According to a white paper published by Pershing LLC, a subsidiary of Bank of New York Mellon Corporation, and Aite Group LLC, an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry, managing counterparty risk is a far more critical component of a hedge fund’s overall business operations today than it has been in previous years.  We discuss the findings of the white paper, and detail the paper’s recommendations regarding best practices for proactively managing counterparty risk.