The following Pillar 3 disclosures have been prepared by BennBridge in accordance with the requirements of BIPRU 11. Pillar 3 disclosures will be made available annually on the Firm’s website following publication of its Financial Statements.
Due to the nature, size and complexity of the Firm, BennBridge does not have a fully independent risk management function. The Governing Body is responsible for the management of risk within the Firm. The Governing Body meets periodically and receives input from the relevant business areas. BennBridge has clearly documented policies and procedures, which are designed to minimise risks to the Firm and all staff are required to confirm that they have read and understood them.
BennBridge has developed systems and controls to manage the risk that the Firm cannot meet its liabilities as they fall due. The Governing Body has allocated responsibilities to certain individuals to ensure the effective on-going monitoring and management of liquidity risk. The Head of Compliance has been allocated responsibility for the management of portfolio risk. The COO is responsible for business and capital funding risks and he is part of and reports within the Firm’s governing body on a frequent basis. The Governing Body formally reviews and signs off the liquidity assessment at least annually.
Operational risk is defined as the risk of loss due to system breakdowns, internal and operational control failures, staff fraud or misconduct, and catastrophes. Responsibility for the day to day performance of a significant portion of BennBridge’s functions have been outsourced under service level agreements, such as IT, accounting, and legal etc. Given the nature, scale and complexities of the Firm’s current business, the risk management structure is relatively simple. The Firm’s Governing Body manages the risks of the Firm through periodic receipt of management information on e.g. the Firm’s financial position, capital adequacy and compliance with the various rules and regulations to which the Firm is subject.
A considerable part of the Firm’s risk is the risk of a downturn in business performance by the underlying boutiques or an inability to attract additional boutiques to grow the business. The main concerns of the Firm relate to poor performance of the boutiques and their underlying fund / mandate and redemptions, but also their market conduct and investment processes.
Reputational risk is defined as the risk of damage to the Firm’s reputation that could lead to negative publicity, costly litigation, a decline in the customer base or the exit of key staff members and therefore directly or indirectly leading to a loss of revenue. There is some overlap between reputational risks and business risks, since both can result in the loss of clients and a reduction in income.
Capital Resources Requirement
BennBridge, as CPMI firm, has an initial capital requirement of €125k and an ongoing capital resource requirement which comprises the greater of:
- The funds under management requirement (the sum of the Firm’s base own funds requirements of €125k plus 0.02% of the amount by which the Firm’s funds under management (related to the Fund) exceed €250m); and
- The own funds based on fixed overheads requirement; and
- The sum of market risk and credit risk (for non-AIFM business); plus
Whichever is the applicable of:
- The professional negligence capital requirement (“additional own funds requirement”); or
- The professional indemnity insurance (“PII”) capital requirement.
BennBridge calculates the credit risk applicable to its non-AIFM activities under the simplified approach.
For the period ended 5 April 2018, BennBridge’s capital resource requirement under Pillar 1 was £251k.
The Pillar 2 capital requirement is calculated as part of the ICAAP and represents additional capital to be maintained against any risk not adequately covered by Pillar 1.The ICAAP involves consideration of a range of risks faced by BennBridge and determines the level of capital needed to cover these risks.
In the Firm’s latest ICAAP, BennBridge concluded that its capital requirement under Pillar 1 (£251k) was sufficient to withstand unexpected losses arising from the operational, business and reputational risks identified and no additional capital was required to be held under Pillar 2. Scenario analysis and stress testing supports the conclusion that the Pillar 1 capital requirement is sufficient.
BennBridge’s remuneration policy complies with the requirements set out in Article 14 of the Alternative Investment Fund Managers Directive (“AIFMD”) and chapter 19B (the “AIFM Remuneration Code”) of the FCA’s Senior Management Arrangements, Systems and Controls Sourcebook (“SYSC”).
BennBridge has a Remuneration Committee comprising the Governing Body. In accordance with the AIFM Remuneration Code BennBridge reports annually on the remuneration policy for “Code Staff”, defined as senior management, risk takers, control functions and any employees receiving total remuneration that takes them into the same remuneration bracket as senior management or risk takers.
The Remuneration Committee is responsible for setting the Remuneration Policy for all staff. The Remuneration Policy is designed to:
- Promote sound and effective risk management;
- Not encourage risk-taking which is inconsistent with the risk profile of the instrument constituting the fund of the AIFs the Firm manages;
- Be in line with the business strategy, objectives, values and interests of the Firm alongside the AIFs the Firm manages
- Include measures to avoid conflicts of interest
All employees are paid a fixed, base salary which is commensurate with market rates for those of their seniority, experience and qualifications. Any variable element of remuneration is performance-related, based on the results of the Firm and performance of the individual.
BennBridge has one “business area” being its investment management business. The number of current Code Staff has been established as 14. The total remuneration to Code Staff for the period ended 5 April 2018 was £1,339,062.
The information contained set out in this disclosure has not been audited by BennBridge’s external auditors and does not constitute any form of financial statement and should not be relied upon in making any judgement about the Firm.