The SEC, like the roughly 26,000 registered entities whose activities it is charged with overseeing, must efficiently allocate its resources to accomplish its stated goals. Responsible for examining SEC registrants, the SEC’s Office of Compliance Inspections and Examinations (OCIE) is often forced to make difficult decisions about where to focus its time and efforts when carrying out its four pillars of promoting compliance; preventing fraud; identifying and monitoring risk; and informing policy. Recognizing that the enormous size of the registrant pool prevents it from conducting regular exams of each registered firm, OCIE has repeatedly stated that it employs a risk-based strategy when overseeing market participants within its jurisdiction. This two-part series examines how this risk-based strategy informs the SEC’s National Exam Program. Fund managers can benefit from understanding how the SEC carries out a risk-based examination program, as the strategy shapes both the selection of which advisers to examine and the exams themselves. This first article discusses the steps that the SEC has taken in recent years to increase the number of advisers it examines each year and explores how the risk-based strategy employed by OCIE informs which advisers are selected for examination. The second article will analyze the types of exams OCIE conducts, recent trends in examinations, how the risk-based strategy translates into risk-based examinations and ways fund managers can determine the type of exam OCIE is conducting. See “What Hedge Fund Managers Need to Know About Getting Through an SEC Examination (Part One of Two)” (Jun. 16, 2016).