Compliance program management isn’t just a necessary expense – a line item on your hedge fund’s yearly budget. It’s a core functionality, which, when managed properly, can add incredible strategic value.
Of course you, as a compliance professional, know that, but does your leadership?
Although 2023 is expected to be a strong year for investments in compliance programs, many compliance teams still find themselves having a difficult time convincing leadership of the importance of making necessary investments in ongoing compliance initiatives…especially given the economic climate.
To help you make the argument for increased compliance budget, we’ve compiled a list of ways that compliance program management is vital to a hedge funds ongoing success.
How investing in compliance program management adds value to your hedge fund
It’s often the compliance team who is responsible for resolving red flags that could develop into violations. However, if compliance teams don’t have the support required to spot and resolve these red flags, this could be detrimental to not only the hedge fund but consumers’ trust in the market.
That said, while compliance teams play a significant role in the daily operations of your hedge fund, leadership is responsible for approving the budget for expanded expenses. And they may need a little convincing that compliance isn’t just a cost center.
A thorough compliance program can contribute to the growth and success of your hedge fund by:
- Enhancing the organization’s reputation.
Hedge funds operate in a highly competitive industry where reputation is everything. By investing in the tools your hedge fund requires to maintain a robust compliance program, your organization’s can demonstrate commitment to doing business the right way and help it attract new investors, retain existing ones and differentiate itself from competitors.
2. Identifying and mitigating risk.
Even the strongest compliance programs aren’t immune to risk. Actively monitoring and mitigating risk points for your firm is a must, especially in light of recent heightened regulatory activity.
While manual monitoring can be effective for smaller firms, it simply isn’t effective as firms grow and begin to take on more clients and more employees. Hedge funds need to invest in tools that help it identify potential risks before they become major issues and take steps to mitigate them to avoid violations, fines and legal ramifications.
3. Helping the firm stay ahead of the curve.
Compliance should not be seen as an obstacle to growth, but rather as a tool to help achieve it. When a hedge fund is ahead of the curve, compliance teams have more time to dedicate to tasks that add more value to the organization. For instance, your compliance team could have time to develop a thorough compliance program that aligns with the hedge fund’s business goals and objectives. This in turn could help your hedge fund expand into new markets by ensuring it complies with the relevant laws and regulations in those markets.
Hedge funds typically have more complex investment strategies than other types of financial firms, which can expose them to a higher level of risk. For that reason, the leadership at your hedge fund must invest into your compliance team so your team can be strategic and proactive in developing a compliance program that adds value to your organization. By doing so, your compliance team can help your organization achieve sustainable growth and success in a highly competitive and regulated industry.
ComplySci is a leading provider of innovative and integrated compliance solutions designed to help financial firms, like hedge funds. By leveraging ComplySci’s program management technology, compliance teams can proactively monitor and manage compliance risks, including insider trading and conflicts of interest. Compliance teams can automate and streamline their compliance processes, enabling them to create thorough compliance programs and focus their attention on other tasks. Ultimately, ComplySci can help compliance teams add value and reduce compliance-related costs, enhance the hedge fund’s reputation and improve overall business performance.
Think we might be the perfect compliance partner for you? Schedule a demo today!