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Five New Year’s Resolutions Every Hedge Fund Should Make

By Dina Ferriero | Thursday, January 5th, 2012

The start of a new year is the perfect time to reflect on the previous year’s accomplishments (and perhaps shortcomings) and consider areas for improvement. While many of us are striving to cut back on the sweets, drop a bad habit or spend more time with friends and family, we got to thinking about resolutions that hedge funds and alternative investment firms should make in 2012.

In this spirit, I spoke with some internal experts here at Eze Castle Integration to gain their thoughts on a few areas in which hedge funds could consider making enhancements in 2012. Check out our list of the top five resolutions every hedge fund should make:

Resolution #1: Investigate the Cloud.
Cloud computing was certainly a hot topic in the investment industry in 2011. This year, the conversation is getting deeper and more technical as hedge fund managers seek to gain a more thorough understanding of this technology and consider implementing it within their firms. Whether you are a startup fund preparing to launch this year, or an established firm looking to improve efficiencies and reduce costs, the cloud provides real opportunities for improvements in 2012. Advantages include increased flexibility and scalability, less required maintenance and reduced expenditures. There are also potential challenges associated with cloud computing, such as privacy and data security concerns. Resolve to learn more about the cloud in 2012, as many of your competitors are likely doing the same.

Resolution #2: Test Your Disaster Recovery (DR) Systems Regularly.
We frequently talk about the importance of disaster recovery for investment firms, but many fund managers lack a strong understanding of the importance of testing DR systems on a regular basis. Routine tests can help your firm ensure that its DR site meets all current business needs. Since these needs are likely to evolve and grow as your organization does, changes will be made to the production environment to reflect these ongoing developments. Likewise, the DR site should be adapted in order to continuously mirror the changing business requirements. By engaging in regular disaster recovery system tests, firms can ensure they will be fully prepared to continue operations in the event that a disaster knocks out the production environment.

Resolution #3: Locate, Review and Evaluate All Current Telecom Contracts. 
Telecom contracts that you signed 1-3 years ago are probably coming due in the near future. To assess, begin by locating any contracts that are currently in place. Be aware of the re-term dates, as some contracts may have automatic renewal features which could lock you into the same terms without renegotiating. Make note of the contract expiration dates and plan to renegotiate or research better options before renewing for 2012 and beyond.

Additionally, stop assuming that carrier bills are accurate, and double-check to make sure you are not being overcharged and that no billing errors have occurred. Many organizations are not as automated as you may think. Be sure you can validate all costs and taxes on your invoices. If missed, these can be repetitive errors that you pay excessively for over time.

Finally, ask an Eze Castle telecom expert about making technology upgrades. For example, is making the switch from a land line or PRI over to VoIP right for your company? Can your phones or voicemail systems be upgraded? Does your firm require more bandwidth? Once you have spoken to an Eze Castle representative about your current setup, an audit can be performed to determine how your current environment runs and whether any other options exist to enhance it.

Resolution #4: Ensure Your Business Continuity Plan (BCP) is SEC/Dodd-Frank Compliant.
With increasingly stringent guidelines coming down from the SEC in recent years (including the implementation of the Dodd-Frank Act, part of which goes into effect in 2012) it is crucial to examine your firm’s business continuity plan to ensure compliance. Be sure to keep these important considerations in mind when determining whether your firm’s BCP is compliant:DR guidebook

  • Do you have a designated evacuation site?

  • Do you have all of the resources necessary to ensure your business can continue operations during a disaster?

  • Do your employees know how to access all crucial applications if your office becomes inaccessible?

  • Do you have accurate contact information for all employees?

  • Does building management know who to contact from your organization in the event of a disaster or building closure?

Resolution #5: Perform a Comprehensive IT Systems Audit.
At Eze Castle, we recommend that our clients perform an annual IT systems audit and “checkup” under the guidance of a senior systems engineer. For fund managers whose primary focus is making sound investment decisions, making the time to thoroughly assess the firm’s IT environment is a task that can easily be overlooked.

However, this process is extremely important, as it provides perspective on the health of the firm’s current technology and can bring to light any areas where changes or enhancements should be made. Performing an annual IT audit is also helpful for management when outlining roadmaps and budgets for the new year. In an age when technology is quickly becoming a competitive differentiator in the investment industry, firms cannot afford to let inefficiencies persist in their IT systems.

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