Four in five asset managers (80%) believe market risk has increased, with 34% believing it has done so dramatically.

The finding came from a report based on a survey of 250 senior executives at fund managers across the US, Europe and the Asia-Pacific region by Clearwater Analytics called The Crowded Trade.

The researchers also found three-quarters (77%) of respondents believe credit risk has increased, with 51% saying it has done so dramatically.

Some 71% of asset managers have experienced increases in liquidity risk, and 36% said those increases have been dramatic.

Similarly, 71% said concentration risk has increased with 29% saying it has been a dramatic increase.

The study also looked at operational risks, and found nearly three-quarters (73%) of asset managers think technology and cyber risk has increased, with half saying it has done so dramatically.

Business continuity risk has increased for 80% of firms, the researchers found, with 32% calling the increase dramatic.

People and process failures, such as errors in trade execution or inadequate internal controls, have increased for 75% of firms, with 24% calling the increase dramatic.

Chris Sturhahn, head of product, asset management at Clearwater Analytics, said: “Market, credit, liquidity, and concentration risk are all rising at nearly every firm that responded.

“That’s a harder problem than any one risk moving by itself, and it’s a big part of why we’re seeing firms shift into alternatives, expand hedging, and rotate into new markets and regions. 

“Operational risk has become a major focus for asset managers as portfolios grow more complex, reporting requirements intensify and market events unfold much more quickly,” he continued.

“Many firms still rely on fragmented systems, manual reconciliations and delayed reporting processes that can create inefficiencies and increase the potential for errors during periods of market stress.”

This article first appeared in our sister publication Portfolio Adviser.