Breach Management & Remediation
Breach lifecycle management, classification, escalation workflows, remediation tracking, and regulatory notification procedures.
Breach policy
Every compliance breach detected by Asset Atrium - whether active or passive, hard or soft - must be formally recorded, classified, assigned an owner, and tracked to resolution. No breach may be closed without documented evidence that the portfolio has returned within limits or a formal exception has been approved.
Breach lifecycle
All breaches follow a structured lifecycle within the Asset Atrium Breach Manager module:
| Stage | Description | Responsible |
|---|---|---|
| Detected | Breach identified by pre-trade or post-trade compliance engine. Breach record created automatically with rule details, current vs. limit values, and trigger event. | System (automatic) |
| Classified | Breach classified by origin (active/passive), severity (hard/soft), and regulatory impact. Classification determines escalation path and remediation timeline. | System (automatic) + Compliance Officer review |
| Assigned | Breach assigned to the responsible portfolio manager and compliance officer for the fund. Assignment triggers email notification. | Compliance Officer |
| Under Remediation | PM develops and executes remediation plan (trade to reduce exposure, hedge, or wait for market movement). Progress tracked daily. | Portfolio Manager |
| Resolved | Portfolio confirmed within limits by next compliance run. Breach marked as resolved with resolution method and date. | System (automatic confirmation) + CO sign-off |
| Closed | Post-resolution review completed. Breach formally closed with full audit trail. Lessons learned documented if applicable. | Compliance Officer |
Breach classification
| Classification | Origin | Severity | Example |
|---|---|---|---|
| Active Hard | PM trade | Hard | PM attempts to buy a restricted security - blocked at pre-trade |
| Active Soft | PM trade with override | Soft | PM overrides sector limit warning after compliance officer approval |
| Passive Soft | Market movement / redemption | Soft | Equity rally pushes equity allocation above 60% max without any trade |
| Passive Hard | Credit downgrade | Hard | S&P downgrades an issuer below investment grade, breaching credit quality floor |
| Passive Structural | Corporate action | Varies | Merger creates issuer concentration above UCITS 5% limit |
Escalation matrix
Asset Atrium automatically escalates breaches based on severity, duration, and fund risk tier:
| Condition | Escalation Target | Notification Method |
|---|---|---|
| Any hard breach detected (post-trade) | Compliance Officer + PM (immediate) | Email + ATIM dashboard alert |
| Soft breach not remediated within 50% of deadline | Chief Compliance Officer | Email + weekly breach report |
| Soft breach exceeds remediation deadline | CCO + Fund Board / Management Company | Formal breach notification letter |
| UCITS passive breach (5/10/40 rule) | Management Company within 1 business day | Automated regulatory breach notification |
| Multiple active soft breaches (>3 in 30 days) | CCO for review of PM trading behavior | Exception report + meeting request |
| Hard breach from credit downgrade (regulatory limit) | CCO + Board + Regulator (if required) | Formal notification per applicable regulation |
| Any breach in Tier 1 (highest risk) fund | CCO (immediate, regardless of severity) | Email + SMS alert |
Regulatory notification requirements
Under UCITS regulations, material breaches of investment limits must be reported to the fund's management company and potentially to the national regulator (for example, CSSF, CBI, FCA). Under AIFMD, material breaches affecting investor interests must be reported to the national competent authority. Asset Atrium tracks notification requirements per fund domicile and regulation.
Remediation tracking
The Breach Manager tracks remediation progress with the following data points:
- Current exposure vs. limit: Updated daily from post-trade compliance run (for example, 7.2% vs. 5.0% limit)
- Distance to compliance: Calculated amount that needs to be sold/bought/hedged to return within limits
- Remediation plan: Free text description of PM's intended remediation approach
- Deadline countdown: Business days remaining until remediation deadline, with color coding (green/amber/red)
- History: Daily snapshot of breach severity showing trend toward or away from compliance
Breach reporting
Asset Atrium generates the following breach reports:
| Report | Audience | Frequency | Content |
|---|---|---|---|
| Daily Breach Summary | Compliance team | Daily | New breaches, outstanding breaches with aging, breaches approaching deadline |
| Weekly Breach Report | CCO, Fund Management | Weekly | Breach trends, overdue remediations, escalation actions taken |
| Monthly Compliance Report | Board / Management Company | Monthly | Breach statistics, override usage, regulatory notifications, compliance KPIs |
| Regulatory Breach Register | Regulator (on request) | On demand | Full breach history with classification, remediation actions, and outcomes |
Breach analytics
The Breach Manager includes analytics dashboards showing breach frequency by fund, rule category, and origin type over configurable time periods. These analytics help identify systematic compliance issues — for example, a fund that repeatedly breaches sector limits may need mandate rule adjustments or PM training.