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It also reveals there has been an increased level of internal conflict between the fund management team and compliance and risk team during the last two years which shows no sign of slowing - instead it's only expected to rise over the next three years.

The international study with senior leaders and senior compliance and risk executives at alternative fund manager firms which collectively manage around US$132.25 billion AUM, found 81% think issues with their organisation's compliance has resulted in losing investment mandates or clients over the past three years.

There are signs the trend is getting worse. All senior executives surveyed worry that as fund managers are becoming increasingly subject to global compliance regulations, this will increase the risk of their organisation failing in their compliance tasks. Of these, 70% are very concerned about this.

These failings are highly likely to translate into compliance breaches. Of those surveyed, more than nine in ten (92%) expect the level of compliance breaches and risk profile of their organisation to increase over the next 24 months with 24% predicting a dramatic increase.

Ocorian's survey reveals another concerning factor that 90% of alternative fund managers report that there has been an increase in the level of conflict between the fund management team and the compliance and risk team over the last two years - and this is only set to increase. More than nine in ten (92%) expect this level of conflict to increase further still over the next three years.

Aron Brown, Head of Regulatory & Compliance at Ocorian, said: "Compliance and risk teams and the expertise, insights and rigour they provide are front and centre to the bottom-line success of every fund manager. They hold a heavy weight of responsibility, and our research shows that failure to deliver can ultimately lead to lost investment.

"But compliance and risk teams must have the right investment and support in order to be able to do this - particularly when facing the challenges of an increasingly regulated operating environment. This could take many different forms, from investing in people and training, technology and systems, or third-party specialist providers who can provide a broad range of compliance services that are bespoke to individual needs.

"This conflict emphasises how important the three lines of defence are to a business and how the FCA's emphasis on them being separate and cohesive is key - when they aren't this level of conflict arises.