Due diligence risk factors are aspects of an enterprise or project that must be evaluated to determine if there are risk to the objectives and objectives. These include the legal and financial aspects and the operational and IT aspects of a business.
Customer due diligence (CDD) is a great example of due diligence. Verifying a person’s identification and assessing their risk is an essential part of this procedure. It assists in ensuring compliance with anti-money laundering and anti-terrorism laws. CDD typically occurs before the new customer is enrolled and at regular intervals throughout their relationship with the firm. It’s essential to be aware of the various risk categories and the frequency at which each one should be examined.
For instance it’s likely to be unreasonable and excessive for a company to conduct CDD on every country or business partner it has in the world, particularly when some of them have a low risk of corruption. A company should use its GIACC program to categorize and identify countries, projects, and business associates based upon the likelihood they’ll be a source of corruption. Due diligence should be conducted on those that are considered to have a higher risk.
IT due diligence is another illustration of due diligence. This involves an evaluation of the target company’s IT infrastructure as well as cybersecurity and data management practices. This can identify any potential risks or costs associated with the acquisition of a target company, such as hardware or software that may require replacement. This could also help identify any gaps in the IT system that could leak sensitive or sensitive information.