For professional investors, Operational Due Diligence (“ODD”) has become an increasingly important element of their process to allocate capital to third party asset managers. 

Internal and external stakeholders now see a DD Policy as best practice to establish a consistent, evidenced and auditable diligence process across all external manager relationships. When drafted effectively, a policy document guides daily activities, and equally provides a longer-term, strategic framework to oversee the inherent risks of a third-party manager program. Indeed, some global regulators have begun to identify ODD policies as a regulatory issue for prudentially regulated entities.