Operational Due Diligence
The financial services industry is burdened with requirements, spanning controls and oversight. Operational due diligence is about understanding a manager’s internal operations to protect investors from losses related to operational failures or frauds.
Each review assesses the asset manager and the fund’s commitment to regulations and industry best practice standards. Through the use of proprietary software, Laven’s reports offer consistency across asset classes. An integrated scoring system per chapter and overall report give clients a benchmark from which to compare managers. Following an instruction to perform ODD on a fund, we take the following steps:
We contact the manager to request over 60 documents and to set a date for the onsite visit. Once we receive the documentation, we perform a detailed desktop analysis, specifically highlighting any areas or questions that require in depth discussions onsite.
We schedule a call with you to discuss through any areas of special focus required following the desktop analysis.
This usually lasts 5-6 hours and consists of discussions with senior management as well as other staff of the manager, based on their roles and responsibilities. This typically includes discussions with the executive teams, portfolio management, back office/operations, risk management, IT and compliance functions.
We then analyse the information gained from the onsite visit and prepare the report using our in-house due diligence software. The report details of our analysis and includes an executive summary highlighting any red flags and concerns raised during the IDD and ODD. We also seek to hold a debrief call with the client to go through our findings and to give the client the opportunity to ask any questions.
We believe using an expert due diligence provider like Laven can help you to focus your efforts on setting and achieving your investment objectives, while leaving the leg-work to us.
Laven developed the Due Diligence Manager (DDM) digitalising operational due diligence and report production. The DDM is designed to remove errors and inconsistencies in the content and the creation of the report. It allows subject matter experts to focus on their areas of expertise while ensuring time efficiencies and project management. We use the DDM technology for our outsourced ODD work. The software is also available for direct licensing by clients.
The following FAQs have been created to assist following the best practice standards and adhere to the relevant regulatory requirements.