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Manage your operational risk
Operational risk management solutions analyzes complex investment operations and assesses operational processes and risks across all asset types.

As has been evident from the global financial crisis and historic operational failures, financial loss and enhanced regulation require robust oversight to protect business operations to ensure operational strength and maintain fiduciary standards. Financial losses can be mitigated by properly understanding operational risk through conducting a thorough risk analysis.

Financial institutions have enhanced their efforts to establish oversight and governance related to managing operational risks with their investments, vendors, and their own operations. As the industry grows in complexity with respect to managing financial operations, and in evaluating related risks, businesses will have a need for initial and ongoing due diligence, conduct periodic risk monitoring and maintaining industry best practices.

Service Model

  • A consulting practice supported by a global financial institution
  • Depth of expertise in investment operations
  • Bespoke solutions and customizable scope

Adapting to Change

  • Understanding operational failures and solution design
  • Demand from investors and regulators for comprehensive operational controls
  • Enable organizations to respond to ongoing business disruptions

Value-Added Enhancements

  • Help reduce costs by increasing efficiency of investment operations
  • Reduce the risk of financial and reputational loss
  • Demonstrate institutional-quality operations and franchise strength
Operational Risk Management Solutions (ORMS)

Operational Risk Consulting

  • Management consulting for investment operations
  • Advisement on changes to service models
  • Operational process & procedure gap analysis
  • RFP and DDQ evaluation
  • Vendor and service provider reviews

Operational Due Diligence

  • Comprehensive ODD reports with onsite/virtual meetings and service provider due diligence
  • Deskside analysis ODD reports
  • Vendor and service provider ODD reports
  • Audited financial statement review
  • Background check analysis
  • Off-the-shelf ODD reports



Meet Vincent Molino, our Head of Risk

Vincent is a Practice Executive, Head of Risk and Operational Risk Management Solutions within Front Office Solutions. He has been working in the investment management industry for over sixteen years. Prior to Northern Trust, Vincent was a Principal and Head of the Operational Risk Management Group at Mercer.



Consulting

Operational Risk Consulting

Leverage our operational, risk and industry expertise to evolve your operating model. Our services include: management consulting for investment operations, advisement on changes to service models, operational process and risk gap analysis, vendor and service provider intelligence and infrastructure and technology evaluation.



A customized approach to consulting

We create a solution set to meet the unique needs of your office.



Key Insights on Risk Consulting

In 2020, asset managers adjusted to the new normal. What new trends are apparent and how will they impact operational risk in the year ahead?

The second installment of this article series discusses lessons from the Global Financial Crisis and their impact on operational due diligence approaches today.



Operational Due Diligence (ODD)
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ODD for Allocators

  • Protect capital against uncompensated risks derived from operational failures
  • Support internal due diligence model with expertise across all asset classes
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ODD for Investment Managers

  • Identify and address operational gaps to improve outcomes for future due diligence
  • Reduce the volume of third-party due diligence requests with a report made for investor distribution
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Vendor Due Diligence

  • Identify and assess risks among vendors, outsourced providers and counterparties
  • Fulfill client governance and regulatory requirements for vendor due diligence



Operational Due Diligence: The Northern Trust approach



Data Collection

  • Issue a pre-meeting due diligence questionnaire
  • Conduct a media search in order to identify potential adverse events
  • Review and conduct analysis on key documentation

Data Collection

  • Issue a pre-meeting due diligence questionnaire
  • Conduct a media search in order to identify potential adverse events
  • Review and conduct analysis on key documentation

Onsite/Virtual Review

  • Travel onsite or conduct virtual interviews
  • Discuss core operational policies, procedures and controls with key personnel
  • Evidence confidential materials and relevant technology
  • Verification of service with vendors and counter-parties

Onsite/Virtual Review

  • Travel onsite or conduct virtual interviews
  • Discuss core operational policies, procedures and controls with key personnel
  • Evidence confidential materials and relevant technology
  • Verification of service with vendors and counter-parties

Report Issuance

  • Compile research and findings from documentation and interview to create risk analysis
  • Assign ratings to risks identified
  • Peer-review of finalized report
  • Deliver due diligence report to client citing key risks, mitigants, and action points

Report Issuance

  • Compile research and findings from documentation and interview to create risk analysis
  • Assign ratings to risks identified
  • Peer-review of finalized report
  • Deliver due diligence report to client citing key risks, mitigants, and action points

Partnership Approach

  • Project personnel are available to clients to further discuss findings
  • Staff available for presentation to client committees, boards or other governance bodies
  • Bespoke model for client customization of project scope

Partnership Approach

  • Project personnel are available to clients to further discuss findings
  • Staff available for presentation to client committees, boards or other governance bodies
  • Bespoke model for client customization of project scope

Ket Insights On Due Diligence

Investor appetite for increased transparency and how operational due diligence can help provide assurances in private market investment practices.

As investors seek private market opportunities in volatile times, operational due diligence empowers their decisions.

The third installment of this article series considers how the practice of operational due diligence has transitioned during the pandemic and where it will go from here.



See it in action

Want to see more? Schedule a demo with our team to learn more about the exciting features and services Front Office Solutions has to offer.



Front Office Solutions

On a mission to empower asset owners

© 2021 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For more information, read our legal and regulatory information about individual market offices. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional or wholesale clients or investors only and should not be relied upon by retail clients or investors. Issued in the United Kingdom by Northern Trust Securities LLP.