Proposals for Better Management of Non-Financial Risks within the European Fund Management Industry

Proposals for Better Management of Non-Financial Risks within the European Fund Management Industr y - December 2012

Foreword

The present publication, “Proposals for Better Management of Non-Financial Risks within the European Fund Management Industry,” is drawn from the CACEIS research chair on “Risk and Regulation in the European Fund Management Industry” at EDHEC-Risk Institute. This chair deals with the issue of non-financial risk and performance in a changing regulatory framework for the European fund management industry. It is analysing the major risks those in the industry face as a result of regulation and of their practices, assessing their importance and impact in terms of solvency and business models, and proposing methods to attenuate them. In the current paper we conclude three years of research on better management of non-financial risks within the European fund management industry and put forward a series of proposals to limit these risks which emerged during the 2007-2008 crisis and undermined the quality of the UCITS label. It is our fervent hope that the three key recommendations we make, on the reinforcement of information on non-financial risks, increased responsibility of all actors within the fund management industry, and the creation of a new label of “Restricted UCITS,” be adopted by the industry so as to restore the reputation of the UCITS brand to its previously hard-earned and rightful place.

I would like to thank my co-author, Frédéric Ducoulombier, for his tireless efforts on this publication. We would also like to extend our warmest thanks to our partners at CACEIS for their commitment to the research chair and their productive work with us over the three years of this project.

We wish you a pleasant and informative read.

Noël Amenc Professor of Finance Director of EDHEC-Risk Institute

3

An EDHEC-Risk Institute Publication