows you to focus on the key risks quickly

Have real time view of risk, exposures and losses allows you to see the size of the problem and alerts you to put mitigation action in place

Early identification and control reduces cost of mitigation

Be able to search and retrieve information with least time and cost for audits and assessments

Have better internal control, regulatory compliance & enhanced predictability

Build ownership, responsibility and accountability for risk and its management
Institutionalize the risk management process

Policies & Procedures

Policies and procedures repository where you can add, update, review and release policies, procedures, disclosures
Version histories and provides access to the latest policy and procedure to the organization

Assessments & Audits

Calendar for assessments & audits
Audit and assessment checklists
Manage the assessment and audit planning and review process
Monitor the progress of assessment and audit execution and collect deliverables when ready through project and task reporting
Record findings,do impact analysis, identify the risks from the findings and establish a process for risk mitigation
Help monitor the tasks and costs of the risk mitigation process till closure
Provide task reporting of mitigation tasks, and project reporting to monitor the progress of mitigation projects
Provide for a standardized risk scoring, review and risk reporting on for each risk
Provide a mechanism for you to build standardized checklists for audits and assessments that can be reused for each subsequent audit and can be changed to suit the particular audit
Provide alerts on due dates, over dues and late dues in activities and tasks

Due Diligence

Perform due diligence through standardized checklists for investor, investment firm, fund, counter-party and vendor due diligence
Provides processes for recording of due diligence information and review of the due diligence findings
Provides alerts for periodic due diligence assessments and helps you conduct these assessments in a standard way, and review findings
Builds a repository of all the due diligence information collected

Internal Controls Management

Functions for internal control definitions
Process for monitoring the internal control through test definitions, periodicity of testing and reporting
Process for test issue reporting and review to bring to light the issues and risks early
Process to create mitigation strategies for the issues and risks identified and monitor the mitigation progress
Information on all issues and trends in each internal control

Loss Monitoring

Record of losses in operations and loss classification
A method to monitor loss mitigation / control

Interface with operational reports

It provides an interface to bring in key operational MIS and exception reports and a method to mark risks from there and escalate them where necessary

The Dashboard

The powerful dashboard brings together the umbrella of all information related to risk
Allows deep drill down on all information across due diligence, assessments and audits, losses, internal controls and tasks associated with management of the risk and reports on mitigation task status
Slice and dice of information to bring different trends to view
Queries and Reports that can be exported to Excel / PDF formats