Running money in Kenya isn’t for the faint-hearted. Between market swings, demanding clients, and regulators with sharp teeth, an investment manager carries risks that don’t appear in glossy reports.
Take the NAV report for example. That’s the Net Asset Value report—a statement showing the fund’s total assets minus its liabilities, divided by units or shares. Think of it as a fund’s “report card.” A strong NAV reassures investors about returns, but it doesn’t reveal hidden threats—like lawsuits, cyber breaches, or governance failures—that can blindside a firm overnight.
At Dawit Insurance, we believe in Excellence, Stewardship, and Making a Difference. Below, we unpack the silent risks facing investment managers, what Kenyan law has to say, and how smart insurance keeps them from wrecking your quarter.
Explore the full cover overview here: Investment Management Insurance (Kenya)
1. Regulatory & Enforcement Risk: “Process” Is the Punishment
Kenya’s Capital Markets Authority (CMA) wields serious enforcement muscle. When things go wrong—mis-selling, governance failures, custody gaps—the process itself can drain leadership focus and resources.
References: Supreme Court in Popat & 7 Others v CMA (2020)
Containment: Directors and Officers (D&O) Liability funds defense costs and shields directors’ personal assets. Professional Indemnity (PI) responds when clients allege negligence, error, or omission.
2. Advisory & Suitability Risk: “You Should Have Known Better”
Every recommendation carries weight. If an investor claims poor risk profiling, non-disclosure, or unsuitable advice, you’re personally exposed.
Reference: Capital Markets (Licensing Requirements) Regulations — PI minima
Containment: PI Insurance covers negligence, advisory liability, misstatements, and error/omission exposures.
3. Governance Risk: “Board Decisions Follow You Home”
When valuation, liquidity, or related-party transactions go wrong, claimants often target directors personally—even if the operational team carried out the decisions.
Containment: D&O Liability ensures your board service doesn’t jeopardize your family’s financial security.
4. Process & Control Failures: “A Small Control Gap, a Big Loss”
A single reconciliation slip or rogue trade can spiral into a costly claim. And remember: even a flawless NAV report won’t reveal those risks until they’ve already struck.
Containment:
- PI Insurance for client claims.
- Fidelity/Crime insurance for employee dishonesty or commercial crime.
- Error/omission extensions for operational failures.
5. Cyber & Data Risk: “NAV Can Be Right—Until Your Data Isn’t”
Kenya’s Data Protection Act (2019) and General Regulations require strict safeguards. A breach can mean regulatory fines, reputational fallout, and loss of client trust—all at once.
References: Data Protection Act, 2019 • Data Protection (General) Regulations, 2021
Containment: Cyber Liability funds forensic response, PR, downtime recovery, client notifications, and cyber-crime claims.
6. Custody & Trustee Interfaces: “Shared Responsibilities, Shared Blame”
Even if custody is outsourced, managers and trustees share responsibility. Kenya’s CIS Regulations 2023 require transparency and indemnities—making risk transfer a legal expectation.
Reference: CIS Regulations 2023 — Trustee PI disclosure
Containment: Align trustee indemnities with PI and D&O wordings to close coverage gaps.
7. Mandatory PI: The Baseline, Not the Finish Line
Yes, Kenyan law requires PI cover. But true protection means calibrating limits for worst-case scenarios—like multi-client class actions—not just ticking a compliance box.
Quick Case Lessons
- Supreme Court v. CMA (2020): Regulatory reach is wide.
Lesson: Adequate PI and D&O won’t stop scrutiny, but they’ll pay for defense, settlements, and reputation management.
The Dawit Difference: Insurance Built for Investment Managers
– Program Design: PI + D&O + Crime + Cyber, tailored to Kenyan realities.
– Limit Adequacy Modeling: Scenarios, not guesses.
– Contract Alignment: We read your IMAs and trustee docs to plug gaps.
– Claims Advocacy: We stand shoulder-to-shoulder with you—insurer-side.
– Education: Board workshops so your first move in a crisis is the right one.
👉 Ready for a quieter night? Book a 45-minute Red Team risk session and discover your blind spots before they become headlines.
