10 Dimensions of Risk
In the globalized economy of the 21st century the relationship between risk and reward is tighter than ever - while opportunities are arising at an unprecedented rate, so too are the risks. The opening and development of the former Warsaw Pact countries, the expansion of the European Union, the dynamism of economies in Asia - particularly China and India - and the new energy-related wealth of the Middle East, Central Asia and Western Africa are generating exciting new investment opportunities.
Offset against these new opportunities are a new array of business risks, including the lack of transparency in many emerging markets, the danger of corruption and political instability, threats to brand integrity and intellectual property rights and, in some areas, physical security dangers.
Thus, a key goal of Diligence is to assist its clients strike the right balance between exploiting opportunities and protecting against risk. In both highly developed and emerging markets, the Diligence team works to identify, analyze, and then mitigate risk in ten different areas:
1. Transaction Risk
Preparing for, negotiating, and then executing transactions are essential to successfully concluding a deal. We play a decisive role in this process by providing the due diligence information that our clients need to make informed investment decisions or to enter into joint ventures, partnerships or strategic alliances.
2. Competitive Risk
Understanding the strategy and plans of competitors can often provide a decisive business advantage. By monitoring and assessing the moves of key competitors, Diligence is able to ensure that its clients know where they stand.
3. Fraud Risk
In both developed and emerging markets, the threat of fraud, corruption and other forms of criminal activity is growing. By helping its clients observe and analyze patterns of activity on the part of employees, partners, outside vendors and customers, Diligence can provide a reliable system of fraud detection and prevention as well as investigating and bring to a successful conclusion cases of fraud and corruption.
4. Personnel Risk
It is becoming increasingly important for companies to obtain accurate and in-depth reporting on the background and employment experience of senior-level hires and other business affiliates. Reliable background investigations are particularly important for hedge fund managers and private equity investors and managers of fund of funds. Diligence can provide this essential value added information quickly and economically.
5. Regulatory Risk
Compliance, transparency and governance have emerged as central requirements of business life in the United States, Europe and, now, in other jurisdictions. Drawing on its experience working within the Securities and Exchange Commission (SEC) and other regulatory bodies, the Diligence team can help its clients minimize regulatory risk by pin-pointing problems that could lead to costly and time-consuming litigation and regulatory review. Diligence has supported a number of clients in reviewing their exposure through the use of agents in far flung markets.
6. Brand & Reputation Risk
In a globalized economy, brand management has emerged as a key factor for success. At the same time, well-known brands are coming under attack from many parties, ranging from critics on the Internet to well-funded nongovernmental, activist groups. Diligence can help its clients defend against these attacks and design programs for taking the offensive against groups bent on destroying good reputations and brand equity.
7. Information Technology (IT) Risk
While information technology has emerged as an essential part of overall business strategy, it has also become a growing vulnerability. Diligence helps clients reduce this vulnerability by identifying weaknesses in IT security and recommending technology and procedures to safeguard data transfers and communications.
8. Intellectual Property Risk
Competition to obtain intellectual property is intensifying, especially in emerging markets, while conventional legal approaches to coping with intellectual property theft are often ineffective. Diligence can offer proactive, effective "intelligence-based" approaches to this problem.
9. Physical Risk
Terrorism, kidnapping and political violence have become - unfortunately - a reality of business life in several regions. The Diligence team includes professionals with the experience and expertise to both assess physical risk and provide strategies for protecting against it.
10. Political Risk
Globalization has brought companies into operating environments that are unpredictable and politically unstable. Diligence, with its diplomatic experience and relationships, can provide clients detailed assessments of opaque and uncertain political environments and advice on handling sensitive and complex local political matters.
Diligence offers the following services: