Over half - 58% - of the 100 top global hedge fund managers surveyed said expenditure on risk management technology was expected to take up the biggest proportion of overall spending.

However, the Ernst & Young survey found that the most important factor in mitigating operational risk is not technology but people. Around a fifth of those questioned identified people as the main operational risk and 34% said that hiring the right staff is key to combating that risk.

The poll found that retaining the right people (42%) and managing growth (39%) are considered the most important challenges for hedge funds over the next year.

Art Tully, co-leader, global hedge funds practice, Ernst & Young, says: "The real concerns for managers, across most of the regions interviewed, were with regards to retaining key personnel, such as portfolio managers, senior researchers and senior operations staff, including compliance and operational risk functions."

Research carried out last year by Datamonitor precited that global hedge fund investment in IT would reach $3.3 billion by 2009.