Mar 11, 2024


This company created a dedicated Alternative Operations team to support the increasing allocation to alternative assets. The team plays a large role in the appointment and ongoing monitoring of alternative managers and supports valuation methodologies and accurate representation of transactions and valuations within the unit pricing processes for the fund. One of the gaps in the team’s workflows is a lack of independent validation of manager valuations. The market impact of COVID-19 on alternative valuations and APRA’s thematic review have raised the standard for fiduciary oversight and governance on independent valuations of alternative assets. The company engaged Cutter to perform a review of their current capability and design a target operating model.

Cutter Solution

The client sought Cutter’s help to devise a target state operating model, including the following:​

  • Worked with the client's valuation stakeholders to understand current people, policies, and frameworks, including supporting processes and systems for consumption, validation, application, and storage of valuations on alternative assets within the funds​
  • Worked with the client's external auditors and board to understand its perspectives on the current state, discuss opportunities to strengthen the fiduciary oversight and governance of the unlisted assets, and identify aspirational capabilities​
  • Completed desktop assessment of the relevant company policies, frameworks and committee charters to compare against key APRA documentation related to core valuation practices for asset owners​
  • Completed a peer assessment on independent valuation practices and supporting tools to guide target state design​
  • Worked with the client and its external auditors to develop specific recommendations for operating model improvements based on the current state assessment findings and Cutter’s industry best practices​
  • Provided a prioritized series of recommendations along with an implementation roadmap​

Cutter ensured findings from the recent APRA unlisted asset valuation thematic review were considered to “future-proof” any recommendations.​

As a result of the Cutter engagement, the client possessed a clear perspective of how current capabilities stack up against leading industry practices and what is expected from regulators. The target state operating model produced recommendations relating to polices, framework, underlying processes, and roles and responsibilities for the client to implement.​