Operational risk in fund administration has become a critical concern for fund managers, custodians, and third-party service providers across Asia-Pacific. From NAV misstatements to tech outages, the potential for disruption is real—and costly.
Today, operational risk isn’t just about outdated systems or clerical errors. It includes data handling vulnerabilities, third-party oversights, personnel misconduct, and insufficient oversight of fund flows. And in an environment where regulators, limited partners, and auditors are demanding greater transparency, these risks are no longer secondary—they are structural.
Cloud infrastructure issues are now one of the top drivers of operational risk in fund administration, especially as administrators rely more heavily on third-party tech stacks.
What is Operational Risk in Fund Administration?
Operational risk refers to the possibility of loss resulting from inadequate or failed internal processes, systems, human error, or external events. In the context of fund administration, this spans a broad range of exposures, including:
NAV (Net Asset Value) miscalculations
Delayed or inaccurate investor reporting
Trade or cash reconciliation failures
Cyber incidents or data leaks
Errors in capital calls or distribution processing
Vendor-related failures in tech platforms or custodial chains
These issues may seem operational, but they can have financial and legal consequences that echo throughout the fund ecosystem—especially when clients, regulators, or auditors demand accountability. Strengthening controls and preparing incident protocols are essential steps in mitigating operational risk in fund administration across APAC markets.
Real-World Examples
NAV Errors and Regulatory Oversight
In 2024, the Monetary Authority of Singapore (MAS) issued guidance addressing the increasing threat of cloud outages, emphasizing the need for robust operational risk management in financial institutions. This move underscores the importance of accurate Net Asset Value (NAV) calculations and compliance with investment guidelines to mitigate operational risks in fund administration.
Vendor-Linked Outage Halts Reporting in Singapore
On July 19, 2024, a global IT outage, triggered by a faulty update from cybersecurity firm CrowdStrike, led to widespread disruptions across various sectors, including financial services in Singapore. The incident caused significant operational challenges, highlighting the vulnerabilities associated with third-party service providers in fund administration.
Where Risk Gets Amplified
Operational risk exposure grows when:
Funds use multiple third-party systems with minimal integration
There is insufficient segregation of duties in core functions
Administrators are servicing complex or multi-jurisdictional fund structures
Internal teams are stretched across high transaction volumes without automation
There’s no formal operational risk framework in place for issue tracking and escalation
How Insurance Can Support Operational Risk Resilience
While internal controls are the first line of defense, insurance is a key second line—especially when errors lead to financial loss or regulatory scrutiny.
Professional Indemnity (PI)– Covers claims arising from service delivery failures, including NAV misstatements, recordkeeping errors, and reporting delays.
Directors & Officers Insurance (D&O)– Covers claims against executives for mismanagement, regulatory breaches, or oversight failures.
Crime Insurance– Protects against employee dishonesty, fund misappropriation, and third-party fraud—including manipulation of cash records or payment instructions.
Cyber Insurance– Covers liability arising from data breaches, ransomware incidents, or business interruption due to system failure—especially when fund admin platforms are targeted.
What Continuum Can Do
At Continuum, we specialize in helping fund administrators, PE/VC fund managers, and institutional service providers assess their risk exposure and implement protective coverage tailored to operational realities.
We offer modular risk transfer solutions designed to:
Align with multi-entity, multi-fund structures
Address internal and third-party operational risks
Support response readiness in case of legal claims or breaches
As investor expectations and operational complexity grow, having the right frameworks—and coverage—matters more than ever.
Contact us today to learn how we can help de-risk your operational backbone while supporting your long-term growth.
