Hedge Fund Risk Managers

The financial crisis of the late 2000s, growing demand by institutional investors for transparency regarding risk factors, and increasing government regulation of the hedge fund (HF) industry have prompted HF firms to expand their risk management (RM) departments or even create separate RM departments for the first time. (Before the financial crisis, the firm’s investment manager or managing partner handled RM duties.) In 2012 (the most recent year for which data is available), 79 percent of hedge fund firms reported that they separated their risk manager and fund manager functions to ensure independent oversight, according to Risk Roadmap: Hedge Funds and Investors’ Evolving Approach to Risk, a report from the Managed Funds Association and Hedgemark.