Operational
Due Diligence
Over 20 years of experience underwriting operational risk.
Before making investments across our investment strategies, we perform operational due diligence (ODD) to help identify material risks that could arise from the non-investment operations of investments and managers and seek to mitigate the impact where possible.
Key Objectives1
01
Avoid losses caused by operational errors and fraud.
02
Protect our client’s reputation by identifying operational, regulatory, and legal issues.
03
Identify the appropriate structure.
04
Enhance the terms of the deal.
Dedicated ODD Team
Our ODD team operates independent of our Investment Department and is comprised of Finance and Legal professionals. The ODD Team performs several different reviews, the three primary being:
Background Investigation Review
We engage independent third-party investigation firms that specialize in financial services to conduct background investigations on key personnel and entities involved in a prospective deal.
Operational Capabilities and Internal Controls Review
The ODD team assesses whether a potential manager has established a strong, institutional-quality internal control environment led by experienced and capable non-investment professionals, designed an appropriate compliance program, and engaged suitable service providers.
Legal Review and Structuring Review
Our internal team of attorneys and paralegals, in conjunction with external counsel, review relevant legal documentation, focusing on the legal governance, structure, and terms of the potential investment.
Ongoing Monitoring
General Monitoring
Every approved investment is subject to general ongoing monitoring procedures from both an investment and operational perspective.
Specific-Monitoring
Addresses specific issues identified during initial or ongoing due diligence.
ODD Watch List
Certain key change events cause an investment or manager to be added to the “ODD watch list” for enhanced monitoring.
Cybersecurity Focus
As part of our evaluation both pre- and post-investment, we look at cybersecurity risks and preparedness. In a two-part series, we discuss some of the key prevention measures we look for and highlight best practices in readiness and mitigation.
Related News and Insights
1 Due diligence seeks to mitigate but cannot eliminate risk.
Certain investments made directly, not through a third-party investment manager, may not be subject to Operational Due Diligence or require Operations Committee approval.