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Risk management becomes one of the main topics in the decision making process as the regulator increases the level of the requirements. This trend is mainly driven by the accumulation of financial crisis, caused not only by the market risk of the financial product, but also by the deficiency in the corporate governance conducting to “out of control” situations.

Consequently, Risk Management becomes essential to increase the quality level of the controls already in place inside the organization.

The set of the risk factors that can impact the company, the clients, the investors and all the related entities, is so large that it becomes more and more evident that Risk Management covers all the business lines without exception.

SOCAGEX can help you to deliver all the risk management reports mentioned in the CSSF circulars related to management companies, self-managed funds, and banks.

It covers the redaction of risk management process mentioned in CSSF circular 11/512 as well as the “Implementation of the Internal Capital Adequacy Assessment Process  (ICAAP)” mentioned in CSSF circular CSSF 07/301 (as amended by circulars CSSF 08/338, 09/403 and 11/506).
In some companies, the regulatory requirements have also led to a reinforcement of the control of the conformity to applicable laws. The setup of the compliance function is sometimes mandatory.



Risk management tools and methodology


SOCAGEX has expertise in developing risk matrix covering all the activities and risk management system for the calculation of the financial risks associated to portfolio exposures.


The system used by SOCAGEX is interfaced with central administrations and custodian banks.

The following reports can be produced, analyzed and delivered:

* Portfolio exposure;
* Determination of global exposure using the commitment approach and the Value at Risk;
* Liquidity Risk;
* Credit Risk;
* Concentration risk (asset/liability side);
* Counterparty risk (asset/liability side);
*Model Risk;
* Risk on the over-the-counter instruments;
* Other risk metrics (volatility, tracking error);
* Control of the investment policy rules (law, prospectus);
* Reconciliation report between data provider and investment fund accounts.

     
In case of breach of the investment policy rules, SOCAGEX is familiar with the application of the thresholds, calculation of the compensation to investors, and escalation process regulated by the CSSF circular 02/77 “the Protection of investors in case of NAV calculation error and correction of the consequences resulting from non-compliance with the investment rules applicable to undertakings for collective investment”.

Compliance



The application file, the authorization and the daily monitoring of your company


The accordance delivered to a company is subject to the strict application of the regulatory environment. As such, the compliance function is in charge of the control of the conformity to all the applicable laws, regulations and circulars.

SOCAGEX can help you to setup your company, to provide you with the information related to the evolution of the financial environment, and can help you to setup a risk matrix covering your activities.

Amongst the main tasks attributed to the compliance function, there are the following controls:


* respect of the laws and regulations on the fight against money laundering and terrorist financing (CSSF Regulation N°12-02 of 14 December 2012 on the fight against money laundering and terrorist financing);
* respect of the law on the personal data protection (modified law of the 2nd of August 2002)) ;
* respect of the law on the conflict of interest policy (CSSF Regulation N° 12-01 laying down detailed rules for the application of Article 42a of the law of 13 February 2007 relating to specialized investment funds concerning the requirements regarding risk management and conflicts of interest) and CSSF Regulation N° 10-04 transposing Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organizational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company) ;
* respect of the law on the remuneration policy (Circular CSSF 11/505 and CSSF 10/437 Guidelines concerning the remuneration policies in the financial sector);
* respect of the law on the professional secrecy (Law of the 5th April 1993 on the financial sector), review of the service legal agreement contracts.

The setup of the risk matrix includes the Risk and Control Self-Assessment that allows having a full understanding of the most efficient way to identify, measure, control and escalate the compliance risk issues.


The financial regulatory environment faces regular changes coming essentially from the new directives issued by the European Commission. It becomes more and more important to stay aware of the financial impact that these new changes can have on your business.

The founder of SOCAGEX is an ALCO member and he is Certified Compliance Officer by the ALCO.

One member of team is also member of the PRIM association (Risk Management Association Luxembourg).



SOCAGEX