By Ethan Zuckerman
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The type of data collected during the operational due diligence process is operational risk data. After this data has been collected during the operational due diligence process, an investor then can perform an analysis of this data to come to a determination as to the amount of operational risk present at a particular private equity fund. This analysis stage, as compared to the data collection stage, is also typically considered to be a part of the operational due diligence process. Operational due diligence can be thought of as the process of performing due diligence on these operational risks.
Scharfman. All rights reserved. , Hoboken, New Jersey. Published simultaneously in Canada. com. com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials.
Indeed, when first beginning to think about the subject of items that may influence the ultimate investment decision other than purely investment-related concerns, there is a strong temptation for investors to focus on concerns related to fraud in the management of a private equity fund. Certainly, this is understandable for several reasons. Due to the fat-tailed risks associated with fraud it is certainly reasonable, and from a pragmatic standpoint logically prudent, that due diligence surrounding potential issues of fraud should be of penultimate concern during every stage of the entire due diligence process.