GRACE - ODD for Organized Due Diligence

The market crisis that resulted in a massive loss in value of investments for Fund of hedge funds, Pensions, Endowments, Family Offices, HNWs have made stringent due diligence of the firms they invest in, a mandatory way of identifying good investment avenues and also monitoring them continually to identify red flags as soon as they happen and take early corrective action. It is also part of the trustees / boards fiduciary responsibility.

Using best practices suggested by organizations like AIMA can help build the standardization and comprehensiveness in the scrutiny that is necessary. Not only is it necessary to identify all the red flags in the operational processes during the selection but also ensure that the firms are monitored on a periodic basis and attention is paid to see deviations and risks that arise in operations on an ongoing basis. This can be achieved only by establishing comprehensive, standardized and periodic operational due diligence (ODD) process.

GRACE-ODD is a SaaS (Software as a Service) web based software that can help you put this process in place.

Be operationally efficient in the due diligence process by consolidating all information gathered centrally

Having them spread out in multiple excel files, documents and paper trails makes the process inefficient, labor intensive and possibility of risks falling through the cracks

Be able to conduct operational due diligence activities using an industry standard approach like AIMA can help you be comprehensive in your verification process

Having an auditable store of information that can be retrieved at all times means less audit costs

Having a visible and transparent system like GRACE-ODD can prove that you are conducting investment management as per your fiduciary responsibility
Have integrated view of risks across Investment firms. This allows you to focus on the key risks quickly and take decisions

Early identification and control reduces cost of mitigation

Be able to search and retrieve information with least time and cost

Build ownership, responsibility and accountability for risk and its management

Institutionalizes the due diligence and risk management process

Own the knowledge in the enterprise and not lose it when key people leave
Set up Standardized Checklists and scoring mechanism to evaluate firms

Take the best practice Alternate Investment Management Association (AIMA) checklist and enhance it for any other due diligence aspects you want to add to build your own company standardized checklist for fund, fund of hedge fund due diligence
Build your own checklist for due diligence on other types of investments including Hedge funds,Private Equity, Real Estate etc.
Set up risk scores against each check list group and item as basis to score the information when due diligence is conducted
Set up standard checklists for on-going monitoring by type of firm

Handle information Gathered during Selection

Record all the information gathered from and about the firm into the central repository. This includes all the findings and documents received including due diligence information from third parties like fraud investigation, background checks, legal due diligence,counter party due diligence, vendor due diligence etc.
Create site visit checklists and record findings after site visit
Record risk levels to all the information gathered to arrive at a risk score for each firm
Be able to compare organizations based on their risk scores
Review the information internally and record comments on the findings and documentation to finally arrive at the selection / rejection process and record the selection / rejection reasons
Have a central repository and history of due diligence information on all firms in the portfolio as well as on firms that were rejected

Ongoing monitoring

Have alerts for periodic follow up, gather information, review findings and record risks if any seen that need monitoring
Receive the disclosures, reports and filings provided by the funds, save them in the repository and internally review them for issues and record risks if any seen that need monitoring
Set up alerts that can be send to funds, counter parties and vendors to ask them for periodic reports
Secure functions for funds to send in their reports
Review / record findings from periodic activity and record risk levels

Risk Management

Record risks where monitoring / corrective action is called for
Assign responsibility for monitoring risks, assign tasks for mitigation
Send in status reports on risks and tasks, and escalate risks when needed
Be a one place for all the information gathered on an investment firm and monitoring risk from a operational perspective

Business Analytics

Have a comprehensive dashboard for business analytics that allows you to deep drill down on all information
Be able to query / report on information in the repository and export them to excel / PDF formats