Market volatility and insurance gaps are common as tariff pressures loom
Market fluctuations tied to rapid changes in US trade and tariff policies are creating a wave of trading activity – and with it, a surge in operational risk for asset managers.
Tim Sullivan, asset management industry leader at WTW, sees a direct connection between this volatility and the likelihood of trade errors, raising questions about how insurance coverage can and should respond.
“The increased trading activity witnessed during these times can often be followed by trade errors,” Sullivan said. “In 2020, for example, the fear created by the pandemic caused significant volatility in the markets and generated a costly uptick in trading errors.”
Trade errors, Sullivan said, can take many forms. “Common categories include, but are not limited to, data entry errors, missed deadlines, failure to execute, miscommunicated trade instructions, collateral management failures and breaches of mandate.”