Resilience in Asset Management

Resilience in asset management is about a fund being priced, traded, and settled correctly, even when a provider in the chain is disrupted. The central services are valuation of fund holdings, dealing in fund units or portfolio securities, settlement of those deals, and reporting to investors and advisers. When those services stop, the harm is less visible than a failed payment or an unpaid claim, but it is no less real. An investor cannot buy or sell at a known price. An adviser cannot give advice on a stale valuation. A fund that cannot settle a deal may face costs and failed trades that ripple to counterparties. Accuracy matters as much as availability here, because a valuation that is available but wrong can mislead every decision that uses it.

Valuation is the service on which the others depend. A fund's price is calculated from holdings, market prices, and corporate actions, and that calculation feeds dealing, reporting, and risk management. If pricing data is unavailable, dealing may have to pause, because investors cannot be given a fair price. If pricing data is wrong, dealing at the wrong price creates a different harm, affecting investors who bought or sold during the error. The service description therefore has to name the pricing sources, the fallback when a source fails, and the point at which dealing pauses rather than proceeding on unreliable data.

Investors are harmed by being unable to act, and by acting on wrong information. An investor who cannot redeem during a market fall is locked into a loss that may deepen. An investor who buys at a stale price may gain or lose unfairly against other investors in the same fund. A pension scheme or charity invested in a fund is harmed indirectly, through the same pricing and dealing failures, and its own members or beneficiaries bear the ultimate effect. The harm can be diffuse and delayed, which makes it harder to communicate, but that does not make it smaller. A firm that cannot explain, in plain terms, what a valuation failure means for an investor has not finished its communication plan.

Asset management depends on a chain of specialist providers: custodians who hold assets, fund administrators who calculate valuations and maintain records, transfer agents who handle investor dealing, pricing vendors who supply market prices, and brokers and settlement systems that execute and settle trades. Many managers outsource valuation and administration entirely, which means the service depends on a provider's resilience as much as on the manager's own. The manager retains responsibility for the service to investors, even where the work is done elsewhere, and the plan has to reflect that split: the manager's plan covers oversight, fallback, and communication, while the provider's plan covers the operational recovery itself.

A useful asset management test follows a fund through a pricing disruption. One example is a pricing vendor outage on a dealing day: can a fallback price be sourced, is dealing paused or continued, and how are orders received during the pause handled? Another is a fund administrator outage: can valuations still be produced, can dealing continue on a prior valuation, and what is communicated to investors and advisers? A third is a settlement failure: can failed trades be identified, can counterparties be notified, and can settlement catch up without creating duplicate or mismatched positions?

Check whether the plan names the pricing sources and the fallback for each, and whether it states the criteria for pausing dealing rather than leaving the decision to improvisation during an incident. Check whether custodians, administrators, and transfer agents are in the recovery sequence with their own roles, and whether the manager's oversight of those providers is described. Check whether recovery is defined as trustworthy valuations and completed settlement, not only system restart. And check which regime is being applied: DORA, which applies from 17 January 2025, and the UK regime under FCA PS21/3 and PRA PS6/21 are labelled separately in this guide.