Shedding Light on Non-Financial Risks – a European Survey

Shedding Light on Non-Financial Risks – a European Survey — January 2012

Executive Summary

The Survey Highlights the Main Concerns of the Industry All of the specific risks come out at a very high level of importance, without a clear outlier. Bankruptcy risk of an intermediary, collateral risk, internal or external fraud, liquidity risk and breaches of investment rules all come out above 75%, and mis-selling risk at 70%. Yet the perceived degree of protection is uneven in all risks. Respondents notably feel less protected against liquidity risk. of operations is, however, undoubtedly a prominent source of non-financial risk The increased sophistication

as it is important or very important for 77% of respondents, followed by the reduced capacity of some intermediary to guarantee deposits – which must be understood as ensuring the return of assets – (59%), inadequate and/or unclear regulation (57%) and the absence of responsibility of management companies regarding restitution (53%). Respondents have mixed views on regulatory initiatives. They think that AIFMD will marginally contribute to decreasing non-financial risks (27% think risks will decrease, 21% that they will increase). By contrast, they are

Figure 1: How protected from the following non-financial risks do you feel you are?

Figure 2:

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An EDHEC-Risk Institute Publication