Due Diligence Risk Factors

Due diligence risk factors are areas of an organization or project which should be assessed to determine if there are risks to the goals and objectives. These include the financial and legal aspects and the IT and operational elements of a business.

Customer due diligence (CDD) is a good example of due diligence. Verifying the identity of a person and assessing their risk level is an essential part of this procedure. It assists in ensuring the compliance of anti-money laundering and counter financing of terrorism laws. CDD usually takes place before an individual customer is accepted into the company and continues to be conducted at regular intervals throughout their relationship with the company. It’s crucial to know the various risk categories and how often each one should be checked.

It would be unreasonable and untrue to expect an organisation to conduct CDD on all the countries, projects or business associates that it has around the globe particularly if some of them only have the lowest risk of corruption. A company should utilize its GIACC program to categorize and identify countries, projects, and business associates based upon the likelihood that they’ll be a source of corrupt activity. Due diligence should then be conducted on those who are considered to have a higher risk.

Another type of due diligence is IT due diligence, which involves an examination of the target company’s infrastructure for information technology security, data management and cybersecurity practices. This can identify potential risks or costs related to the purchase of a target company, such as replacing hardware or software. It can also uncover any IT system weaknesses that could allow for the disclosure of sensitive information.

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