Due Diligence Risk Factors

Due diligence is an important process that allows businesses to make informed decisions and minimize the risk. It addresses financial, legal and commercial concerns. Due diligence can include factors such as a company’s concentration of customers, the existence of legal or regulatory disputes, and the extent to the extent that intellectual property is being developed.

A key element of due diligence is fact verification, a thorough process of checking the authenticity of information to ensure it’s accurate and authentic. This involves examining documents, cross-checking data and verifying the identity of individuals.

A business should update regularly its due diligence on its current projects, activities, and business partners. The frequency of these updates will be contingent on the risk level in the country and the project or business partner. In regions with high risk it is often necessary to review the due diligence at least every two years.

Enhanced due diligence (EDD) is more extensive than basic CDD and identifies warning signs such as the presence of politically exposed individuals (PEPs) or an antecedent of corruption and money laundering. This might include screening against lists of PEPs from law enforcement agencies like the U.S. Federal Bureau of Investigation or the UK National Crime Agency.

EDD involves determining the the scope of relationships and any involvement of third parties. For instance suppliers who work with clients within a specific jurisdiction would require a more thorough check than an employee of the client’s business. Companies should www.getvdrtips.net/a-comprehensive-guide-to-selecting-the-perfect-boardroom-software also review regularly their own due diligence results and respond if they discover that there are any new or greater risks.