Weathering the Storm

In a HedgeWeek special report this month, particular attention is given to the topic of managing hedge fund risk.  One article describes the failings of hedge funds over the past year to be attributable to poor operational risk management practices.  Here is an excerpt from the article referencing Moody's Investors Service's view.

According to Moody's, a significant portion of losses suffered by hedge funds last year probably reflects deficiencies in operational management and control.  "Losses that are disproportionately large in the context of the fund's stated investment strategy may indicate inherent flaws in the firm's approach to risk control that are not apparent until the market stresses become unexpectedly severe.  Alternatively, such losses may indicate an opportunistic departure from the investment strategy or portfolio guidelines described in the fund's offering memorandums or other representations made to investors.  In Moody's view, both scenarios indicate operational deficiencies.

Operational deficiencies can have tremendous impact at the worst possible time.  It is always better to know your weaknesses ahead of market catastrophes so you can remedy them to weather the inevitable storm. Wheelhouse Advisors can help your company or fund identify and correct the deficiencies in a cost-effective way. To learn more, visit us at www.WheelhouseAdvisors.com.