Insights to help you protect your firm within the evolving risk environment.
Understand: Be aware of your risks and the insurance solutions available to help you meet them. The risk environment for registered investment advisor (RIA) and broker- dealer (BD) firms is dynamic, and successfully navigating the inherent challenges may require evolving with the risks. Maintaining a strong and risk-savvy culture of compliance sometimes requires going beyond explicit regulation to focus on discretionary risk mitigation opportunities.
Align: Professional liability insurance can be a powerful tool in this endeavor, but with the complexity inherent in covering evolving risks with insurance products that can themselves vary significantly between policies, it is critical that firms align their insurance coverage with their business. If your firm does not have sufficient insurance expertise in-house to facilitate such an alignment, consider enlisting third- party support in the form of an independent insurance consultant or broker.
Govern: Be disciplined and strategic in establishing ongoing governance of your professional liability insurance program. Institutionalize a review process that monitors your risk and explores opportunities to mitigate it and enhance your firm’s sustainability. Firms should complete this review at least annually, in time to support the renewal process. Beyond this, ongoing monitoring of both your business and your risk environment, to identify and respond to material changes in either, is a best practice.