Due Diligence Risk Factors

Due diligence risk factors are the areas of an organisation or project that have to be analyzed for potential risks to its goals and objectives. They include the legal and financial aspects, as well as the IT and operational aspects of a business.

One of the most common examples of due diligence is customer due diligence (CDD). Verifying a person’s identification and assessing their risk level is an essential part of this process. It assists in ensuring compliance with anti money laundering and counter financing of terrorism laws. CDD is typically performed prior to when the customer is enrolled and is then performed periodically throughout their relationship with the company. It’s important to understand the various risk categories and when each one should be evaluated.

For instance, it’s likely to be unreasonable and excessive for an organization to carry out CDD on every country, project or business associate it has in the world, particularly when some of these may have a low risk of corruption. A company should make use of its GIACC program to categorise and identify countries as well as projects and business associates based upon the likelihood they’ll be a source of corrupt activity. Due diligence should be conducted on those that are deemed to be at risk. higher risk.

Another type of due diligence is IT due diligence, which involves an analysis of a prospective firm’s IT infrastructure security, data management and cybersecurity practices. This could reveal potential risks or costs related to the purchase of a target, like replacing equipment or software. This could also www.getvdrtips.net/angel-investor-due-diligence-checklist/ identify any gaps in the IT system that could allow for the leakage of sensitive or private information.

By Stown

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