Due diligence risk factors are areas of an organization or a project that should be assessed to determine if there are any risks to the goals and objectives. These include the legal, financial, operational and IT aspects of a company.
A common example of due diligence is customer due diligence (CDD). It involves confirming a person’s identity and assessing their level of risk to ensure compliance with anti-money laundering and countering the financing of terrorism laws. CDD usually takes place before the new customer is enrolled and continues to be conducted periodically throughout their relationship with the company. It’s essential to be aware of the various risk categories and how often each should be reviewed.
It is unreasonable and unjustifiable to expect an organization to conduct CDD on all countries, projects or business associates that it has in the world particularly if some of them have a low risk of corruption. A company should make use of its GIACC program to categorize and identify countries and projects www.getvdrtips.net/top-virtual-data-room-service-providers-2022/ as well as business associates based upon the likelihood that they will be a source of corrupt activity. Due diligence should be conducted on those who are deemed to pose a higher risk.
IT due diligence is another instance of due diligence. This involves an evaluation of the target company’s IT infrastructure as well as cybersecurity and data management practices. This is a way to identify any potential risk or cost associated with the acquisition of a firm, such as hardware or software that may require replacement. It can also reveal any weaknesses in the IT system that could expose sensitive or confidential information.
