Firm and system resilience: Evolving asset management Regulation 2025 report

Recognizing that the threat landscape is becoming more complex, regulators continue to raise their expectations around firm and system resilience.

In this year’s edition of KPMG International’s Evolving Asset Management Regulation report, KPMG professionals unpack current shifts within resilience related regulation to uncover opportunities and risks for asset managers.

Resilience is an increasingly multi-faceted topic that captures a variety of vulnerabilities that could impact on asset managers, their clients and the wider financial system. In response, regulators continue to raise the bar in some areas.

“Against a backdrop of unprecedented financial and geopolitical uncertainty, firm and system resilience has remained at the top of the regulatory agenda. And while prudential frameworks for asset managers have remained largely stable, several new operational resilience requirements have been introduced while others have been embedded,” says Jim Suglia, KPMG International’s Global Head of Asset Management.

Maintaining financial resilience

Prudential frameworks for wealth and asset managers have largely remained stable around the world over the past year. Changes introduced have tended to be minor and aimed at simplifying existing rules without diluting their effect.

Alongside efforts to enhance fund managers’ liquidity management arrangements and private asset valuation practices, authorities continue to consider how the overall ecosystem could be stress tested from a macroprudential perspective.

Potential interconnections and interdependencies in the system are of increasing interest to authorities, particularly in the context of geopolitical tensions, economic pressures and rapid digitalization.

Strengthening operational resilience

Around the world, significant new packages of operational resilience-related requirements have been finalized and taken effect. Other regulators, however, have stepped back from introducing new resilience-related requirements for asset managers and advisers. Overall, while regulators’ objectives are converging, approaches and requirements are increasingly diverging in terms of the detail.

For asset managers, focus is now firmly on embedding the new rules and completing the process of fully transitioning project implementation teams into the business. Firms are also prioritizing efforts to ensure that resilience is a fundamental design component when it comes to business strategy, transformation or change activities, and end-to-end supply chain considerations.

Combatting financial crime

Wealth and asset managers play a critical role in protecting the integrity and resilience of financial markets. Robust financial crime controls and compliance with relevant requirements are a core component of this. However, firms also want to ensure that the onboarding process is smooth and simple so that the customer experience is not unduly impacted.

It is worth noting that recent enforcement actions have underlined the importance of robust controls and compliance with local requirements.

Opportunities and risks

Opportunities for asset managers
Risks for asset managers

Strategic approach:

View operational resilience as a source of competitive advantage and embed it within the firm’s strategy, particularly when making outsourcing decisions.
Embedding resilience:

Take the opportunity to move resilience out of project implementation to more deeply embed it with clear owners across the first line of defense.
Customer journey:

When reviewing compliance with AML requirements, consider the effectiveness of the customer journey and where it could be improved.

Loss of trust:

Asset managers simply can’t afford to get this topic wrong. Robust governance can help improve regulatory compliance and ensure that key risks are addressed.
A lack of realism:

Regulators often identify room for improvement in firms’ resilience planning. A topical issue is firms’ wind-down planning – where firms’ plans can be built on unrealistic assumptions or are simply not operational.
Non-compliance:

Firms need to keep pace with evolving AML requirements. A failure to comply could result in supervisory action or even enforcement.