Due Diligence Risk Factors

Due diligence risk factors are areas of an organisation or project which must be assessed for possible risks to its goals or objectives. These include the financial, legal operational, and IT aspects of a business.

Customer due diligence (CDD) is a great example of due diligence. 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 typically takes place prior to when the first customer is welcomed and is then repeated periodically throughout their relationship with the firm. It’s important to understand the various risk categories and how often each should be examined.

It would be untrue and untrue to expect an organisation to conduct CDD on all the countries, projects or business associates that it has around the globe and especially when some of them may only pose a low risk of corruption. The company should therefore utilize its GIACC programme to identify and classify countries as well as projects and business partners according to the likelihood of them being corrupt sources and also ensure that due diligence is undertaken on those that are considered to pose more than a low risk.

IT due diligence is another example of due diligence. It involves a review of the company’s IT infrastructure as well as cybersecurity and data management practices. This can identify potential risks or costs related to the purchase of a target company, like replacing equipment or software. This could also identify any gaps in the IT system that could expose sensitive or confidential information.


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