Investors face significant operational risk challenges, heightened by trend towards niche alternative investment strategies

bfinance, the independent investment consultancy, today announces the appointment of Matthew Siddick as Operational Risk Solutions Senior Director. Siddick will head up bfinance’s new Operational Risk Solutions advisory unit, based in the firm’s London office. He brings more than 14 years of experience in financial services, pensions and investments, most recently as head of EMEA Operational Due Diligence at Aon. He reports to Duncan Higgs, Managing Director and Head of Portfolio Solutions.

Siddick represents bfinance’s first senior appointment dedicated solely to Operational Due Diligence (“ODD”) matters. He will focus on enhancing and developing solutions designed to support investors’ operational risk requirements, both at the time of appointing external asset managers and over the longer-term as part of ongoing due diligence.

The move reflects the evolving ODD challenges faced by the firm’s asset owner clients—such as pension funds, insurers and endowments—who are seeking to conduct thorough analysis of external asset managers in order to protect against losses incurred through operational failures, such as fraud or blow-up. “While there have been significant improvements in asset managers’ operational control in the 10-plus years since the Global Financial Crisis, operational deficiencies still represent a major potential pitfall,” says Higgs. “Today we see growing complexities within areas such as cyber security.”

Higher allocations to alternative investments can also increase the ODD burden: these strategies bring further potential for exposure to differentiated risks such as those related to complex counterparty relationships, the use of leverage and private market valuation methodologies. Alternative asset classes—particularly private markets—have represented an increasingly prominent portion of bfinance’s manager research. During the 12 months to June 30^th 2021, 45% of all new manager searches initiated by bfinance clients were focused on private markets, including a number of less conventional sectors such as Trade Finance, Impact Real Estate, Equipment Leasing and high-yielding Real Estate Debt.

Siddick was formerly Head of EMEA Operational Due Diligence at Aon where he led the firm’s London based ODD group responsible for evaluating the operational risk of managers and funds held by Aon’s clients across the firm’s Advisory and Fiduciary platforms. He holds a Bachelor of Arts Degree in Economics from the University of Sussex and is a CAIA Charterholder.

Duncan Higgs, Managing Director and Head of Portfolio Solutions at bfinance, said: “We are delighted to welcome Matt to the team: he brings outstanding experience in the field. This appointment is an important step in the enhancement of the firm’s ODD capability as we look to support our asset owner clients with the challenges they currently face.”

Matthew Siddick, Senior Director and Head of Operational Risk Solutions at bfinance, said: “I take great pleasure in joining bfinance and engaging with the firm’s diverse global client base. As investors’ strategies become ever more complex and portfolios increasingly gain exposure to alternative asset classes, there is a growing operational risk burden. It is crucial for investors to be able to demonstrate that related operational risks have been evaluated, measured and monitored in a structured and well-documented fashion.”