Private Asset Manager Risk: Small firm does not mean small claim

October 2017

Advisen and CNA are pleased to announce the release of a white paper/infographic that looks into the management asset-managers-cna-250x324liability risks faced by smaller asset managers. The 4-page publication highlights the many options available as sound risk management tools, such as management liability insurance, to provide coverage for the vulnerabilities that arise in this industry.

Mitigating Potential Risks

Companies that provide asset management solutions whether big or small are faced with the same management liability risks. The downside for smaller asset managers is whether they have the capacity to survive an investigation by the Securities and Exchange Commission (SEC) or defend against allegations such as breach of fiduciary duty.

Of the largest D&O losses from cases recorded since 2012 involving small asset manager firms, losses above the median insurance limits purchased by these firms totaled $650 million. Twenty cases involved losses that exceeded the company’s average annual revenue. Viewing errors and omissions (E&O) losses in the same manner, almost $440 million of losses were above the median insurance limit and 14 eclipsed its revenue, according to Advisen data.

This and more findings are featured in Private Asset Manager Risk – Small Firms Does Not Mean Small Claim, a paper and infographic from Advisen and CNA that warns that a regulatory proceeding or lawsuit can bankrupt an asset management firm without comprehensive risk management solutions.