The Bank of New York has issued a white paper on hedge fund operational risk that provides to investors guidelines on how well HFs are sticking to their own best practices. The paper, prepared by risk firm Amber Partners, outlines major areas of risk – aside from performance – that investors should consider, including portfolio pricing, compliance, internal controls and procedures, and quality of service providers, such as external auditors. “Investors must increase their focus on assessing the operational risk aspect of their investments and not wait for the regulators or an unexpected problem to surprise them,” David Aldrich, a director at BNY in London, said in a statement. Amber Partners CEO and founder Reiko Nahum notes in an interview with Global Investor magazine that newer hedge funds were at an even greater risk of operational problems because “they can’t afford to hire the best operations people, or they are using Excel spreadsheets instead of proper order management systems.” In fact, the paper points out that a top priority for hedge funds is to hire an experienced CFO or chief operating officer to run the business and a chief compliance officer to introduce policies and enforce them.