Pillar 3 Disclosure
Risk ManagementThe Firm’s Management determines its business strategy and the level of risk acceptable to the Firm. They have designed and implemented a risk management framework that recognises the risks that the business faces and how those risks may be monitored and mitigated and assess them on an ongoing basis. The Firm has in place controls and procedures necessary to manage those risks. The Firm considers the following as key risks to its business: Business risk – This risk represents a fall in assets under management, investment performance or the loss of key staff which may reduce the fee income earned by the Firm and hinder its ability to finance its operations and reimburse its expenses. Business risks are assessed and mitigated as part of the Internal Capital Adequacy Assessment Process (‘ICAAP’). Market risk – The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling. The Firm operates currency bank accounts permitting it to receive/pay currency directly. In addition, the Firm can manage such exposure by hedging certain positions. Operational risk – This risk covers a range of operational exposures from the risk of the loss of the key personnel to the risk of the provision of investment advice. Legal, reputational and business continuity risks are also included within the category of operational risk. Operational risks and how they may be mitigated are assessed as part of the ICAAP. Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Firm’s bank balances and any other debtors. Counterparty risk is monitored on an ongoing basis.
Regulatory CapitalThe Firm is a Limited Liability Partnership and its capital arrangements are established in its Partnership deed. Its capital contains members’ capital contributions. The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its accounts receivable in foreign currency, and credit risk from management and performance fees receivable from the funds under its management. Pillar 1 capital is the higher of:
- the base capital requirement of €50,000;
- the sum of market and credit risk requirements; or
- the Fixed Overhead Requirement (‘FOR’).