How Fund Managers Can Withstand the Coronavirus Pandemic: Business Continuity and Other Operational Risks (Part Three of Three)

Fund managers are preparing for long-term disruption to their business operations, as the global coronavirus pandemic continues to wreak havoc on financial markets and businesses. Measures fund managers should take to ensure they can thrive during a long-lasting pandemic include reevaluating employee efforts; vendor safeguards; basic compliance measures, such as their abilities to satisfy the custody rule; and insurance coverage. To support those efforts, the Hedge Fund Law Report interviewed various legal professionals on how fund managers can smoothly navigate the coronavirus pandemic. This final article in a three-part series examines operational risks, including important business continuity measures, vendor management techniques and insurance coverage issues. The second article recommended disclosures to provide while marketing during this period, features to review in key person provisions and cyber risks to mitigate. The first article detailed the SEC’s relief for Form ADV and Form PF filings, as well as guidance for communicating with investors and managing liquidity risks introduced by the coronavirus. For more on mitigating operational risks, see “Fund Managers Must Supervise Third-Party Service Providers or Risk Regulatory Action” (Nov. 16, 2017); and “Challenges and Solutions in Managing Global Compliance Programs” (Oct. 5, 2017).

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