Due Diligence Matters – New Year 2023 Bulletin

23rd Jan 2023
Meeting ODD needs in the new year – our 2023 bulletin 

Background checks

 Individual and entity level background checks (initial and monitoring) are included in our established “Allocator On-Demand ODD” services; however, we are regularly asked if we can provide this as a standalone solution for a broader range of clients. In short, yes we can…

We have partnered with world-class alternative data service providers to integrate deep-dive enhanced due diligence background checks. Using innovative technologies and analytical intelligence tools, we offer actionable investor background checks and risk taxonomy across different jurisdictions and in different languages. We offer tailored alternative data solutions on entities and individuals in turbulent reputational environments and our checks cover ultimate beneficial ownership, regulatory screening, media coverage, and criminal checks.

Prompt background checks are performed by one of our ODD Consultants. He is a multilingual chartered anti-money laundering specialist (CAMS) who previously worked as an arms export analyst at the Israeli Ministry of Defence and as an enhanced due diligence analyst at major financial institutions covering high risk entities and individuals.

Our fees vary based on scope, complexity and ongoing monitoring, but are highly competitive and cost-effective.

 

The ODD equivalent of a SOC / ISO type report

Whilst timely, useful and in some cases a requirement for institutional firms, a SOC / ISO type report is targeted, limited and, on its own, does not generally fulfil the ODD requirements of investment managers and / or allocators. Such reports are a source of information, but they are not ODD reports.

 

A Pragmatic Solution for Investment Managers and Service Providers

perfORM can be engaged directly to perform an ODD review and write the detailed accompanying ODD Report. We incorporate a review of these assurance documents and certifications, where available, in our ODD Report, but go further to address the reader’s potential concerns across all operational pillars.

No ‘pass’ or ‘fail’ is awarded. Instead we provide a hierarchical assessment of operational risks; the client will only complete a factual accuracy check of the ODD Report before issue. While we will, where possible, complete an onsite visit, our review process is significantly less onerous and time-consuming than a data-heavy, sample-based controls audit.

 

 Our Support for Multi-Manager ODD Reviews

The Challenge

  • ODD teams with multiple manager relationships, either via SMAs or co-mingled funds, devote time and resource to conducting operational due diligence. This is largely split between new manager reviews and monitoring of existing investments on a cycle of 1-3 years, with frequency often influenced by internal risk ratings, investment strategy and open- vs closed-ended structures.
  • Due to priorities of the business sometimes not all ODD work, particularly monitoring, can be performed by internal teams within the preferred frequency.

Solutions available to ODD Teams

  • Prioritising reviews, extending monitoring cycles to fit within available resources, risking missing a new operational issue arising with an existing holding.
  • Hiring additional full-time or fixed term staff, which could have a significant impact on budget.
  • Partnering with perfORM to assist with the ODD workload.

Why use perfORM Due Diligence Services?

  • Competitively priced – Compared to adding headcount or holding back on completing ODD work, perfORM can deliver initial or monitoring ODD reviews at an affordable cost.
  • Expertise – perfORM was built from the ground up with expert ODD staff. Clients can trust our quality of work. Average experience is 10 years, which is industry leading.
  • Delivery – perfORM has partnered with Diligend and can provide reports, analysis, downloads and other functional use of Diligend free of charge via a client dashboard. As a result, clients are able to experience one of the leading due diligence platform providers in the business and seamlessly integrate the due diligence work into their own systems/databases.

 

Example (for confidentiality actual numbers have been changed)

The Challenge

A perfORM client has a portfolio of approximately 100 manager names in multiple time zones which it wishes to monitor from a reputational risk perspective. It also expects to perform an estimated 20 new reviews in the year.  Internal capacity challenges are hindering its ability to bring on new managers/funds, as well as monitor the existing relationships. Ultimately, the inability to allocate and redeem capital on a timely basis is having a negative impact on its own clients’ portfolios.

Technology in-house is limited and the client is also contemplating an ODD platform to use. Reports and programs are managed via Outlook, Word and Excel.

The Solution – partnering with perfORM

1. After a consultation, an ‘on-demand’ facility was agreed coupled with a program for perfORM to monitor existing relationships with the option of the client’s participation in due diligence calls.

2. Diligend interfaces with both the investment manager and the client for efficient flow of data.

3. Pricing: pay as you go, bulk discount applied and scope designed specifically for this work, no more, no less.

 

The Positive Outcome

The client is now on its way to completing its monitoring program, and internal resources are more efficiently allocated to higher risk managers and investment opportunities that are higher priority.

Please contact us if you would like to learn more about how we could help you achieve these outcomes.

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