In May 2017, Centaur conducted a survey to assess clients’ opinions about industry trends and challenges. When asked to highlight the primary challenges the industry would likely face during the next two years, 68% of respondents put the regulatory landscape as extremely important. This was followed closely by both market vulnerability and geopolitical risks at just over 41% and cyber security at 36%.
1. INCREASINGLY COMPLEX REGULATION IS AN EVOLVING CONCERN FOR THE INDUSTRY
Investors and regulators are demanding greater transparency and accountability from fund managers. Internal controls, risk management and strong compliance are inherent qualities for successful fund managers, who in turn are looking for these attributes from their fund administrators. 68% of surveyed clients cited the regulatory landscape as an extremely important concern with a further 20% stating that it is somewhat important.
Centaur is constantly adapting to support clients as they race to keep up with regulatory requirements. As new regulations come on board, clients need an administrator that analyses, informs and manages the ongoing barrage of regulation and regulatory scrutiny.
2. THE MARKET IS BECOMING INCREASINGLY VULNERABLE TO GEOPOLITICAL RISKS
Evolving market dynamics are influencing the priorities for fund managers as they see markets becoming increasingly vulnerable to political risk, especially in the light of Brexit and the unpredictability of the Trump administration. Just over 80% of respondents indicated geopolitical risks as either extremely important or somewhat important, while almost 70% cited market vulnerability.
New awareness among investors has created a demand for transparency in asset management. This demand, coupled with the realisation that markets are becoming increasingly vulnerable to political risks has created a demand for greater accountability from administrators. We expect volatility and market vulnerability to continue to be a challenge to the industry in the foreseeable future.
3. RECENT I.T. BREACHES HAVE CAUSED FUND MANAGERS TO ASSESS THEIR CYBER SECURITY STRATEGIES
Of the fund managers surveyed, 75% cited cyber security as an important challenge for the industry as the rate of incidents continues to escalate. A security breach is often (and swiftly) followed by fines, law suits and catastrophic media coverage. As a result, cyber security is becoming a key component of supplier risk reviews for fund managers.
The challenge of blocking cyber threats is constant. There is no doubt that the number of threats is growing and the hacker community is usually a step ahead of risk prevention measures. At Centaur, we continually invest in innovative technology, review our procedures and partner with the best technology partners to ensure we provide a safe and secure environment for clients and employees.
The results from the survey are interesting. Concerns around regulation, market vulnerability and cyber security are very real. At Centaur, we have always focused on and invested in our infrastructure that provides clients with security as well as the transparency now demanded by investors and regulators.