Luc Neubergone of the most recognized risk experts in the market, spoke to Paperjam about the history, philosophy and objectives of Global Fund Risk
How did you come up with the idea of starting an association like Global Fund Risk?
Luc Neuberg. – “In 2021, the Financial Stability Board (FSB) identified the investment funds industry as the most important sector in the area of non-bank financial intermediation. Since then, as during the 2007 crisis, the recent turbulence in credit institutions has once again shaken the confidence of investors and savers.
The global volume of investment funds, representing more than $70 trillion in assets under management, a level close to global GDP, is surprising. By comparison, according to the Bank for International Settlements (BIS), this is almost equal to the global size of bank balance sheets.
It is therefore clear that investment funds play a major role in the global economy and that securing investor confidence is crucial. The lessons of previous financial crises are clear; risk management has become a key element for the sustainability of the financial system. Now an integral part of the system, even more than added value, risk management has become an element of its DNA.
Is Luxembourg the right place to launch an initiative that aims to be global?
“Yes absolutely. As a leader in the implementation of European fund regulations, Luxembourg has played a central role in opening up the market for international distribution of funds and in providing access to international investments for European private and institutional clients.
And with more than 5000 billion assets under management in investment funds at the end of 2022, risk management has been at the center of discussion for many years, supported by a community of experts from all geographies. , but also of all fund operations, and it is also supported by a regulator that promotes best risk management practices. The Luxembourg market therefore has all the legitimacy to promote this global initiative.
How to strengthen the culture of risk management for funds?
“The Global Fund Risk Association (GFR) aims to bring together fund industry players with an appetite for and exposure to risk management. This association will enable, on a global level, a certification course, but above all the exchange and promotion of best risk management practices for investment funds.
The GFR board represents more than a century of professional experience in finance. Serge de Cillia, François Chauvet, Michael Derwael worked with me to bring the project to completion, with the support of 18 founding members, representing major players in the industry, from all professions related to investment funds: administrators, managers, risk managers, advisors, lawyers, as well as representatives of central administrations.
How has the market received your initiative?
“The initiative has received a very enthusiastic welcome from players in the Luxembourg fund industry, but also from international players and academics. Examples of GFR Honorary Members include Professor Philippe Jorion (University of California and author of the FRM reference paper), Professor Marti Subrahmanyam (New York University), Professor Davide Maspero (Bocconi University) and Michael Roberge (President and CEO of MFS, Boston, the group that launched the first fund opened in 1924). Therefore, GFR’s ambition is global and applies to all players in the fund industry worldwide.
How to join GFR?
“To become a member of GFR, such as CFA (Chartered Financial Analyst) and FRM (Financial Risk Manager, issued by GARP), certification will be offered based on the successful completion of a book-based reference exam, which confirms fundamental knowledge in the field . This certificate, Risk Management for Funds, is intended for all players, not just risk managers. In this way, it is not a purely technical approach, but a holistic vision of the discipline.
The book ‘Risk Management for Mutual Funds’, recently published by McGrawHill, is the reference work for GFR certification.
This community, apart from risk managers, will benefit members, academics, students and ultimately all players in the mutual fund industry.
When do the certification exams start?
“See you on November 25 at the first certification exam! The next sessions will be held in May and November 2024 in Luxembourg. Information is available on the association’s website: www.globalfundrisk.org.”