Checklists in Investment Operations: Lessons from the WHO

Checklists can save lives – literally.

A study by the World Health Organization found at least half a million deaths each year could be prevented by implementing a simple surgical safety checklist.

This finding was backed up by a study in the Netherlands, which discovered that using a checklist reduced surgery complications by more than a third, and deaths by almost half.

It’s a simple concept, but immensely effective – and one that can be equally applied to the world of investment operations.

We’re all human

In his book The Checklist Manifesto, surgeon and public health researcher, Dr Atul Gawande, states that errors in the modern world are largely the result of “ineptitude” – mistakes caused by not making proper use of what we know, rather than caused by a lack of knowledge.

As we’ve all learned (sometimes at a cost), humans, even the smartest ones, are prone to error. That’s especially true with periodic or repetitive tasks, when we’re more liable to be lulled onto autopilot. And it only takes one missed step for consequences to follow.

But, by having well-designed checklists to guide us through the key steps in any complex procedure, we can minimize those human errors, as Dr. Gawande explains.

Perform better

Take performance reporting - to produce accurate daily, monthly and quarterly performance figures, portfolio administrators must properly manage the underlying data: that means downloading the data from different systems, reconciling it to multiple sources, and correctly processing corporate actions, dividend and interest calculations, expenses and fees.

A mistake in just one part of the process can result in bad final numbers, eroding trust and damaging relationships with the portfolio managers who rely on that information. As the old saying goes, “once bitten, twice shy.”

This can have a serious knock-on effect. Any time the performance figures subsequently “look off” you’ll have to work much harder to convince them your numbers are right. This leads to hours of wasted time spent checking and validating the information.

At Empaxis, we use automated checklists extensively in our daily processes. Because they’re based on a standard format, all members of the team can follow them easily, whichever client they’re supporting. As a result, portfolio errors have been reduced dramatically.  

It may not be the difference between life and death for the asset managers, hedge funds and family offices that outsource to us … but it’s close.

Save yourself from ineptitude!

Start here: How To Build A Checklist In 6 Steps

  • Create your checklist in MS Word or Excel
  • Are you “advanced”? Build it in SharePoint
  • What does a World Health Organization checklist even look like?
  • Want a shortcut? Here is a checklist for making checklists

Stephen Van de Wetering is the Founder and CEO of Empaxis Data Management, a premier provider of back-office services to small and medium financial services firms, hedge funds and wealth management organizations in North America and Europe.  You can reach him at 310-356-5831 or via email at

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