Due Diligence Risk Factors
Due diligence risk factors are the areas of an organization or project that need to be assessed for the possibility of risks to its goals or goals. These include the legal and financial aspects and the IT and operational aspects of a company.
One of the most common examples of due diligence is customer due diligence (CDD). Verifying the identity of a person and assessing their risk is part of this process. It helps to ensure compliance with anti money laundering and anti-terrorism laws. CDD is usually carried out prior to an individual is hired and is then performed at regular intervals throughout their relationship with the company. It is important to understand how often each risk category should be reviewed.
For instance it’s unreasonable and disproportionate for a company to conduct CDD on every country or business associate it has worldwide, especially when some of them be considered to have a low level of corruption risk. A company should use its GIACC program to categorise and identify countries and projects as well as business partners based on the likelihood that they will be the source of corrupt activity. Due diligence should be conducted on those that are considered to have a higher risk.
Another example of due diligence is IT due diligence, which involves an evaluation of a target company’s IT infrastructure as well as cybersecurity and data management practices. This will help identify any potential risks or costs associated with the purchase of a target company, like replacing equipment or software. It can also reveal any gaps in the IT system that could lead to the disclosure of sensitive or confidential information.