Operational Due Diligence

Operational Due Diligence

Over 20 years of experience underwriting operational risk

Overview

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 Objectives 1

Avoid losses caused by operational errors or fraud

Protect our client's reputation by identifying operational, regulatory, and legal issues​

Identify the appropriate structure​

Enhance the terms of the deal​

Operational Due Diligence Functions

Our dedicated 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

+ 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.

Core Principles

Ongoing Monitoring

Our evaluation does not stop at initial investment. On an ongoing basis, we analyze and review various investment-related correspondence and monitor organizational and operational developments.

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.

Our Focus on Cybersecurity

As part of our evaluation both pre- and post-investment, we look at cybersecurity risk and preparedness. Click below to read our two-part series where we discuss some of the key prevention measures we look for and highlight best practices in readiness and mitigation. 

Related News and Insights

Effective Due Diligence in a Virtual World

We explore some challenges and unforeseen benefits of performing remote due diligence, and discuss what we believe makes a well-resourced, sophisticated investor properly positioned to conduct due diligence in this environment.

Read More »

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.