Hedge Fund Technology New Year’s Resolutions
With 2016 fast approaching, it is important to reflect on the past year and think ahead to how you could improve your hedge fund’s technology operations in the coming year. It’s been a challenging year for hedge funds, with volatile markets and low growth rates, and this trend is more than likely to continue in 2016. The slowdown in China’s growth continues to be felt across the industry, and the effects of the small but significant rise in interest rates by the US Federal Reserve are yet to be seen. Against a backdrop of increasing industry challenges, it is critical to consider how to set your hedge fund up for success in 2016.
Make cybersecurity a key part of your risk management strategy.
PwC’s Global State of Information Security survey in 2015 found that only 25% of company directors are actively involved in reviewing their organization’s security and privacy risks, while research conducted by the Ponemon Institute highlighted that just 24% of firms surveyed saw their security leader regularly briefing the board on cybersecurity strategy. In this increasingly troubled political climate, where cybersecurity attacks are on the increase (CYREN’s 2015 Cyberthreat Yearbook report found that successful cybersecurity attacks on businesses of all sizes increased by 144% over a four-year period), and the stakes are high for all businesses, but particularly so for hedge funds (where reputational damage can bring down the entire firm), it is critical to view cybersecurity as an enterprise wide concern. Identifying cybersecurity as a key risk and including it in the risk management strategy will ensure that the topic is given the consideration it needs.
Streamline your partner portfolio.
With everyone in agreement that there is potential for a tough year ahead, it will be crucial for firms to streamline operations, making every single partner, member of staff and technology investment count. When choosing partners, choose specialists who understand the industry inside out and the specific challenges you are facing. Ensure your partner is fully compliant with the current and imminent regulations in your region and will share their knowledge and expertise with you in order to ensure you also meet regulatory compliance requirements. Partners who can prove that they meet industry standards with accreditations and stamps of approval from official bodies demonstrate that they have made the necessary investment and will take your business seriously.
Understand your data better.
Successful companies are data-driven. Slicing and dicing data in order to understand the business and make timely decisions can have a positive impact on a company’s operations and its bottom line. More and more firms are hiring Chief Data Officers and Data Scientists to understand the reams of data that are being produced by enterprise applications and the IoT. Companies are snapping up experts in business intelligence and analytics that can manage a team, interpret data and forecast, even in these turbulent times.
Consider a move to the cloud.
Most firms are using cloud services today in some way- even if the extent of cloud use is a single business application, such as Salesforce. However, some firms have gone further and moved their entire back-end office infrastructure to the cloud. If your firm hasn’t yet evaluated a move to cloud services, the benefits can be game changing. Face value costs may not come down, but savings could come indirectly by streamlining IT personnel, reducing HR burden and budget. It would also be a wise move in the face of global financial instability to move away from a capital expenditure (CAPEX) model to an operational (OPEX) expenditure model. The burstable nature of the cloud also makes it the ideal home for tasks like risk analysis and calculations, or big data analytics.
Whatever you resolve to do in 2016, good luck, and happy new year from RFA!