b'Annual Report & Accounts 2022 Mercia Asset Management PLC 49Strategic reportRisk Possible consequences MitigationThe Group now hasThe loss of one or more of theDedicated investment teams operate in respect of each c.758million of FuM andcontracts due to poor performanceasset class and in many cases, each fund mandate. Fund derives the majority ofor other irreconcilable differencesPrincipals oversee both fund performance and client its revenues under fundcould have a material impact on therelationships. Detailed quarterly reports are issued to management contractstrading performance of the Groupfund investors.linked to each specificand reputationally, its future abilityInvestment committees provide a robust review of all fund. to successfully tender for newproposed investments and ensure that investments contracts. meet the mandate of the fund and that any conflicts are managed appropriately.The Groups compliance function monitors adherence to investment procedures through its internal audit reviews, which also monitor adherence to regulatory requirements.The Board oversees the Groups fund management operations, performance and client relations.The Group, includingThe Group operates both aThe Group focuses its investment activities its fund managementdirect investment and a fundpredominantly on the historically under-served regions subsidiaries and Merciasmanagement portfolio modelof the UK, where competition for investing in new portfolio companies areand both may find themselves intechnology companies is less fierce. Companies in which subject to competitioncompetition when new investmentthe Group invests are chosen because they are in large risk. or lending opportunities arise. Ingrowth markets, have developed disruptive technologies addition, all portfolio businessesand have already achieved a degree of commercial are predominantly focused ontraction.the technology sector, which isThe Group conducts all of its investment activities in a fair intensely competitive on a globaland transparent manner and is increasingly recognised scale. as a trusted investment partner for entrepreneurially Portfolio companies competitorsminded, ambitious management teams. may have greater financial,The Groups fund management entities have maintained technical and other resources.a strong performance against their institutional Competition in the technologymandates, including with BBB, with further allocations sector could materially adverselyhaving being made to the existing mandates. affect the prospects, financial condition and results of operationsPortfolio company competitiveness is monitored and of portfolio companies, withadditional support and expertise is provided by Mercia a potential knock-on effect onNucleus when required.fund management and director monitoring fees, as well as impacting on direct investment performance.'