# JOURNALof Applied IT and Investment Management Volume 1 No.

3 December 2009

DR. PETER SCHENK

MEAG
AWARD-WINNING
RISK MANAGEMENT
CULTURE

PRINCIPAL
ADAM SCHNEIDER
DELOITTE CONSULTING
TAKING OPERATIONAL
BENCHMARKING TO
THE NEXT LEVEL

PROFESSOR INGO WALTER

GLOBAL ASSET
MANAGERS AFTER THE
FINANCIAL CRISIS

DIRECTOR GENERAL
PETER DE PROFT
EFAMA

THE ROLE OF THE

ASSET MANAGEMENT
INDUSTRY IN THE
FUNDING OF THE
POST-CRISIS
FINANCIAL SYSTEM

MITIGATE RISK REDUCE COST ENABLE GROWTH

2 December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

CEO COMMENT: CONTENTS

# TAKING OPERATIONAL BENCHMARKING

Huge prospects TO THE NEXT LEVEL 3

careful management
# MEAG RISK MANAGEMENT CULTURE
PAR EXCELLENCE 7

by CEO Peter L. Ravn # NEW SIMCORP STRATEGYLAB VOLUME ON

The long-term drivers for growth in
the investment management industry
are strong. Though there may be doubt
as to whether the recent improvement
in the financial markets is sustainable,
there is plenty investment managers
can do to prepare for whatever the
future may bring.
COST MANAGEMENT AND OPERATIONAL
CONTROL AN INTRODUCTION 11
# GLOBAL ASSET MANAGERS AFTER
THE FINANCIAL CRISIS 15
# EXTERNALISE: USING SPECIALISTS TO
REDUCE OPERATIONAL RISK AND COST
OF OPERATIONS 18

When preparing for the short-term # 41% OF THE INVESTMENT MANAGEMENT

uncertainties and for the longer term INDUSTRY IN THE RED 21
opportunities, it is important for each
individual institution to focus on # PREPARE FOR GROWTH: SUMMIT IN THE
streamlining ones organisation to be CONFERENCE GLOBAL FINANCIAL
able to capture value and growth once
INDUSTRY 23
the tides turn. This inevitably involves looking at the cost platform, reducing
fixed costs and keeping them down once growth accelerates. Such an approach # THE ROLE OF THE ASSET MANAGEMENT
points to scalable platforms capable of accommodating growth going forward.
INDUSTRY IN THE FUNDING OF THE POST-
CRISIS FINANCIAL SYSTEM 28
Getting a grip on ones core competences remains key. I believe that the trend
among investment managers to outsource non-core activities while sharpening
# BOOK REVIEWS 32
focus on what they do best will accelerate. As such, our product, SimCorp
Dimension, is designed to help our clients perform the many complex tasks
# REGULATORY UPDATE 33
needed to stay ahead in todays and tomorrows international financial markets.
In addition, we offer services that can free investment managers resources and
# RECENT RESEARCH AND WHITE PAPERS 34
further allow them to focus on their key business.

I am pleased to say that the SimCorp Dimension International User Community

Meeting (IUCM) in September in Luxembourg was a great success. With more
than 200 attendees, the majority of our clients were represented, and some sent
more than one delegate. The feedback has been very positive. Our work through
SimCorp StrategyLab, SimCorps research arm, has enabled us to analyse and
track the significant trends in our industry. Consequently, clients told us that
the themes presented in Luxembourg, which have emerged from our research,
were fully aligned with their own strategies and plans. 98% of the participants
indicated that they would attend next years IUCM event, not least given its
value as an opportunity for networking with peers in the industry.
2009 has certainly been a year out of the ordinary. And the challenges are not
past yet. The importance of data quality and integrity in asset management has
become even more apparent core principles that are underpinned by
SimCorps enterprise offering. The events of the last year have given us
confirmation that we can look forward to the future with reasonable confidence,
along with our clients across the investment management industry.
A positive outlook towards 2010 is an excellent outset for me to send everyone
my best Seasons Greetings and to wish a Happy New Year on behalf of SimCorp.
Read the journal online at www.simcorp.com/journal
EDITOR-IN-CHIEF
Lars Bjrn Falkenberg, Vice President, SimCorp A/S
larsbjorn.falkenberg@simcorp.com
EDITORIAL ASSISTANT
Mette Trier, SimCorp A/S
mette.trier@simcorp.com
PUBLISHER
SimCorp A/S, Weidekampsgade 16, 2300 Copenhagen S, Denmark, Phone: +45 35 44 88 00.
Journal of Applied IT and Investment Management is a quarterly publication, published and distributed globally
by SimCorp A/S. Print run: 11,000.
SUBMISSION GUIDELINES
Articles, book reviews, new reports and information on recent research can be submitted for review to Editorial
Assistant Mette Trier, mette.trier@simcorp.com. For submission guidelines, please visit
www.simcorp.com/journal.
DISCLAIMER
The contents of this journal are for general information and illustrative purposes only and will be used at your own
risk. The articles in the publication do not necessarily reflect the view of SimCorp. SimCorp will use all reasonable
endeavours to ensure the accuracy of the information. However, SimCorp does not guarantee or warrant the
accuracy or completeness, factual correctness or reliability of any information in this journal and does not accept
liability for errors or omission including inaccuracies or typographical errors.
ISSN 1903-6914. Copyright rests with publisher. All rights reserved SIMCORP A/S 2009.

Peter L. Ravn, Ph.D.,

SUBSCRIPTION
is CEO at SimCorp A/S. Subscription to the journal is free of charge for members of the industry, associated institutions and academics.
To subscribe, please visit www.simcorp.com/journal. Change of address should be e-mailed to journal@simcorp.com.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 3

# Taking operational bench-

marking to the next level:
thoughts for investment
management firms
The investment management industry is now being challenged by volatile mar-
kets, changing revenue models and substantial client issues. As a result of the
2007-2009 financial crisis, many investment managers are facing the need to
adjust their operational strategies to these changing conditions. Both benchmark-
ing and best practice analysis have been proposed as tools to help asset managers
understand their relative position in such operational areas as specifics of service
delivery and cost structure. Once complete, however, these studies can be diffi-
cult to link to particular choices and activities. This article examines the specific
methods that firms can use to extend their analyses with focus on determining
what is next. by Adam Schneider , Principal, Deloitte Consulting LLP
1

B
enchmarking is a standard
practice used across industries
to define firm business
performance and compare
across firms. It is defined as follows: To
measure [a rivals product] according to
specified standards in order to compare it
with and improve ones own product.2
The definition tends to be about
specifications and quantification, for
example the cost of a unit produced. In
investment firms, an operational
benchmark might include cost per dollar
of assets managed measured in basis
points, or the percent of trades handled
on a straight-through-processing (STP)
basis through the back office.
Separately, the concept of best practices
has emerged to define how leading firms
perform specific business functions.
While best is subjective pretty good
practices is just not as attractive it can
be a valuable method for understanding
the specifics of how competitive firms
accomplish specific operational tasks and
therefore be a guide for choices. For an
investment management firm, an example
of an operational best practice might be
measured by the STP benchmark
indicated above.
TYPES OF STUDY
Generalising, there are three different
types of benchmarking/best practices
study that are often conducted between
firms:
Compare facts: Studies that compare
specific facts across firms. These
studies include comparing organi-
sational structures or comparing
functional costs. Many benchmarking
analyses fall into this category.
Compare processes in use: Studies that
compare in detail how firms perform
certain functions, in an attempt to
identify best practices or at least
practices that are more successful than
others. Studies of this nature typically
involve detailed functional analysis
across multiple firms. For an
investment management firm, this
might be a comparison of how firms
reconcile with custodians which shows
how some firms use automated tools, 1 Adam Schneider is also a contributor to the new volume
by SimCorp StrategyLab: Operational control in asset
some offshore work and others management: processes and costs edited by Michael Pinedo
outsource to a third party. (see walkthrough, pages 11-14).

automating trade processes so that they 2 Dictionary.com

need little human intervention and can be

4 December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# Taking operational bench-
marking to the next level:
thoughts for investment
management firms
Compare projects others are doing:
These studies compare projects and
investment programmes across firms,
and share their experiences. For
example, firms may compare how they
use a methodology such as Six Sigma
to re-engineer processes or reduce
costs. The goal is not to understand
the outcome, but how projects are
being performed and how specific
tools fared in a real-world situation.
STRENGTHS AND
WEAKNESSES
Benchmarking/best practices studies can
be hugely valuable and provide significant
insight to investment managers. Their
value comes from the ability to understand
multiple operating models, including
models for change, and provide insight on
firm choices with respect to operating
In investment firms, an
operational benchmark might
include cost per dollar of
managed assets measured in
basis points, or the percent of
trades handled on a straight-
through-processing (STP)
basis through the back office.
strategy, cost structure, systems imple-
mentation decisions and human resources
decisions. Some of the key benefits
include:
r esults are normalised across firms,
allowing careful inspection and
comparison;
enables an apples-to-apples com-
parison to be made of the area or
subject being dealt with;
focuses on the specifics of the
investment business, for example
processing equity transactions rather
than being a general study focusing on
generalised transaction processing
strategies;
firms can better understand or forecast
the consequences of major choices,
such as re-engineering strategies or
technology implementation strategies;
and, perhaps most importantly, allows
firms to look beyond their
organisations and assess where they
stand in terms of key management
processes, capabilities and metrics.
However satisfying studies of this type
are, there are weaknesses. In particular, we
have seen many instances where studies
are disconnected from next steps. We
might call this the now what? problem.
For example: we learn that a successful
competitor has a widely different organ-
isational structure now what? Or, we
learn that another firm has a different
processing strategy, preferring to insource
operations and technology now what?
The issues of translating study into action
generally include the following:
A n excess of data but a lack of insight.
This is probably the single largest
issue. That is to say, weve learned a
great deal, but the study itself does not
translate into strategies and specific
action steps.
The risk of noise overwhelming the
answer. Cost structure comparisons,
in particular, have challenging
accuracy requirements, and one
common issue is the difference in cost
allocation methods. During one study,
a firm proudly announced they were a
low cost provider, a position they
achieved by not including information
technology costs in their analysis,
which were counted by peers.
The reality that the cumulative weight
of different business strategies may
explain most results. Choices about
product offerings, distribution, or
technology investment decisions and
other historical factors may well
explain most of the output differences
found.
BENCHMARKING: A PROPOSAL
FOR IMPROVEMENT
Is there a way to both get the benefits of
external peer measurements while also
linking them to business objectives?
Perhaps by combining the benefits of
external information with ongoing
business planning.
Benchmarking/best practice studies
effectively treat the business being
measured as a black box. The output is a
series of measures: it uses process x. It
costs y per billion of currency under
management. It has a success rate of z%.
However, few of these benchmark
measures tie the visible service levels to
internal and external constituencies. We
propose to focus less on internal processes
and more on the relevant service level
metrics. If we find operational per-
formance is far away from these metrics,
we can immediately identify strategies for
change.
We propose to align the external
benchmarking and annual planning
processes by using visible service level
measures to drive internal plans for
improvement. In essence, we would use
benchmarking techniques to compare
both other investment management firms
and output metrics important to internal/
external clients.
Such a programme would have significant
advantages as it would be focused.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 5

Figure 1 shows an example of a Internal and Internal and external clients Custodians that service and Investment consultants with
external client that offer varying interact with many relationships and experience
programme successfully used in invest-
surveys perspectives investment firms
ment management firms. It would work
as follows:

U nderstand the service level Externally Reporting Trade processing Reference data
Survey of
expectations of relevant parties such requirements
visible Performance measurement Cash management Assets under management
functions Client service including Trade settlement Client administration
as clients, custodians and other key
inquiries and escalation Reconciliation Performance measurement
internal clients. Fee accounting/billing Reference data
Determine whether or not peer firms Contributions/withdrawal Corporate actions
are meeting this level of service. Note Investment accounting Investment accounting
Accuracy
service level may include a wide range Corporate actions
of subjects such as specific timings,
accuracy levels, internal cost or level of
technology enablement. The goal is to Analysis and Study
identify specific expectations that are comparison analysis Firm Services Current
or are not being met. profile* and quality delivery
Focus on service level metrics visible measures effectiveness
to external parties, as opposed to those
that are used to manage internal * including general statistics and operating ratios
processes.

Benchmarking of this type would work

through a waterfall process that starts by
understanding the needs of external
parties, then working towards peer firms
and then measuring the internal opera-
tion. The goal is to assemble as many
outside-in measures of operational
effectiveness as practically possible. A
sample process chart, including
participants and types of questions asked,
is included in Figure 2.
LINKING TO IMPROVEMENT
Interviewee Potential participants Sample questions asked
Client Investment manager to establish meeting What are the service and support dimensions that are most important to you?
Senior management for perspective and tone How does the investment manager satisfy your needs relative to these dimensions?
Line functions interfacing with investment What is your desired end state relative to the key dimensions?
managers
Custodian Advisor services unit What are optimal trade communication procedures?
Senior management for perspective and tone What defines client expectation relative to investment manager to custodian
communication? What incentives should be built into the process?
Any report card/MIS reporting
Investment Client service partner How is your organisation aligned to meet internal and external needs?
consultants Investment advisors What defines client expectation relative to consultant communication?
and other firms Performance analyst What are the gaps in servicing the key identified dimensions?
Internal cost metrics as per cost benchmarking studies

PROGRAMMES Investment Operations manager What are the most important service dimensions to your clients?
Tying information from the outside-in management Middle/back office managers How are your products and services aligned with their expectations?
benchmarking process described above to firm itself IT representative What is your desired end state relative to the key dimensions?
CFO, COO as appropriate Internal cost metrics as per cost benchmarking studies
business improvement programmes is
relatively straightforward. Our proposal is
to directly link the results of the
benchmarking to potential change and
re-engineering projects.

For example, the business function of
performance measurement is essential to
investment firms. The calculations are
precise, compared to external parties, and
directly determine how firms, clients and
consultants view their success. At the
same time, the specifics of executing
performance measurement are highly
internal and rarely visible.
 6 December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

# Taking operational bench-

marking to the next level:
thoughts for investment
management firms

In our outside-in approach, firms would
start with the goals of the performance
management function and use these goals
as benchmark questions for external
parties, for competitors and finally for the
performance operation itself. When done,
the study should be able to reach a
In the performance measurement case, one
might learn that clients expect to have daily
performance available, with month-end
audited performance ready three days after
month end, and that other firms are meeting
this goal. Meanwhile, the internal survey
indicates that our firms operation is
achieving only ten-day-after-month-end
The benefits of linking external measures
to firm improvement projects are
significant and ongoing. We believe this
structure for benchmarking will provide
significant benefits over traditional
approaches.

Benchmarking/best practices
readiness. An illustrative example of
operational functions benchmarked on an
outside-in approach is indicated in Figure 3.

studies can be hugely valuable There are significant benefits to this

and provide significant insight

approach. Firms would formally
understand the service levels they must
provide for key constituencies. They would

to investment managers. understand how they and their

conclusion about the areas relative
operational position. That assessment can
be used as the basis for deciding how to
move that function from its current level
of capability to what is required.
competitors are meeting those service
levels and whether there is a gap. They can
then assess whether the gap in capability
is significant enough to require im-
provements to be made. In fact, the
competitor benchmarking would be likely
to indicate whether the required
improvements are cost-related, process-
related, or technology-related.
 SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 7

# MEAG risk management

culture par excellence
MEAG, winner of the SimCorp StrategyLab Risk Management Excellence
Award, is a risk management firm both by design and by culture. We spoke to
Dr. Peter Schenk, MEAGs Head of Investment Controlling, to learn about its
approach to risk. by Richard Willsher

Dr. Peter Schenk, Head of Investment Controlling, MEAG

A
mong asset managers, companies have to behave differently assets have to be structured completely
MEAG may well be the than assets belonging to other types of differently than those of a composite
envy of its peers. It manages investors. The assets must back the insurer or firms that reinsure storm risks.
more than 180 billion of liabilities of the insurance company. The risk content and asset behaviour
assets, yet suffered no direct damage in What is more, life insurance company mean that they have to match, or
the financial crisis. This is almost certainly
due to the risk management culture at the
firm and its heritage as part of Munich
Re.
Munich Res mission statement is
All but 8 billion of the assets under its
We turn risk into value. So thats
management are from Munich Re
companies and, as Dr. Peter Schenk
where we start from. We have
explains, insurance companies do things
differently. The assets of insurance
to understand the investors risk
concept. Dr. Peter Schenk
 8 December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# MEAG risk management
culture par excellence
approximately match, this liability
structure. Any deviation has to be de-
liberate. This means that when you
manage assets for insurance companies,
you have to talk about risk. The liabilities
are risks. Insurance companies deal with
risk. Munich Res mission statement is
We turn risk into value. So thats where
we start from. We have to understand the
investors risk concept.
We regard our role explicitly
as business enablers.
Dr. Peter Schenk
PRIMARY FOCUS ON RISK
While many other fund managers may be
under greater pressure to focus on return,
MEAGs primary focus is on risk. More
particularly, it has to understand very
clearly the riskless position of the investor.
But what is risklessness? For a private
individual it may mean cash in a drawer to
pay for tomorrows pizza, says Dr. Schenk.
For an insurance company that knows, or
expects from its models, that it will have to
be able to pay certain claims in a years
time, or, in life insurance, in 10 or 15 years
time, your riskless position will not be
cash, because relative to the liabilities, the
return is quite different. To arrive at this
riskless position you have to do certain
calculations; you need to look at the asset
and liability values at risk. You need
processes that will meet the liability
structure when it changes. Insured events
may or may not occur. Claims may emerge
or not emerge. Modelling but also
preparedness for the unexpected are key
ingredients of the process. As Dr. Schenk
adds without any hint of complacency, A
financial crisis is just another event that
makes you think about your risk profile.
It follows, then, that understanding and
calculating risk at MEAG starts at the top
of the firm. As well as heading the risk
management function at MEAG, Dr.
Schenk also plays a role in the integrated
risk management function of Munich Re
as a whole, where he reports directly to its
chief risk officer. As an indication of the
scale of the Group-wide risk management
task, it is worth noting that in the half year
to 30 June 2009, Munich Re generated
gross premium income of 20.7 billion.
Any new investment decision that is taken
involves the full participation of the risk
management function; it has to pass the
risk management test.
It is very important to remember that
there always are two perspectives in our
decision processes: the front office per-
spective and the risk perspective, which
are taken equally into account, explains
Dr. Schenk. In order to come to a well-
balanced decision, the people with an
allocation idea must know that they will
be confronted with risk perspectives. An
example where we see this working in
practice is our New Product Process.
When an attractive new investment idea
comes out in the market, the front office
may be thrilled with it. The investor may
be thrilled as well, because it may be a
good instrument to reflect its liability
profile. But we will only take up on it if we
on the risk management side agree. We
have to be able to understand the product.
We have to be able to adequately model it
in our systems. We have be able to access
the data we need to feed our models, so
that the output they give us is in the form
of useful information.
BUSINESS ENABLERS
However, it would be a mistake to paint
the risk management function only as an
obstacle to doing business. The risk
management culture has evolved much
further than that and according to Dr.
Schenk, There are conflicts, but we have
found ways to deal with them as a routine.
What is necessary is intense com-
munication and mutual respect. We work
together in one building. We meet at
lunch. Whenever issues arise, we sit down
together and talk about them. We regard
our role explicitly as business enablers. We
supply the front office with tools that they
can use for their allocation and try to assist
in finding solutions when dealing with
narrow risk limits and other restrictions. It
helps if they see that we really do not want
to hinder them and that we are not always
risk averse, but that we also try to find
ways for them to take on risk.
Dr. Schenk sets out the first principles of
MEAGs risk management operation. The
internal data has to be up to date and
complete. It has to be stored correctly and
securely so that all holdings are known at
any time. The details of holdings must be
transparent. The methods and processes
for handling the data have to be able to
transform it into information that is useful
and can flow into the decision-making
process. To achieve these things MEAG
uses a centralised data backbone that
includes SimCorp Dimension. These
features are the basic building blocks, but
it is dealing with the unusual situations
that defines the risk culture at MEAG
and tests how effective it is. As Dr. Schenk
elaborates, When special situations
emerge, when there is a crisis or new
business opportunities something un-
usual, you have to have all this data, and
the processes and governance rules must
be set up perfectly. And you need a risk
culture that is able to change to another
gear; to move into crisis mode, if you like.
Then, when you do, the culture of the firm
ensures that everybody really likes to work
with each other. Everybody keeps a close
eye on the risk system, but the gap
between it and the special situation can
only be bridged with communication and
action, with everybody really doing not
only what is in their job description, but
whatever is necessary at that moment. As
Dr. Schenk adds, This is a top-down
issue because everyone appreciates that
understanding, managing and controlling
risk is vital to our business and our
decision-making process.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
MULTI-DISCIPLINARY TEAM
It is also key to the process that the risk
management function is staffed in a way
that matches the demands of the business
in all its complexity. For example, Dr.
Schenk himself has a background in
mathematics and computer science and
holds a doctorate in economics. He notes
that his colleagues in the Risk
Management department are an
interdisciplinary team. There are econo-
mists, people with technical computer
science backgrounds, but also physicists.
In addition, the company sponsors them
to gain Professional Risk Managers
International Association (PRMIA)
qualifications. Intellectual rigour and
professional competence are essential
prerequisites.
However, part of MEAGs success in the
current financial crisis is owed to the
2000-2003 equity bubble, which sharp-
ened the firms resolve to enhance its risk
culture. As Dr. Schenk explains, We
looked at everything: at what worked and
what didnt work so well. The problem is
always interfaces between different
departments; between the asset manager
and the investor. And there we learned
some lessons. One was that we really
intensified communication. We intro-
duced a mandate management concept
which ensures that the tactical asset
allocation not only fits MEAGs view of
the market, but also the investors overall
situation. One example of what this
concept entails are the regular asset/
liability management meetings now held
between investors and MEAG. Another
is the elaborate risk management process
with well-documented tasks and areas of
responsibility. Every objective that an
investor has is quantified and cor-
responding risk triggers are defined.
When a risk trigger is activated, a
predetermined process starts. This process
always has to do with distributing and
exchanging information, meeting together
and deciding. Our processes now
encourage people to make decisions.
9
A strong process was already in place before the financial
crisis, and the institution performed well during the crisis.
[MEAG] has a strong emphasis on the risk culture
throughout the company group, where the risk management
units are structurally separated from the front office.
The risk policy is not only comprehensive and detailed; it
also demonstrates that risk policy can be an active tool to
create added value for the institutions stakeholders.
Award speech by Professor Ingo Walter at the SimCorp StrategyLab Risk Management Excellence Award 2009 announcement
Today, for example, risk modelling, stress interesting constructions that somehow
testing and reviewing and revisiting the manage to comply with existing
stress tests and models on a regular basis regulation. So it will always be the task of
are vital processes. And transparency is the individual companies risk management to
sine qua non. It is one of the chief reasons make a judgement about the degree of
that MEAG avoided the worst of the transparency, he says. The other thing is
crisis, as Dr. Schenk points out: If you systemic risk. To prevent this we would
have transparency, you can quickly manage need a global risk management system. A
an assets risk. You can sell it or hedge it global risk management system means
faster than your competitors perhaps. global data pools, a global early warning
Nobody could ever understand what a concept and global risk management
CDO of CDOs was, because you couldnt processes linked to these warnings. This is
drill into the data that really exposed the now being thought about and discussed in
risk. If we were to buy these products and all kinds of forums, but the challenges are
somebody asked us, What is your
exposure to US real estate, or to British
credit cards?, we couldnt see the answer.
We wouldnt have the data. So we either
Our processes now encourage
wouldnt permit such instruments at all, or
would at least classify them as non-
people to make decisions.
standard, which leads to strict limitation Dr. Peter Schenk
in volumes and special pricing and
reporting rules.
huge. I think the desire is there, as well as
GLOBAL PROSPECTS the basic willingness to collaborate, but it
So in the bigger picture, considering the will be cumbersome to arrive at concrete
raft of new controls and measures decisions and to accept jointly shouldering
currently under discussion, and in light of the pains risk management brings with it.
MEAGs experience, is Dr. Schenk I think the train is moving in the right
optimistic that products that are not direction, but if it is to reach its destination,
sufficiently transparent will be banned or many components have to interlock, and
sufficiently de-risked in the future, so as to many parties who have not worked
not pose a threat? together so far will have to do so in the
future. It is complicated, global, and there
It is not black and white, but altogether are lessons to be learned along the way. It
Im not optimistic. Buy-side needs and might take a long time.
sell-side creativity will always lead to
 10
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# MEAG risk management
culture par excellence
Dr. Schenk concludes by saying that while
the world has probably learned how to
avoid another sub-prime crisis, it is the
unexpected we have to prepare for. To
deal with the unexpected you need global
risk management systems, a global risk
culture and global risk governance, so that
the relevant key persons will sit down
together and make decisions, fast. This,
he says, will be very difficult to achieve on
a global scale, but for MEAGs own
business, with the highly evolved risk
MEAG (Munich ERGO Asset
Management GmbH) is part of
Munich Re. It provides advice on
strategic asset allocation, risk
management and asset-liability
management, combined with
professional investment manage-
ment. It manages approximately
186 billion worth of assets on
behalf of Munich Re and for third
parties, including other institutions
and public funds.
Munich Re is the worlds largest
reinsurance group. It conducts
both insurance and reinsurance
business in an integrated model,
with premium income of 38
billion, net profit of 1.5 billion
and 44,000 employees around the
world. ERGO, the groups primary
insurance group, has 40 million
clients in more than 30 countries
and earned premium income of
17.7 billion in 2008. ERGO
offers a range of insurance products
and is Europes leading health and
legal expenses insurer.
management capability that Dr. Schenk
describes, there is plenty of cause for
optimism.
Richard Willsher is a London-based finan-
cial journalist and former investment
banker.
The SimCorp StrategyLab Risk
Management Excellence Award
has been established by SimCorp
StrategyLab for the purpose of
rewarding and promoting best prac-
tise within risk management in the
global investment management in-
dustry.
MEAG was named the 2009
winner by an international jury
including Professor Caspar Rose
of Copenhagen Business School,
Professor Rene Adams of Uni-
versity of Queensland, Professor
and Director of SimCorp Stra-
tegyLab Ingo Walter of Stern
School of Business (NYU), and
SimCorps CEO, Peter L. Ravn.
The assessment was based on
MEAGs achievements and devel-
opments in the field of risk
management in the period from
1 August 2008 to 31 July 2009.
SimCorp StrategyLab is the
independent research arm of
SimCorp. Read more about
SimCorp StrategyLab and its Risk
Management Excellence Award at
simcorpstrategylab.com/riskaward
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 11

# New SimCorp StrategyLab volume

on cost management and
operational control:
an introduction
A new SimCorp StrategyLab volume discusses new ideas on key strategic asset
management industry issues concerning processes, costs, productivity and opera-
tional risk, with a particular focus on their interrelationships and the trade-offs
between them. by Professor Michael Pinedo and Editorial Assistant Mette Trier
1

T
he global asset management
industry can be divided into
two broad categories:
institutional asset manage-
ment and retail asset management.
Through a number of phases, the asset
management industry as a whole has
undergone some major changes over the
last two decades.
Firstly, from the early 1990s until about
Madoff case, one of the largest operational
risk events in history.
Currently, the asset management industry
finds itself in a new phase of major
change. Since the credit crisis, the sector
has suffered from plunging global
financial markets and from liquidity
becoming either highly restricted or non-
existent. Even with a market recovery,
with regard to their costs, productivity
and risk management. These factors have
only recently begun to gain recognition as
playing an important role in asset
management, and their interdependencies
and trade-offs have not yet been
thoroughly analysed. For example, a
reduction in costs, implemented without
proper planning, may substantially
increase exposure to operational risk.

The new reality has forced

1 The editor, Michael Pinedo of the Stern School of Business,
NYU, focuses in his current research on the modelling and
analysis of service systems, with an emphasis on Total Quality
Management (TQM) and operational risk. He has written, or
jointly written, numerous technical papers on these topics and
is the author of several books.
2008, the world witnessed how the value
of assets under management (AUM) sky-
rocketed due to the high liquidity in the
global financial markets. This in turn was
caused by abundant credit and ever- asset managers to develop a
much stricter discipline in
increasing asset valuations, among which
the most widely known are real estate
prices. This first phase also fostered the
creation of hedge funds that continue to
play a major role in the financial markets. their operational processes, in
Before the crisis, most asset managers
were not too worried about operating
particular with regard to their
costs or operational risks, as ever-
increasing prosperity made the value of costs, productivity and risk
management.
their AUM grow steadily. Excessive costs
and disproportionate numbers of errors
were buried under the constantly rising
revenues from a growing asset base and
under the solid profits generated by high
returns. The winds have changed, former levels of liquidity and wealth Processes, operational controls, costs,
however, and today, the industry is cannot be expected to become the norm productivity and quality control have
working under quite different conditions. again. been studied extensively in other
Many of the largest asset managers have industries, in particular the manufacturing
suffered a drop in the value of AUM by SETTING A NEW AGENDA: sector. It seems that the financial industry
30-40%, not only due to a decline in asset PROCESSES, COSTS AND RISKS can learn a great deal from these studies.
prices, but also from clients withdrawing The new reality has forced asset managers For example, the procedures used for
their money. The crisis also brought to develop a much stricter discipline in Total Quality Management (TQM) in
regulatory failures to light, such as the their operational processes, in particular manufacturing and services turn out to be
12
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

# New SimCorp StrategyLab volume

on cost management and
operational control:
an introduction
1 See pages 36 of this issue of Journal of Applied IT and
Investment Management for Adam Schneiders article
Taking operational benchmarking to the next level.
very similar to procedures that can be
used in the management of operational
risk in financial services.
In financial institutions as a whole, it has
become clear that even institutional asset
managers with large trading operations
have to keep their costs under control.
The most important cost and operational
risk factors in asset management can be
summarised as, firstly, the costs and risks
with regard to human resources; secondly,
costs with regard to client contact centres
and distribution channels; and thirdly,
costs with regard to systems development
and transaction processing.
In this new volume, the contributors
consider all the cost and risk factors
mentioned above for retail as well as
institutional asset managers. It is evident
that the first factor is important for both
categories of asset management firms. The
second factor is clearly more important
for a retail firm than for an institutional
firm. The third factor is equally important
for both categories of firms.
From various perspectives, the authors
illustrate how the operational per-
formance measures of interest in global
asset management are mainly concerned,
on the one hand, with costs and
productivity and, on the other hand, with
quality management and operational risk.
Moreover, they discuss issues related to
the obvious trade-offs between costs and
productivity, and quality control and
operational risk.
TWO PERSPECTIVES
REPRESENTED: INDUSTRY
AND ACADEMIA
The main body of the volume has been
divided into two parts representing
industry and academic perspectives
respectively. Six chapters have been
written by authors closely connected to
the asset management industry who give
their views on general managerial,
technological and cost models that are
pertinent to the challenges faced by
todays global asset management firms.
Four chapters by more academically
orientated authors are based on their
collected data, which lead us to valid new
conclusions and recommendations.
A best practices framework for
operational infrastructure and controls
Providing the first set of industry
perspectives, mit Alptuna, Manos
Hatzakis and Reha Tutuncu from
Goldman Sachs present an operational
and control policy framework that
incorporates industry-wide best practices
and reflects current thinking as shaped by
the 2007-2009 financial crisis. Especially
in the rapidly expanding area of alternative
investments, they emphasise the im-
portance of strong governance in effecting
these best practices and discuss opera-
tional elements such as robust
infrastructure and controls, reliable
valuation, and a holistic approach to risk
management. Finally, the authors
examine under which conditions the
cost-effective strategy of outsourcing
operational asset management functions
can be successful for both managers and
clients.
Managing costs at investment
management firms
Another significant industry angle is
provided by Adam Schneider1 of Deloitte
Consulting, who focuses on the operations
and costs in an investment management
firm from a value chain perspective. The
investment management industry is now
challenged by volatile markets, changing
revenue models and substantial issues of
client faith and trust. Many investment
management firms are facing revenue
declines, product performance and the
need to adjust strategies to these changing
conditions. For the first time in many
years, cost control is important to
investment managers. Mr. Schneider
provides a framework for an analysis that
allows firms to compare their cost
performance with others in an effective
manner. It is based on the results of a wide
variety of cost control projects conducted
over the past 20 years throughout the
investment management industry and
covering a large number of firms.
Lean Six Sigma in asset management
Focusing on the concept of Lean Six
Sigma in asset management, Klaus Arfelt
from SimCorp outlines what is needed to
maintain high productivity in conjunction
with high quality control. Initially, his
reason for looking deeper into the Lean
Six Sigma idea was motivated by the
highly impressive results that have been
achieved in the manufacturing world. To
illustrate this, the author looks at the
automobile industry, where the concept
was introduced and where the most
revolutionary consequences of process
optimisation have been observed. Finally,
the advantages and positive side effects of
Lean Six Sigma implementation are
discussed. The chapter demonstrates how
a lean organisation has obvious com-
petitive advantages when it comes to
employee competencies, operational
transparency and a mentality of contin-
uous improvement.
Management of risk, technology and
costs in a multi-line asset management
business
In his chapter on the multi-line asset
management business, John H. Biggs,
retired chairman of TIAA-CREF,
discusses responsibilities at the different
levels of the corporate structure as far as
risk management and technology
management are concerned, along with
the effects on total costs. In order for an
asset management firm to function well,
he concludes that risk management and
technology management functions
should not be kept at corporate level, but
rather delegated down to the line
managers.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
Manos Hatzakis, co-author of the chapter A
best practices framework for operational
infrastructure and controls, is a vice
president at Goldman Sachs Asset Manage-
ment and COO of Goldman Sachs Invest-
ment Partners.
Strategic and tactical cost management
in asset management
Zeroing in on both strategic and tactical
cost management, management consult-
ant and adjunct professor at New York
University Marcelo Cruz studies the
types of cost reduction efforts that have
been tried over the past few of years in the
industry. In his corresponding analysis of
strategic cost management, Cruz analyses
the trade-offs between levels of corporate
expense with levels of operational risk
exposure.
Cost effectiveness in the asset
management industry: an IT
operations perspective
Concluding the part on industry
perspectives, Kjell Johan Nordgard from
SimCorp and Lars Falkenberg of
SimCorp StrategyLab discuss the effect
of information technology on cost
effectiveness in the asset management
Adam Schneider, author of the chapter on
Managing costs at investment management
firms, is a principal at Deloitte Consulting
LLP, primarily serving clients in banking,
investment management, wealth manage-
ment and capital markets.
industry. The significant conclusions of
the impact report analysed are based
upon a recent survey of 100 interviews
conducted among leading asset managers
around the world.
Cost structure patterns in the asset
management industry
The first of the second parts academically
orientated chapters is written by
Professors Dennis Campbell and Frances
Frei of Harvard University, who focus on
the relationship between annual revenues
and annual selling, general and
administrative (SG&A) expenses in the
2001-2008 period. The authors find that
indirect costs related to SG&A appear to
be increasing when revenues climb, often
rising at a faster rate than revenues. On
the other hand, these indirect costs
remain relatively fixed when revenues
decline.
13
Yakov Amihud of New York University, co- Haim Mendelson of Stanford University,
author of the chapter Transaction costs and co-author of the chapter Transaction costs
asset management. and asset management.
Transaction costs and asset
management
Yakov Amihud of New York University
and Haim Mendelson of Stanford
University go on to analyse transaction
costs, the variable costs of trading securities,
in the asset management industry. They
demonstrate how trans-action costs affect
the values of assets. For any given level of
risk, securities with higher transaction
costs tend to have lower prices. The authors
study the effects of transaction costs on
asset management and introduce the
different types of transaction costs, study
their structure and show how they affect
asset prices. Finally, they examine the
implications of these relationships for asset
managers, showing how transaction costs
affect portfolio construction, fund design,
trade implementation, cash and liquidity
management, client acquisition, devel-
opment strategies and trading frequen-
cies.
14
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# New SimCorp StrategyLab volume
on cost management and
operational control:
an introduction
Does strategic outsourcing create
financial value?
Posing this question, Anitesh Barua and
Andrew Whinston of the University of
Texas at Austin and Deepa Mani of the
Indian School of Business in Hyderabad
study the value of strategic outsourcing.
The authors describe the risks and
managerial challenges in strategic
outsourcing. They have analysed the 100
largest outsourcing initiatives imple-
mented between 1996 and 2005 and
determined the number and value of the
sample contracts over time as well as
reasons behind outsourcing failures.
A stitch in time
Finalising the section on perspectives
from academia, adjunct professor at
Columbia University Kosrow Dehnad,
who works for the Samba Financial
Group, compares the trading processes in
financial services with the production
processes in manufacturing. He contends
that procedures similar to those used in
TQM in manufacturing can improve risk
management processes in financial
services considerably. He provides four
examples of error detection procedures
based on TQM thinking and discusses
the importance of automation and IT
investments in the implementation of
such procedures.
This book was written with
management of the global asset
management industry in mind.
The contents of the volume will also
be highly relevant for anyone else
with an interest in this industry, be it
researchers or students.
Title
Operational control in asset
management:
processes and costs
Editor
Professor Michael Pinedo
Stern School of Business, NYU
No of pages
220
Publisher
SimCorp StrategyLab
Publication date
7 December 2009
Price
45
Available from amazon.co.uk
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 15

# Global asset managers

after the financial crisis
The institutional asset management industry after the
financial crisis of 2007-2009 is likely to return to the
role of one of the largest and most dynamic parts of the
global financial services sector in the years ahead. But
what shape it may take is a matter of considerable un-
certainty. by Professor Ingo Walter, Director of SimCorp StrategyLab

T
he estimated extent of the
damage from the crisis borne
by various financial sectors is
shown in Figure 1. Losses
outside the banks have affected insurance
companies and hedge funds, but indirect
losses, as a result of massive price declines
in financial and non-financial shares as
well as crisis-related bond defaults, have
eroded equity and fixed-income values.
Compounding investor returns were the
indirect effects on yields attributable to a
flood of liquidity by central banks trying
to contain the crisis. Taken together, this
means that asset management clients are
far more sensitive to risk and cost than
before the crisis, requiring much more
focused attention on these two dimen-
sions of asset management.
Nevertheless, savings have to go
somewhere, and the asset management
industry will, as before, capture its share
of these flows. This is based on a number
of long-term drivers.

LONG-TERM DRIVERS
On the pension side, long-term drivers
include the continued recognition that
most government-sponsored pension
systems, many of which were created
wholly or partially on a pay-as-you-go
(PAYG) basis, have become funda-
mentally untenable under demographic
projections that appear virtually certain to
materialise. They will need to be
progressively replaced by asset pools that
will throw off the kinds of returns
necessary to meet the needs of growing
numbers of longer-living retirees. Further
changes have grown out of the partial
displacement of traditional public- and
private-sector defined benefit pro-
grammes. These, backed by assets
contributed by employers and working
individuals, have come under the pressure
of the evolving demographics, rising
administrative costs, and shifts in risk
allocation by a variety of defined con-
tribution schemes. Despite the impact of
16
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# Global asset managers
after the financial crisis
the crisis, which has led some to believe
that a return to defined benefit pro-
grammes will develop, it seems likely that
the pre-crisis trends will resume once
stability returns to financial markets.
Even with the crisis-related losses in asset
values, the substantial increases in
individual and institutional wealth in a
number of developed countries and a
range of developing countries, especially
in Asia, will probably resume (see Figure
2). This is likely to run alongside realloca-
tion of portfolios that have, for regulatory,
tax or institutional reasons, been
overweight domestic financial instru-
ments, notably fixed-income securities.
There will possibly be a greater role for
equities and non-domestic asset classes,
Asset management will continue
to attract competitors from an
extraordinarily broad range of
strategic groups.
Nevertheless, savings have to
go somewhere, and the asset
management industry will, as
before, capture its share of these
flows. This is based on a number
of long-term drivers.
which may again promise higher returns
but may also reduce the beneficiaries
exposure to risk, due to portfolio
diversification across both asset classes
and economic and financial environ-
ments that are less than perfectly cor-
related in terms of total investment
returns.
The growth implied by the first of these
factors, combined with the asset-
allocation shifts implied by the last, will
tend to drive the dynamics and the
competitive structure of the global
institutional asset management industry
in the years ahead.
HIGHLY COMPETITIVE ASSET
MANAGEMENT INDUSTRY
Asset management will continue to
attract competitors from an extraordinarily
broad range of strategic groups. Com-
mercial and universal banks, investment
banks, trust companies, insurance
companies, private banks, captive and
independent pension fund managers,
mutual fund companies, financial
conglomerates and various types of
specialist firms are all active in investment
management. This rich array of con-
tenders, coming at the market from very
different starting points, competitive
resources and strategic objectives, is likely
to render the market for institutional
asset management highly competitive
even under conditions of large size and
rapid growth. Securities firms, such as
broker-dealers, have also penetrated the
asset management market, and so have
insurance companies reacting to stiffer
competition for their traditional annuities
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 17

$ trillion
70
Japan

North America 60

Europe
Other 50

40

30

20

10

0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

business. Commercial banks, watching

The basic drivers are intact and will

some of their deposit clients drift off into
mutual funds, have responded by
launching mutual fund families of their
own, or marketing those of other fund
managers. Firms in each category have resume much of their pre-crisis course,
also launched in-house hedge funds or
funds of funds. Such cross-penetration but the contours of the [global asset
management] industry itself and the
among strategic groups of financial
intermediaries, each approaching the
business from a different direction, makes
global asset management markets one of
the most competitive in all of finance. impact on the various players that
Nevertheless, this cohort is likely to
change after the crisis. Independent
comprise it remain highly uncertain.
broker-dealers have at least temporarily
disappeared as the big players either, like
Lehman Brothers, failed, were absorbed, their market share. How this pans out will
such as Merrill Lynch or Bear Stearns, or be materially affected by the regulators as Ingo Walter, Ph.D., is director of SimCorp
converted to financial holding companies, they begin to price systemic risk or force StrategyLab and Seymour Milstein Pro-
in the case of Goldman Sachs and Morgan the separation of businesses whose fessor of Finance, Corporate Governance
Stanley. Universal banks in Europe and cohabitation could impose unacceptable and Ethics. He also serves as the Vice Dean
elsewhere are rethinking their business costs on the system. of Faculty at the Stern School of Business,
models based on what has happened. For New York University.
example, the future role of financial POST-CRISIS OUTLOOK
conglomerates active on both the sell-side So the global asset management industry
and the buy-side of the market may well is destined to live though some interesting
advance, despite the conflicts of interest times. The basic drivers are intact and will
built into the model. On the other hand, resume much of their pre-crisis course,
pure buy-side firms such as insurers and but the contours of the industry itself and
independent fund management com- the impact on the various players that
panies and those affiliated with comprise it remain highly uncertain.
commercial banks will be handed strong
marketing arguments that could bolster
18
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

# Externalise: using specialists to

reduce operational risk
and cost of operations
Triggered by the current market environment, asset managers are beginning
to focus greater attention on their IT infrastructures in their constant under-
taking to mitigate operational risk, find long-term cost savings and position
themselves for sustainable future growth. Looking for solutions, there might be
reasons to look beyond the organisation. by Karl Dait, Reporter

S
imCorps research among
major asset management firms
has identified a number of
common and unavoidable
challenges due to the waves of change
that continuously break over the global
asset management industry. Yet, if
professionally handled, there is scope to
reduce risk and save cost in dealing with
them.
OPERATING MODEL AND
UPGRADES
Best practice suggests that periodic
reviews of the overall IT operating model
are both necessary and worthwhile.
Deriving directly from the needs of the
business, the key question is: Is our IT
model fit for purpose? which leads to
further questions such as, Will it be
adequate to meet our needs in the short,
medium and long terms? Asset managers
uniformly state that they continually aim
shoring them, in order to gain best value
from internal staff and systems by
allowing them to concentrate on the core
competencies of the organisation. Hope-
fully, this will produce a robust, scalable
IT operating environment capable of
expanding and running a more focused
business.
Addressing the risk and total cost of
operations inevitably requires examination
of the upgrade process. Most IT platforms

The solutions ... typically to reduce operational risk and fixed costs,
flatten the cost curve over the life of the
need periodic upgrades and, in many
cases, annual upgrades. Whether clients

include outsourcing of particular operating model and weatherproof the

organisations IT capability in light of
carry out such upgrades themselves or
involve partners, there will always be

functions ... to concentrate on

new requirements from the marketplace, significant risk and cost. It can, however,
and at the same time support future be difficult, if not impossible, to identify

the core competencies of the

growth opportunities. These include,
among other things, new regulations,
reporting requirements or the ever-
organisation. growing list of new client demands. The
solutions to these questions typically
include outsourcing of particular
functions, whether near-shoring or off-
and monitor these factors.
For example, during an upgrade proce-
dure, internal or external IT staff are
likely to be deployed for some time, and
this cost can easily be calculated. However,
calculating the cost when others in the
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
non-operational parts of the organisation
are involved on an informal but time-
consuming basis can be a less straight-
forward task. At the same time, faulty or
incomplete upgrades put the daily
business at risk and can entail additional
costs if a system or capability is inoperative,
even for a short period.
Asset managers say that where upgrades
fail, it is largely due to faulty planning and
testing or because automated upgrade
procedures are not in place. Moreover,
because upgrades are relatively few and far
between as compared with routine daily,
weekly or monthly periodic IT functions,
staff involved may lack the recent
experience, which means that extra time is
required to relearn the procedures, and this
often represents a significant hidden cost.
INCIDENT AND PROBLEM
MANAGEMENT
Also, in the context of limiting operational
risk and total system cost, enterprise
system users say that encountering
particular problems or out-of-the-
ordinary incidents is a concern to them.
Again, the overarching issue is the
availability of suitably experienced staff,
whether in-house or at the outsourcing
partner, to fix the problem. The time taken
to sort problems out using available help
desk resources can be costly in terms of
downtime or when particular aspects of
system capabilities are inoperative.
Initially, the threat derives from not
knowing when the problem will be solved
and when the system will be up and
running again, and this impacts efficiency,
entails costs, and causes stress for all
parties involved. The mission-critical
importance of an asset managers central
data repository means that it is vital to
have able technicians on site who can
quick-fix one-off incidents. Practically,
however, an asset management business
does not necessarily need to retain
specialised and expensive in-house
resources in case a random, unlikely event
should occur.
IN-HOUSE STAFF OFTEN
UNLIKELY TO GAIN INCIDENT
MANAGEMENT EXPERIENCE
Another result of incidents and problems
taking place comparatively rarely is that
in-house staff do not gain adequate
incident management experience from
operating their systems on a regular basis.
Consequently, maintaining skills at a
suitable level to be able to respond quickly
and efficiently can be difficult. Again, this
requires experimentation and a relearning
process, even for well-qualified staff,
which can be long, frustrating and
ultimately costly.
The challenge that asset managers are
facing is to define how to maintain a high
degree of stability and continuity on their
system platforms, which is critical to the
overall running of the enterprise. At the
same time, the expense of retaining in-
house resources is not necessarily the most
cost-effective means of addressing these
needs. The result is that the lifecycle cost
of running the platform is difficult to
reduce, given the fixed costs of hardware
and in-house personnel.
SIMCORP SERVICES
In light of the challenges facing asset
management firms, SimCorp has
launched a series of new service offerings
under the name of Transitional and
Operational Services to supplement its
traditional implementation and educa-
tional services with the aim of harnessing
SimCorps very own and broad experience
in maintaining and operating its product,
SimCorp Dimension. To address asset
managers concerns, the new services will
allow asset managers to take advantage of
literally 100s of years of collective
experience in maintaining and operating
SimCorp Transition and Operational Services fall into three categories
1. Validation and testing
These services enable clients to call
on SimCorps highly qualified
consultants to assist in planning and
executing the testing and validation
of a SimCorp Dimension installation
following an upgrade, patch or
re-configuration. In essence, they add
their expertise, as well as a range of
automated processes, to in-house
staff, ensuring that processes are
highly optimised. The right test
methods are used, the procedures are
right the first time and less time is
wasted, consequently saving resources
and reducing the risk of outages due
to system failures.
2. Release and deployment
In this case, SimCorp Dimension
consultants take over the entire
upgrade process, including planning,
project management, preparation,
technical upgrade and testing within
a strictly controlled budget.
The result is that the upgrading is
carried out more efficiently and
within previously agreed cost
parameters. This reduces the call on
internal resources and upgrade-
related risk and saves time.
3. Incident and problem
These services address the SimCorp
Dimension clients challenge of how
to deal with one-off events efficiently
and can operate in four different
ways:
19
SimCorp provides certified
consultants in particular events,
for example, to substitute an
absent critical member of
in-house staff.
SimCorp provides consultants to
staff, train and implement the
asset managers own support desk
in the immediate post-upgrade
phase when most concerns arise,
for example from other members
of staff unfamiliar with the
upgraded system.
SimCorp offers the second
alternative but on a permanent
basis. A SimCorp consultant joins
the asset managers support team.
The financial institution has the
opportunity to outsource its
first-level support entirely to
SimCorp. The cost savings here in
terms of in-house overhead are
evident, while even greater
benefits derive from the wealth of
knowledge and experience that
SimCorps consultants accrue
from constantly working in the
field of problem-solving in
SimCorp Dimension matters.
20
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

# Externalise: using specialists to

reduce operational risk
and cost of operations

SimCorp Dimension and will help asset

managers mitigate risk, manage costs and asset managers will have the
opportunity to redeploy key staff to
provide a solid platform for future growth.

The new services offer asset managers

experienced systems professionals from
SimCorp to help address the less frequent more mission-critical business areas
or to reassign costs from being fixed
and more complex tasks involved in
maintaining and operating their SimCorp
Dimension installation. SimCorp offers
well-trained staff who provide high-
quality and targeted assistance in a range to variable in nature, which has an
immediate impact on the bottom line.
of disciplines that will ensure improved
system quality, greater availability and
more efficient problem resolution, all
contributing to lowering operational risk
and allowing asset managers to focus on
the day-to-day business.

REDUCE RISK AND COST OF

MAINTENANCE
The new services also give asset managers
the opportunity to significantly reduce
and manage costs in relation to
maintaining and operating their SimCorp
Dimension installation. SimCorps con-
sultants only work with SimCorp
Dimension and are able to use their pro-
prietary knowledge gained from years of
SimCorp Dimension development expe-
rience or the intimate knowledge of many
of SimCorps other clients in order to plan
and deploy high-quality system upgrades
or to quickly assess, analyse and resolve
issues. Additionally, asset managers will
have the opportunity to redeploy key staff
to more mission-critical business areas or
to reassign costs from being fixed to
variable in nature, which has an immediate
impact on the bottom line.
Finally, with all the efficiencies gained
from a more stable and reliable systems
maintenance and operations environment,
asset managers can assign their resources
to and direct their focus on areas that will
help support and position the business for
future growth such as acquiring new
clients, supporting new product lines or
expanding into new geographies. (For
more information on SimCorp Transition
and Operational Services, see Figure 2.)
The mitigation of operational risk and
overall cost management of maintenance,
operation and ongoing care of the
SimCorp Dimension platform remains
the priority of SimCorp Services. The
services have been developed on the basis
of input from a number of major financial
institutions and are designed to help
SimCorp Dimension clients position for
future growth. In this context, the broad
experience that SimCorp can bring to
these tasks plays a critical role.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 21

# 41% of the investment

management industry
in the red: structured cost management
approach separates winners from losers

The investment management industry has been through some of the toughest
times in its modern history. As a result, recent research indicates that 41% of
the entire industry is operating with cost rates at or above 99%, which basically
means that they are currently not profitable. Only 19% of companies surveyed
operate with cost rates of less than 85%. Financial top performers in the indus-
try tend to pursue structured cost reduction methodologies such as Business Pro-
cess Improvement (BPI) or Lean Six Sigma. by Lars Falkenberg, SimCorp StrategyLab and
Professor Michael Pinedo, Stern School of Business, NYU

T
he Global Investment
Management Cost Survey
2009, carried out by
SimCorp StrategyLab, re-
veals that as a direct reflection of the
pressure on profit in the industry 72% of
the companies surveyed claim that cost
management has gained increased
strategic importance. Only 20% of those
surveyed state that cost managements
strategic importance is the same as always.

Further, 43% of all investment firms

surveyed have been through cost-cutting
projects over the last two years. Of those
having undergone cost-cutting projects,
55% have been targeting cost of labour
and 32% have been looking to reduce
transaction life cycle cost. The level of
reduction sought varies significantly
when adjusting for investment man-
agement firm type. Topping cost-cutting
ambitions, companies working in fund
distribution have been looking to cut up
to 15% of their costs across the board,
including labour and other operational
costs.

Of all companies surveyed, only 41% on

average have been able to sustain the
achieved cost reductions for more than a
12 month period.
22
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# 41% of the investment
management industry
in the red: structured cost management
approach separates winners from losers
Read more about SimCorp StrategyLab at:
www.simcorpstrategylab.com
Short-term tactical versus long-term strategic cost management: watch the webcast with Professor Michael Pinedo,
Stern School of Business, New York University, at www.simcorp.com/reducecost
A general perception across the industry
seems to be that automation of processes
is the most important cost-cutting
strategy over the coming three years
period (41%). This is supported by an
average of 46% who think that increased
cost efficiency, greater process efficiency
and greater operational efficiency through
automation will be important aspects of
cost management in the future.
71% of those surveyed think that
increased competition will increase
pressure to rethink cost structures in their
organisations as well as regulatory
changes (66%) and pressure from
shareholders and investors (61%).
According to the results of the survey, top
performers in terms of ability to generate
profit (i.e. those with cost rates below
85%) seem to review their cost structure
every six months, and they use BPI or
Lean Six Sigma as cost reduction
methodologies. Further, they pursue an
active equity or multi-boutique invest-
ment strategy as well as make use of
external consultants in their cost
reduction projects. Also, the typical
duration of cost reduction projects seems
to be 712 months in these firms.
About the Global Invest-
ment Management Cost
Survey 2009
The survey is based on 100
CATI interviews with respon-
dents from around the world.
Not all respondents answered all
questions.
The specific interview distribu-
tion is 50 from Europe, 25 from
the United States and 25 from
the Asia-Pacific region.
Respondents were randomly
selected from industry databases,
and interviews were completed
after confirmation of meeting
screening criteria.
Only one contact person per
company was interviewed.
The questionnaire was created
by SimCorp StrategyLab and
was examined by The Nielsen
Company prior to fieldwork.
The SimCorp StrategyLab was
not revealed as the client behind
the study unless prompted by
the respondent.
All respondent answers are
anonymous unless they spe-
cifically agreed to have their
answers reviewed.
50% of the respondents use di-
rect distribution channels, while
27% use indirect distribution
channels and 23% work with
another type of distribution
channel.
Most (36%) of companies
interviewed have operations in
1 location, 22% in 23 locations,
14% in 46 locations and 28%
in 7 or more locations.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 23

# Prepare for growth:

summit conference in the global
financial industry
More than 200 delegates from the global financial industry came together for
one of this years most significant industry events; the 12th SimCorp Dimension
International User Community Meeting (IUCM). In Luxembourg, the second
largest investment fund centre in the world, representatives of the worlds lead-
ing financial institutions, SimCorp professionals and industry experts discussed
the prospects of growth from a strategic as well as an IT perspective.
by Rikke Baden, Reporter

T
he debate over long-term
market prospects continues
to rage, and though it is
difficult to gauge both the
length and severity of the downturn,
organisations should start aligning their
business towards growth. For this reason,
the headline for this years International
SimCorp Dimension User Community
Meeting was Prepare for growth.
Delegates from the global financial
industry participating in the two-day
event were introduced to an impressive
programme, combining industry experts
macro views of current challenges and
how to exploit post-crisis opportunities
with hands-on advice on how to mitigate
risk, reduce cost and enable growth. In
addition, participants had the opportunity
to gain early insight into SimCorp
Dimension development strategies and
discuss development plans with SimCorp
management. Finally, an extensive
programme of SimCorp Dimension
domain break-out streams allowed
participants to focus on specific parts of
the SimCorp Dimension solution with
domain experts of 12 different domains.
COURAGE TO INVEST IN THE
FUTURE
For SimCorp clients it is paramount to
know that the company, whose product
they have trusted to build their business
upon, is both solid and innovative. The
first part of the programme was dedicated
to SimCorps top management outlining
the financial situation of the company, the
strategic foundation and introducing new
services.
SimCorps CEO Peter L. Ravn welcomed
the audience and went over the figures
and the market situation as seen from a
SimCorp perspective. SimCorp is by no
means immune to the market environ-
ment, and Peter L. Ravn explain-ed that
SimCorp had experienced hesitancy in
the market resulting in some potentially
new clients postponing or calling off
planned investments in SimCorp
Dimension. On the other hand, he added
that a large number of clients have
24
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# Prepare for growth:
summit conference in the global
financial industry
assigned high priority to investing in
improved system platforms.Consequently,
overall, SimCorp is able to demonstrate
sustained and robust growth in a very
unstable market. SimCorp continues to
maintain focus on executing its long-term
strategy and continuously invests in
product innovation, including employee
training and development, and R&D, and
clients and investors can feel certain of
the robustness of the SimCorp business.
SimCorps CEO also took the time to
emphasise the ongoing and extending
business with existing clients as a
contributor to the continued success of
the company.
As keynote speaker at the event, Ingo Walters
extensive experience allowed him to capture
the audiences attention with an impressive
presentation that included hard facts, anecdotes,
academic research and valuable insight into the
long-term solutions to the current
financial situation.
Following the presentation of the
financial figures, Peter L. Ravn went back
to discussing the current market
environment. There was no doubt that the
financial turmoil means new challenges,
also for SimCorp. The market faces more
rigid requirements from regulators and
there is increased focus on operations
from top management. This will no doubt
change the agenda in the investment
management industry and increase focus
on risk mitigation, operational efficiency,
strategic cost management and scalability
in operations. In a direct response to these
challenges, SimCorp has established the
independent research institution
SimCorp StrategyLab, which aims to
build a bridge between research and
practice. It is the ambition of SimCorp
StrategyLab to show industry responsi-
bility and commitment by building
thought leadership and provide product
development input. Specifically, the work
aims to suggest ways to mitigate risk,
reduce cost and enable growth. And
though SimCorp StrategyLab conducts
its own research, quite a significant part of
the research is done in close partnerships
with respected academic institutions,
that may facilitate users to mitigate risk
individual academic researchers and other
expert partners.
In conclusion, Peter L. Ravn pointed out
that crises produce opportunities, and
although SimCorps market is affected by
the financial crisis and its business has not
come through unscathed, it deals with the
challenges and executes its business
model consistently. SimCorps commit-
ment to the industry is unwavering, Peter
L. Ravn concluded.
PERENNIAL GUARANTEE
Following Peter L. Ravn on stage were
respectively Chief Operating Officer
Torben Munch and the latest member of
SimCorps executive management board,
Chief Technology Officer Georg Hetrodt.
Georg Hetrodt demonstrated in his
presentation how SimCorp continues to
invest in R&D, aiming to improve quality
and reduce time to market. The overall
aim is to reach best-of-class status with
SimCorp Dimension. Product develop-
ment, although market- and client-
driven, is also pursued strategically, and
Hetrodt went over some of the
functionality in SimCorp Dimension
and enable growth, while Torben Munch
discussed the issue of cost management
and in particular the differing focus
between short-term and long-term cost
reduction. Though sustainable cost
reduction across the enterprise is the goal,
depending on corporate objectives, a
combination of short and long-term cost
management projects may be appropriate,
he said.
In a direct response to asset managers
search for improved cost management,
Torben Munch discussed the need for
periodically reviewing ones business
operating model. Organisations will
concentrate on their core business, and as
a result firms may outsource or off shore/
near shore certain functions. Some of
these may be services that can be supplied
by SimCorp. As a reaction to the market
situation, SimCorp offers a number of
professional services related to im-
plementation, system upgrade and testing,
tasks that are not usually within the core
scope of the asset managers business, and
consequently can be outsourced. On
grounds of experience, best practice
know-how as well as proven and trusted
standards, SimCorp can provide these
services and consequently free asset
managers internal resources.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
Further to these services, SimCorp has
also implemented the so-called IST
project an international specialist team.
Torben Munch described how the IST
service brings technical and business
competences together and helps to
increase the quality of service requests.
More importantly, it ensures a much
faster time cycle for solutions to any
SimCorp Dimension system issues.
Experience shows that by combining
knowledge from our market units and our
system development department,
SimCorp can provide the best possible
service to its clients including shorter
response time, higher quality and lean
processes, he explained.
Munch concluded the presentation by
saying that partnering with SimCorp
provides the client with a perennial
guarantee of continued investment in
R&D, lasting client involvement, strong
software and professional services, reliable
support in all client time zones and
dedicated commitment to the asset
management industry.
AFTER THE CRISIS
In order to understand the financial crisis,
and more importantly, how to move
beyond the crisis, director of SimCorp
StrategyLab, Professor Ingo Walter of
Stern School of Business in New York,
presented a macro view of the global asset
management industry, including an
outline of the industrys development
over the past 50 years in US and Europe.
As keynote speaker at the event, Ingo
Walters extensive experience allowed
him to capture the audiences attention
with an impressive presentation that
included hard facts, anecdotes, academic
research and valuable insight into the
long-term solutions to the current
financial situation. Among other things,
Professor Walter discussed aspects of
scale and scope in the asset management
industry and argued that there is no
credible evidence that bigger is in fact
Keynote speaker Professor Ingo Walter, Director of SimCorp StrategyLab
better. Though organisations can gain
scale economies and operating efficiency
through technology, the flipside may be
complexity and bureaucracy. Looking to
the future, Professor Walter said that
winners and losers in the global asset
management industry will be separated
by capital strength, a strong global brand,
structured risk management, and, not
least, qualified and motivated staff.
AWARDING RISK
MANAGEMENT EXCELLENCE
While preparing for the future, the
industry is realising the need for a stricter
discipline around risk management.
Earlier this year SimCorp StrategyLab
invited investment management
institutions to participate in an assessment
of their ability to mitigate market risk,
operational risk and governance risk. The
assessment was based on the institutions
achievements and developments
accomplished in the period from 1
August 2008 to 31 July 2009 and the
winner would receive the Risk
Management Excellence Award 2009.
An international jury consisting of
distinguished specialists and academics
within finance, governance and risk
management evaluated the incoming
suggestions and named MEAG the
winner of the SimCorp StrategyLab Risk
Management Excellence Award 2009.
25
The jury included Professor Caspar Rose
of Copenhagen Business School,
Professor Rene Adams of University of
Queensland, Professor and Director of
SimCorp StrategyLab Ingo Walter of
Stern School of Business (NYU) and
SimCorps CEO, Peter L. Ravn.
The SimCorp StrategyLab Risk Mana-
gement Excellence Award has been
established for the purpose of rewarding
and promoting best practise within risk
management in the global investment
management industry.
In Luxembourg, MEAG (Munich
ERGO Asset Management GmbH)
received the award for their thoroughly
thought-through and implemented risk
policy.1 MEAG is part of Munich Re and
provides advice on strategic asset
allocation, risk management and asset-
liability management, combined with
professional investment management.
MEAG manages approximately 186
billion worth of assets on behalf of
Munich Re, the worlds largest reinsur-
ance group.
LIVE WORKSHOPS WITH
FOCUS ON RISK, COST AND
GROWTH 1 Read more about MEAGs risk approach in the article
The business challenges within the areas MEAG risk management culture par excellence on pages
710 in this issue of Journal of Applied IT and Investment
of risk, cost and growth were individually Management .
26
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
# Prepare for growth:
summit conference in the global
financial industry
analysed and further debated in three live
workshops presented by experts within
these fields. To combine academia with
practise, SimCorp Dimension specialists
offered their know-how and explained
how the flexibility of SimCorp
Dimension can meet the challenges the
industry is facing within the areas of risk,
cost and growth.
INCREASED FOCUS ON RISK
MANAGEMENT
Caspar Rose, professor at the Copenhagen
Business School and editor of the book
Understanding the financial crisis:
investment, risk and governance,
discussed the various aspects of risk in the
workshop Mitigating risk, including
governance, compliance, systemic, market,
credit, liquidity, reputational and
operational risk. In particular the areas of
credit risk and operational risk were
analysed. While depicting the current
market situation based on recent research,
Caspar Rose, challenged the audience to
evaluate their own risk exposure.
A survey conducted and published by
SimCorp StrategyLab in April 2009
revealed that despite the current situation
in the financial markets, the risk function
has lost status in organisations and has
moved down the reporting line. At the
same time, the role and responsibility of
the risk function has been extended.
Casper Rose demonstrated how current
risk management models have turned out
to be insufficient, how government and
board supervision have failed, and how
increasingly complex financially struc-
tured products have further impaired the
situation. During a situation of financial
crisis and instability, it becomes easier to
spot operational risk with focus primarily
on fraud, wrongful advice, and IT
breakdown. It becomes increasingly
crucial to identify the key risk indicators,
and proper IT solutions play an important
role in the resolution process.
Having discussed the predominant
strategic challenges investment managers
are facing from a risk perspective, experts
in the workshop demonstrated how
SimCorp Dimension may directly or
indirectly provide the solution to the
above challenges.
SURVIVAL OF THE FITTEST
ADAPTING TO SURVIVE
Reducing cost was the theme of another
workshop hosted by principal at Deloitte
Consulting in New York, Adam
Schneider. While the recessionary climate
has shifted IT from being strictly a
support function to playing a critical,
strategic cost management role, organi-
sations depend more on IT than ever
before. Asset managers increasingly see
technology as core to their cost structure,
operations and service strategy and thus
central to differentiation and competitive
advantage.
The credit crunch crisis and the effect it
has had on investment management firms
has, among other things, forced financial
institutions to look more closely at their
cost structures. Assets under management
have declined significantly and margins
have been cut. Consequently, investment
management firms have looked to the
nearest and most basic tools for cost
cutting such as reducing headcount to cut
the cost of labour and closing down
business lines. These are traditionally
short-term and very tactical solutions, but
looking ahead, professional investment
managers will need to consider more
strategic answers as other challenges face
their business environment including
increased competition, tighter regulatory
requirements, and increasing demands
from clients. Adam Schneider argued in
his presentation that it is not necessarily
the strongest of species that survives in
this environment. More importantly, it is
the one most adaptable to change.
According to Mr Schneider there are four
key challenges an investment manage-
ment firm must adapt to in order to
survive: regulatory change, relationship
repair, product failures and financial
repair. Adam Schneiders formula for cost
reduction is a three-step-model: define
the goal, define functions and benchmark,
and finally, adapt the business model for
the future.
While it may sound simple, Adam
Schneider concludes that no one has
really come up with an easy-to-execute
plan, but advises financial firms to aim for
improvement it will never be perfect in
any case.
BACK TO NORMAL?
THIS IS THE NEW NORMAL
In the last live workshop, professor Paul
Verdin debated the strategic challenges of
how to ensure profitable growth in the
aftermath of the crisis. Under the headline
Enabling growth, professor Verdin offered
insights into growth in the investment
management industry and SimCorp
Dimension experts suggested efficient
solutions to meet the challenges as seen
from an IT architectural perspective.
Paul Verdin, who, among other positions,
holds the Chair of Strategy and Orga-
nisation at Solvay Business School in
Brussels, began his presentation by
drawing a picture of the scene today.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
Though we are moving beyond the worst
of the crisis, there are still a number of
governance, leadership and management
issues in the financial industry that
remain unsolved. A consequence of the
credit squeeze is the limited pass-through
of liquidity in the economy and there is
still enormous potential for policy errors.
Those who wait for a return to normal
will wait in vain. This is the new normal,
Professor Verdin said. More importantly,
those who blame the economy or the
industry for the circumstances have
misunderstood the situation. A companys
success is entirely dependent on what the
company does, or does not do. A company
does not fail because of what the world
does to it, but because of what it does to
itself. In other words, the most important
thing a company can do is to know and
understand its clients, the market and its
own strengths and adapt accordingly.
A first step forward is establishing a solid
strategy that addresses at least three basic
questions: Do you understand the
competitive dynamics in your industry?
Are you clear about your competitive
advantage? And do you know your core
competences, your unique strategic assets
and treasure and nurture them? Paul
Verdin points out, however, that growth is
not a strategy in itself. Growth is the
result of a good strategy, and a good
strategy is one that makes money in a
sustainable, durable way. Professor Verdin
emphasises that a good strategy includes
continued investment in the future. It is
focused on continuous value creation for
clients and this obviously requires that
businesses know and understand what
signifies value to its clients and how to
deliver it better than anyone else. Old-
fashioned client-orientation is paramount.
SIMCORP DIMENSION
ROAD MAP
As the situation in the global financial
markets has intensified, professional
investment managers look for solutions to
help them meet and overcome the
While it may sound simple, Adam Schneider
concludes that no one has really come up with
an easy-to-execute plan, but advises financial
firms to aim for improvement it will never
be perfect in any case.
challenges in the industry. Having the
right IT platform is paramount, and
delegates in the IUCM meeting were
thus anxious to learn more about the new
and future developments within SimCorp
Dimension.
While SimCorp Dimension is an
enterprise solution that provides com-
prehensive support across the entire
investment management process, the
solution is also completely modular.
Investment management businesses are
different in size, focus, and operating
model and SimCorp Dimension can be
configured precisely to an organisations
needs, now and in the future. To provide
an overview, vice president of product
management at SimCorp, Leen Kuijken,
presented the road map for future
developments within SimCorp Dimen-
sion. SimCorp spends more than 25% of
its revenue on R&D, and approximately
120,000 man-hours on each biannually
updated version of the product and
Kuijkens presentation gave a valuable
insight into how these resources are
allocated and what the investment
managers using SimCorp Dimension can
expect from their IT platform.
Product development in SimCorp is
market-driven and based on systematic
collection and prioritisation of client and
market research, requirements and
demands. The past years have more than
ever before been characterised by a
changing market environment, intro-
ducing new challenges, including more
rigid requirements from regulators and
authorities and also a stronger focus on
operations from top management. The
changing agenda in the investment
management industry introduces demands
on risk mitigation, operational efficiency
and strategic cost management and
scalability in operations. Leen Kuijken
demonstrated how SimCorp Dimension
can meet these challenges in terms of
product functionality. She introduced a
number of new and forthcoming
27
improvements within front-to-back office,
financial instruments and system IUCM 2009 at a glance
environment, all centred around the 200 participants
perpetual themes of risk, cost and growth. 14 countries
70+ SimCorp Dimension
DOMAIN BREAKOUT STREAMS clients
While the event in Luxembourg had a
strategic focus, participants who came for Keynote speaker
more practical, hands-on advice did not Professor Ingo Walter,
leave empty-handed. In an impressive Director of SimCorp StrategyLab
selection of 12 different breakout streams,
participants were able to select Guest speakers
presentations on specific SimCorp Professor Caspar Rose,
Dimension functionality that targets Copenhagen Business School
issues facing professional investment Professor Paul Verdin,
managers. The sessions provided KU Leuven, Belgium
participants with insight into new and INSEAD, France
functionality and development plans for Adam Schneider'
forthcoming SimCorp Dimension principal at Deloitte,
releases. Practical examples served to Consulting LLP
illustrate a selection of main features and
benefits. Winner of the 2009 SimCorp
StrategyLab Risk Management
A SUCCESSFUL AND Excellence Award
SIGNIFICANT EVENT TO BE MEAG
CONTINUED
The International SimCorp Dimension Location
User Community Meeting in Luxem- Abbeye de Neumnster,
bourg was the 12th annual meeting, Luxembourg
gathering SimCorp Dimension users
from all over the world in what has turned Dates
out to be one of this years most significant 17-18 September 2009
events of its kind in the asset management
industry. According to SimCorp sources,
the planning of next years event has
already started.
28
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

# The role of the asset management

industry in the funding of
the post-crisis financial system:
some considerations
The asset management industry is a central component of the greater European
economy. Over the course of this year, we have seen a gradual return to health,
as illustrated in recent industry data.1 In Europe, there are promising signs
of a recovery in investor confidence, with net inflows into UCITS funds, for
example, increasing to 38 billion in July, in line with a trend of total assets
in UCITS rising by 5.4 percent, or 246 billion, since the end of 2008. Net
inflows have now been positive for three quarters in a row, following eighteen
months of net withdrawals. by Peter De Proft, Director General of the European Fund and Asset
Management Association (EFAMA)

H
owever, it is not the time
to become complacent.
Despite the positive signs
of growth, we are faced
with a much-changed financial landscape
and one that is still in a state of flux. It is
important that we properly identify how
to steer a safe course through this new
financial system and take advantage of
called back to basics, which will have far-
reaching implications for the worldwide
financial system. This boring model will
lead to:
a recapitalisation of toxic losses and
increase in capital due to higher T1
requirements;
a permanent shortage of classic credit
availability because of a dramatic
reaching challenges for the asset
management industry that will ultimately
reshape it. There are four particularly
strong trends developing at this point.
Conflicting pressure on products
and sales
In the past, conflicts of interest regularly
created tension between asset managers
belonging to a larger financial con-

The reshuffling of the banking reduction in leverage;

more sophisticated collateral require-
glomerate and their parent group. These
imposed ambitious sales figures, resulting

business model unquestionably ments for assets;

development of more off-balance-
in the development of creative products
that were more of interest to the profit

implies far-reaching challenges for sheet products on both the asset and
liability side;
and loss account of the group than to the
clients.

the asset management industry.
1 Research and input for this article by courtesy of Edwin Van
der Ouderaa, Partner, Accenture.
the opportunities it presents. In the
following, I would like to outline some of
the considerations we must bear in mind
as we look to negotiate this landscape.
BANKS ARE FORCED TO
ADOPT A BORING BUSINESS
MODEL
As a result of the financial crisis of the
past two years, banks have been forced to
move to a different business model, often
an increased liquidity level for assets
and liabilities on the balance sheet
resulting in a pressing need for
transferable products, clear valuation
rules and central counterparty clearing
mechanisms;
the development of transparent, trust-
ed products on the liability side to
reconnect with their retail clients.
KEY TRENDS AND
CHALLENGES IN ASSET
MANAGEMENT
The reshuffling of the banking business
model unquestionably implies far-
For each investment manager, there is
clearly now a need to rebuild customer
trust and to review the distribution model
and the sales policy. Trust will be regained
by crystal clear application of transparency
in pricing, by avoiding conflicts of interest
between sales policy and the customers
needs, by providing appropriate advice
adapted to the clients profile, and by
constantly proving the added value of
active management. Products with
unsustainable promises will have to be
taken off the shelf and cannot be
promoted any longer.
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
From a marketing point of view, the key
question about branding that has to be
resolved is the credibility or trust of
distribution through the parents brand
versus the asset managers reputation and
reliability.
Over the past eighteen months, we have
already noticed a strong tendency towards
consolidation amongst asset managers,
combined with a trend for more
independence from parents, be they
banks, insurers or other financial
conglomerates. These phenomena have
originated in and been strongly influenced
by:
a n ongoing trend towards open
architecture and guided architecture
distribution, i.e. distribution by selling
products via third-party channels
outside of group structures;
raising cash for impaired banks by
selling off their asset managers or
parts of the business, sometimes also
by MBOs or IPOs;
pressure on margins pushing towards
scale-based mergers or, on the
contrary, towards the creation of
specialised boutiques.
Asset managers need to reposition
services and relations
The decreases in revenues (14%) and
margins (40%) experienced by asset
managers in 20082 are the result of a
number of converging factors. These
factors include the decline of assets under
management (AUM) at the same time as
increased focus on higher revenue
products, with products becoming more
expensive, for instance repos, bonds, and
collateral; the decreasing revenues of the
decline in securities lending due, for
example to a short-selling ban; and the
decline in performance and management
fees.
As part of the cost reduction exercise, the
established sales channels and distribution
models are under re-examination, leading
to the downsizing of sales offices and
investing in associations with new sales
channels.
Trading relations with counterparties are
coming under scrutiny, with counterparty
creditworthiness and business rationale
being re-evaluated, as well as with
concentration and sovereign risks being
reconsidered.
29
Peter De Proft, Director General of the
European Fund and Asset Management
Association (EFAMA)
Asset managers need to transform
internal processes in order to remain
relevant in terms of cost and risk
management
Innovation has always been driven by the
sell-side companies. Today, asset
managers will need to develop products
and processes based on their own
constraints and goals, and based on their
insight into the needs of the client. Sales
teams and product development will have
to work in a more closely coordinated
fashion in order to increase efficiency.
Automation of workflow and the
rationalising of systems will increase the
volumes treated and reduce the use of
manual operations and time of execution.
In a mid-year status report on the
evolution of fund processing stan-
dardisation published by EFAMA in
cooperation with SWIFT during the first
six months of 2009, the automation rate
of cross-border fund orders was shown to
have reached 69%. Although the total
automation rate in the Asia-Pacific region
lagged this somewhat, there was definite
progress as it reached 45% in the first half
2 Source:
of 2009, compared to 36% in Q4 of 2008. Accenture.
30
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp

# The role of the asset management

industry in the funding of
the post-crisis financial system:
some considerations

The constant and increasing

In spite of the progress made so far,
straight-through-processing (STP) still
has some way to go.
There is a surge of back office outsourcing
models at a much lower cost and a
questioning of what constitutes core
activities and what does not.
Clearly, the trend is an increased focus on
cost reductions:
T he unpredictability of many events
has forced asset managers to invent
further in terms of risk management
and operational infrastructure (non-
staff costs have increased by 9% in
2008),3 at the same time, asset
managers were able to reduce staff by
9% in 2008.3
All asset managers are seeking
redistribution of margin in the value
chain between distribution, transfer
agents, financial advisors, asset
management, etc.
The constant and increasing pace of
change in the regulatory environmentwill
have some serious consequences for the
organisation of daily business:
B
 ased on the global credit crisis, the
amount of regulation covering
advisory business will rise significantly,
driving the need for more centralised,
auditable advice.
T
 he increased need for more
transparency in alternative investing
will lead to strict risk management
capabilities.
CONVERGENCE OF CAPITAL
MARKET PLAYERS AROUND
ASSET MANAGERS TO FILL
THE CREDIT GAP
Once market confidence is restored,
mezzanine and other tranche financing
will return. However, given stronger
demand for high-quality collateral and
cash flows and larger haircuts by the
banks, credit is likely to be restricted for
years to come. Therefore, in order to fill
the gap, banks and asset managers can
facilitate the intervention of off-balance
sheet funding with semi-equity
instruments such as subordinate loans,
high-yield convertible bonds with
preferred dividend or guaranteed fees or
preferred equity, incorporated into legal
entities called Quasi-Equity Vehicles
(QEVs). This would allow for a matching
of demand and supply in cash with the
right risk profile.
These vehicles would offer new
investment opportunities and sources of
return for their investors. They would
create synergies of competency, where:
i nvestment bankers structure and
locate funding for deals, for example
through IPOs;
pace of change in the regulatory
environment will have some
serious consequences for the
organisation of daily business.
a sset managers package the shares, or
semi-shares, and sell them;
private equity analyses the investment
opportunities, providing due diligence
and manages the operational aspects
of these investment opportunities.
CONCLUSION: ASSET
MANAGERS HAVE AN
IMPORTANT ROLE TO PLAY AS
POSSIBLE TRANSFORMERS OF
THE NEW FINANCING WORLD
Along with the strategic goals of our
industry of strengthening the relationship
between investors and asset managers by
increasing product transparency for
investors, improving corporate govern-
ance in the industry and promoting the
need for long-term savings, asset
managers have the opportunity to become
important transformers of the new
financial architecture, filling the gap of
deleveraging by traditional banks as
described above.
The areas where we can most immediately
deliver this transformation as a cohesive
group are in mobilising and governing the
recapitalisation of the banking system
and transforming money-market and
longer-term funds into quasi-equity.
The downsizing of the back-to-basics
banks will lead to more independent asset
managers. There will be more tension
between independent asset management/
open architectures and hub and spoke
models, versus integrated distribution and
production ones. The need for liquidity
under stress will, in turn, lead to product
innovation. All of these developments
point to the asset management industry
having an unprecedented window of
opportunity for fundamental innovation.
EFAMA is the representative
association for the European
investment management
industry. It represents through
its 26 member associations
and 44 corporate members
approximately 11 trillion
in AUM, of which 6.4
trillion was managed by
approximately 53,000 funds
at the end of June 2009. Just
over 37,000 of these funds
were UCITS (Undertakings
for Collective Investments
in Transferable Securities)
funds.
3 Source:
Accenture.
 Imagine we could start again

Many decisions in life, once taken, are unfortunately irreversible. In the aftermath of the crisis, many investment
management firms agree that were it not for past operational decisions, more firms could be better strategically
positioned for whatever the future may hold.

However, evident to most, adapting to the near future requires a significantly improved ability to mitigate risk,
reduce cost and capture a profitable part of future growth. Some decisions can actually be corrected. In many
cases they ought to be. Think strategically when investing in software.

SimCorp Dimension is a scalable and modular STP front-to-back enterprise system for the investment management industry that enables
institutions to mitigate risk and reduce costs while enabling growth.

www.simcorp.com
MITIgaTe rISk reDuCe CoST enable growTH
32
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
BOOK REVIEW:
# Risk and Financial Catastrophe
Erik Banks, Palgrave Macmillan, 2009
R
isk and Financial Catas-
trophe presents an in-depth
discussion of the nature and
consequences of financial
disasters and the pragmatic solutions that
must be considered in order to cope with
such crises in the future. This highly
topical book tackles technical issues in a
readable, non-mathematical way and
presents the subject in a practical light
with the use of eight case studies of
market-wide, international catastrophes.
The book is divided into three parts:
Part I, The Nature of Catastrophe, sets the
stage by presenting a taxonomy of risk and
placing non-catastrophic and catastrophic
exposures into an overall framework. This
section also considers the unique
properties of catastrophe, exploring both
BOOK REVIEW:
# Strategy, Value and Risk:
The Real Options Approach, Second Edition
Jamie Rogers, Palgrave Macmillan, 2009
T
he surge of innovation in
information technology at
the end of the twentieth
century reduced the cost of
communications, which facilitated the
globalisation of production and capital
markets. Globalisation has in turn spurred
competition and consequently innovation.
Sustainable competitive advantage is an
increasingly difficult proposition in this
environment, a fact which raises a number
of issues for organisations such as how to
create and manage value, how to improve
natural and man-made events in relation
to frequency, severity and financial impact,
as well as the specific nature and formation
of financial disasters and how individual
institutions, and the financial system at
large, respond to such crises.
Part II, The Risk Framework, presents the
processes commonly used in the corporate
world to deal with risks, noting how such
processes may be suitable for non-
catastrophic events, but not for extreme
events. This section also considers a series
of techniques, tools and models that are
available to help quantify catastrophic
risk, illustrating their use in a practical
sense while also analysing their
limitations.
Part III, Practical Management, moves
into the practical dimension of the topic
an organisations capabilities to respond
and adapt, how to manage the effect of
competition on industry structures and
how to foster and manage innovation.
In response to these issues, the concept of
real options is having an impact and
influence on organisations. Real options
is a form of advanced financial analysis
that applies financial options theory to
real assets. The concept offers a framework
that can link value to risk and uncertainty,
and the ability to manage the strategic
opportunities that lie in an increasingly
by analysing a series of past disasters
including the emerging debt crisis of the
1980s, the October 1987 crash, the
Japanese banking crisis of the 1990s, the
Southeast Asian crisis of 1997, the
Russia/LTCM dislocation of 1998 and
the credit crisis that began in 2007. It
considers lessons learned, and then
proposes a series of prescriptive measures
to cope with future disasters.
ERIK BANKS is responsible for group
market risk and investment banking credit
risk at the European universal bank Uni-
Credit. Over the past 23 years, he has held
senior risk positions at Citibank and Merrill
Lynch and in the hedge fund sector in New
York, Tokyo, Hong Kong, London and
Munich. He is the author of more than 20
books on risk, derivatives, emerging markets
and governance.
dynamic environment. This book, for
practitioners and academics alike,
illustrates the issues with detailed case
studies.
JAMIE ROGERS is an executive director at
The Weston Group, a merchant bank based in
New York. He has extensive experience in a
range of areas that include valuation and risk
management in the financial, energy and
commodity markets, corporate finance and
derivatives.

SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009 33

Regulatory update
This quarterly regulatory update covers major new regulatory requirements
and substantial developments that affect the investment management industry.

CONSULTATION ON GREATER

REGULATION FOR UCITS DEPOSITARIES

The Directorate General Internal Market and Services (DGIMS) issued a
consultation paper on extending to private investors, existing proposed regulation of
professional investor depositaries.

In April 2009, the European Commission proposed a Directive on Alternative

Investment Funds Managers (AIFM), which was aimed at organising a regulatory
regime for investment products that are mainly aimed at professional investors. Part
of these proposals was that an alternative fund should appoint a depositary to safe-
keep its assets. In light of the Lehman collapse and the Madoff fraud, the DGIMS
has issued a consultation questionnaire with a view to stipulating similar depositary
protections to investors in UCITS compliant investment products.

Although the consultation period closed on 15 September those wishing to learn

more about the proposals can find details at: http://ec.europa.eu/internal_market/
consultations/2009/ucits_depositary_function_en.htm

KEY DECISIONS ON GIPS

On 19 October, the executive committee (EC) that governs the Global
Investment Performance Standards (GIPS) released a list of its key decisions.

Although the final version of the revised standards is not due to be published
until the end of the year, the EC expects that they are unlikely to be changed.
They cover areas such as fair value, risk, standard deviation, non-fee-paying
portfolios, proprietary assets, error correction, taxation issues, compliance
statements and verification status. Readers may learn more about the ECs
decisions at: www.gipsstandards.org/news/releases/2009/singapore_summary.
html

SOLVENCY II IMPLEMENTATION
MEASURES
CEIOPS the Committee of European Insurance and Occupational Pensions
Supervisors has reported that it received over 20,000 comments from 105
stakeholders in the context of Solvency II consultations. It is currently examining
these submissions and will put forward a third set of draft advice to its members by
the end of October. Consultation on this advice will then remain open until 11
December 2009. See: www.ceiops.eu//content/blogsection/9/1/5/5/

BASEL II ENHANCEMENTS TO
FRAMEWORK
The Basel Committee on Banking Supervision announced in July that it had
finalised its proposals for enhancing the Basel II framework. It is strengthening the
Pillar 1 minimum capital requirements for certain securitisations. It has addressed
some weaknesses in the Pillar II supervisory review process that came to light in
the course of the financial turmoil since 2007. Pillar 3 market discipline
requirements have been strengthened in certain areas. The Committee expected
banks and their supervisors to begin implementing the Pillar 2 guidance immediately
and that in respect of Pillars 1 and 3 no later than 31 December 2010. For details
of these proposals see: www.bis.org/publ/bcbs157.htm
34
December 2009 JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT SimCorp
Recent research
and white papers
# RECOVERING FROM THE STORM: THE NEW
ECONOMIC REALITY FOR U.S. ASSET MANAGERS
After a quarter century of largely uninterrupted growth and profitability, the recent
economic and financial crisis has challenged asset managers in ways not seen in
generations. While markets recovered to year-end 2008 levels during the summer
of 2009, it is worth recalling that in 2008 the S&P 500 experienced the second-
largest contraction in its history, rivalling the catastrophic losses of the Great
Depression. The market downturn caused net flows to long-term mutual funds to
turn negative for the first time since the 1970s, raising questions about the lasting
impact on the US investing culture.
Recovering From The Storm, McKinsey Financial Services Practice
www.mckinsey.com/clientservice/Financial_Services/~/media/Reports/Financial_Services/
Recovering_From_the_StormFINAL.ashx
McKinsey & Company, 30 pages, 2009
# MCKINSEY & COMPANY 2009 ASSET MANAGE-
MENT SURVEY: WILL THE GOOSE KEEP LAYING
GOLDEN EGGS?
Asset managers are focusing on rebuilding profitability after a turbulent 2008 and
a tough 2009. Amid tightening regulations, the new normal raises the bar in
distribution, and asset managers must adapt to a more challenging environment.
For further information, please contact:
John Cheetham, McKinsey & Company, London
john_cheetham@mckinsey.com, Tel: + 44 207 961 5294
#
LESSONS FROM CHANGE: RESTORING TRUST IN
THE ASSET MANAGEMENT INDUSTRY
A year after the collapse of Lehman Brothers, the asset management industry
struggles to adapt to a changed world. The global credit crunch had catastrophic
effects on every segment of the asset management industry. Most businesses had to
cope with only a few quarters of declining sales, whereas asset management saw
40% of its entire value plunge. Client portfolios were decimated and revenue
streams savaged in just a few horrendous months. Now, the survivors have begun
the hard work of rebuilding their business in a changed world.
Lessons from change: Restoring trust in the asset management industry
www.ey.com/Publication/vwLUAssets/LFC-asset_management/$FILE/LFC_Asset_management.pdf
Ernst & Young, 32 pages, 2009
#
THE 2009 ERNST & YOUNG BUSINESS RISK
REPORT ASSET MANAGEMENT
The crisis experienced in the financial market during 2008 has had a dramatic
impact on asset management. Understanding and mitigating market risks is
placing great pressure on managers as they seek to deliver value for investors. The
financial crisis will force asset management to address the challenges in this report
head-on and at an early stage in order to manage the challenges effectively and
transform them from risks into opportunities.
The 2009 Ernst & Young business risk report Asset Management
www.ey.com/Publication/vwLUAssets/The_2009_Ernst_Young_business_risk_report-_Asset_
management/$FILE/11618_SBR2_Asset_Mgmt_2009_sec.pdf
Ernst & Young in association with Oxford Analytica, 24 pages, 2009
# UCITS IV WHICH BUSINESS MODEL FOR
TOMORROW?
Markets are now set to embrace the latest phase of UCITS development with the
implementation of UCITS IV in July 2011. While this process is still at an early
stage, preparations for its introduction have created a raft of detailed new
regulations and involved considerable industry consultation and participation. This
report is based on a major RBC Dexia Investor Services/KPMG study assessing
the likely impact of UCITS IV on the asset management industry. The purpose of
the study was to gather opinions from a broad range of asset managers six months
after the final text of the new UCITS IV Directive was approved by the European
Parliament.
UCITS IV: Which business model for tomorrow?
www.kpmg.lu/Download/Surveys/2009/FINAL%20REPORT%20-%20UCITS%20IV%20-%20
which%20business%20model%20for%20tomorrow.pdf
KPMG & RBC Dexia Investor Services, 39 pages, 2009
# FINANCIAL CRISIS MANUAL: A GUIDE TO THE
LAWS, REGULATIONS AND CONTRACTS OF THE
FINANCIAL CRISIS
The Davis Polk Financial Crisis Manual has been written for anyone who wants
to understand the flurry of new legislation, old law used in new ways, contracts
with Treasury, press releases, frequently asked questions, guidelines and other
rulemaking that has occurred at a dizzying speed over the last year and a half as a
result of the financial crisis. This Manual attempts to describe these US financial
crisis laws as they relate to financial institutions and is also meant to be, through
the hyperlinks in each chapter, a reference work gathering in one place the scattered
primary sources of financial crisis laws.
Financial Crisis Manual: A Guide to the Laws, Regulations and Contracts of the Financial Crisis
www.davispolk.com/Davis-Polk-Publishes-Comprehensive-Financial-Crisis-Manual-09-24-2009/
Davis Polk, 279 pages, 2009
#
MANAGING RISK IN PERILOUS TIMES:
PRACTICAL STEPS TO ACCELERATE RECOVERY
Managing risk in perilous times: Practical steps to accelerate recovery is a
briefing paper written by the Economist Intelligence Unit and sponsored by ACE,
KPMG, SAP and Towers Perrin. The findings are based on two main strands of
research:
A programme of desk research, conducted by the Economist Intelligence Unit,
which examined current academic and industry thinking around risk
management, with a particular focus on financial institutions.
A series of interviews in which senior risk professionals, financial services
participants and academics were invited to give their views. In some cases,
interviewees have chosen to remain anonymous.
Managing risk in perilous times
www.kpmg.com.vn/.../Managing%20Risk%20in%20Perilous%20Times%20-%20Practical%20Steps.pdf
The Economist Intelligence Unit Limited 2009, 22 pages, 2009
SimCorp JOURNAL OF APPLIED IT AND INVESTMENT MANAGEMENT December 2009
# CONQUERING THE CRISIS: GLOBAL ASSET
MANAGEMENT 2009
by Kai Kramer, Brent Beardsley, Monish Kumar, Andy Maguire, Philippe Morel, Tjun Tang
and Hlne Donnadieu
Boston Consulting Group has released this publication with the following
introduction: The asset management industry has been at the core of the global
financial crisis. Declining financial markets and a lack of transparency regarding
the risks of certain products have prompted some investors to question the
judgment of the people who manage their money. This July 2009 report provides a
detailed analysis of the dilemmas that asset managers currently face, and offers
concrete solutions to help them weather the crisis and emerge well-positioned for
the future.
Conquering the Crisis: Global Asset Management 2009, BCG publications
www.bcg.com/expertise_impact/publications/PublicationDetails.aspx?id=tcm:12-26920
The Boston Consulting Group, 32 pages, July 2009
# WINDS OF CHANGE: FIRST-HALF 2009 M&A
ACTIVITY IN THE GLOBAL ASSET
MANAGEMENT, BROKER/DEALER, AND
FINANCIAL TECHNOLOGY INDUSTRIES
In this August 2009 report, New York investment banking group Jefferies Putnam
Lovell describe the trends they expect to see in financial services mergers and
acquisitions over the next twelve months. With the capital markets recovering
and investor fears receding, M&A activity will be fuelled more by buyers seeking
to grow than by sellers anxious to survive, it predicts. The report outlines a number
of other likely trends driven by the growing confidence that the worst of the
economic crisis has passed.
Winds of change, Jefferies Putnam Lovell Strategic Insight reports
www.jefferies.com/cositemgr.pl/html/Industries/FinancialBusinessServices/StrategicInsight/index.shtml
Jefferies Putnam Lovell, 2009
# RAPID AND SUSTAINED COST MANAGEMENT
In this publication, Accenture consultants question how successful companies
achieve high performance during times of economic turmoil. It lists the challenges
that companies face as: relentless competition, increased earnings expectations,
complex global operations, regulatory compliance, efficiency imperatives,
proliferating risks and the sheer speed of change. The web link below leads to a
series of downloadable documents and podcasts on the theme of cost control and
management.
Rapid and Sustained Cost Management
www.accenture.com/Global/Consulting/CostManagement.htm
Accenture Consulting, 2009
# STRATEGIC COST MANAGEMENT: PROTECTING
PROFITS AND ENHANCING BUSINESS
PERFORMANCE IN A TURBULENT ECONOMIC
ENVIRONMENT. WHY COST CUTTING GOES
WRONG
Along similar lines to the Accenture document, KPMG says, Even in the good
times, many organisations make a poor fist of managing their costs. They are
unlikely to get better at it just because business conditions have become a lot
tougher. This KPMG study entitled Rethinking Cost Structures undertaken
with the Economist Intelligence Unit, found that nine out of ten of the companies
examined were, by their own admission, failing to optimise their cost reduction
efforts.
Rethinking cost structures, KPMG & Economist Intelligence Unit
www.kpmg.com.au/Default.aspx?TabID=189...3476
KPMG Australia, 2009
35
AR COST MANAGEMENT IN A DOWNTURN:
SHORT- AND LONG-TERM STRATEGIES FOR
DEALING WITH BUDGET PRESSURES
by Merv Adrian
The executive summary for this document says: Top analyst relations (AR)
professionals are in control of their budget, manage that spending to achieve
committed objectives, and are prepared to defend and document costs accordingly.
In a period of economic uncertainty, such preparation is essential to preserving AR
services when executive management demands across-the-board cost cuts. Even
AR teams that have yet to master their budget planning and defence can cut costs
wisely by combining short-term, straightforward efficiencies with longer-term,
more strategic adjustments including reassigning certain expenses to the budgets
of other stakeholders in marketing, sales, and events.
AR cost management in a downturn, Forrester Research Decision Tools
www.forrester.com/Research/Document/0,7211,44975,00.html
Forrester Research, 10 pages, 2009
# A GLIMMER OF HOPE: GROWTH PROSPECTS IN
THE GLOBAL INSURANCE INDUSTRY AND THE
ESCALATION OF RISK AND CAPITAL
MANAGEMENT
This June 2009, joint publication from KPMG and the Economist Intelligence
Unit is the first of a two-part investigation of the prospects for growth in the
insurance industry. Based on research among over three hundred insurance
company executives the surveys conclusions are generally optimistic. The second
half of the report, to be released later this year, will track respondents attitudes to
risk and capital management.
A glimmer of hope, KPMG & Economist Intelligence Unit
www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/A-glimmer-of-hope.aspx
KPMG International, 2009
# THE DAY AFTER TOMORROW FOR ASSET
MANAGEMENT
In this report, PricewaterhouseCoopers discusses some of the key issues facing the
asset management industry. Among these, it lists:
Business models under stress.
How will investors react in the post-crisis environment?
Will fiscal pressures change the shape of the industry?
G8, G20: A new spirit of co-operation. What will be the consequences for asset
managers?
How will the regulation impact asset managers?
These and a number of other big industry challenges are reviewed and discussed in
the report.
The day after tomorrow for asset management, PwC Global Day after tomorrow perspective series
www.pwc.com/gx/en/asset-management/day-after-tomorrow/index.jhtml
PricewaterhouseCoopers, 34 pages, 2009
New reports published and information which could be relevant for listing can be submitted
for review to: Editorial Assistant Mette Trier, mette.trier@simcorp.com
MITIGATE RISK REDUCE COST ENABLE GROWTH
SimCorp is a leading provider of highly specialised software and financial know-how for the financial sector. Established
in 1971, with approximately 1,000 employees, SimCorp is listed on the NASDAQ OMX Copenhagen A/S. The SimCorp
system, SimCorp Dimension, is sold, implemented and supported by the head office in Copenhagen and subsidiaries and
branches in Amsterdam, Brussels, Frankfurt, Helsinki, Hong Kong, Kiev, London, Los Angeles, Munich, New York, Oslo,
Paris, Singapore, Stockholm, Sydney, Toronto, Vienna and Zurich.

www.simcorp.com