|
In alternative investments, operational due diligence (ODD), is an investigation (due diligence) into operational factors of alternative investment entities such as a hedge fund, private equity fund, or infrastructure fund. ODD has gained prominence over the past years due to the failure of hedge funds such as Amaranth Advisors and the Bayou Hedge Fund Group. Also contributing to the increase of interest in this field were the actions of alleged rogue traders such as Brian Hunter and alleged Ponzi schemers such as Arthur Nadel, Jérôme Kerviel and Bernard Madoff. Operational risks are the risks arising from execution of the business functions of any entity, for example an alternative investment fund, and these are distinct from its investment functions. An ODD exercise does not include within its scope the investment functions of an alternative investment fund and therefore generally does not include the gathering, analysis and verification of information relating to the historic actual or future expected investment performance of such funds, the variance or future expected variance of the returns of such funds, or the appropriateness of the stated strategy of such funds as a (potential) constituent part of the investor’s wider portfolio, except insofar as these investment functions are or could themselves be adversely influenced by operational risks. However, a separate “Investment Due Diligence” (IDD) exercise is often carried out by or on behalf of (potential) investors to consider investment functions. In fact, historically, it can be said that it has been more common for an IDD to be performed than for an ODD to be performed, despite strong academic arguments and empirical evidence that overall risk (i.e., investment risk and operational risk) is best capable of being understood and mitigated where both an IDD and an ODD are performed. ==Importance== The historical position is somewhat odd given the prevalence of operational risk failures in, for example, hedge fund scandals and closures over the years. As early as 2003, a study by Christopher Kundro and Stuart Feffer of Capco indicated that operational risk failings were the sole reason for 50% of all hedge fund failures (with operational risk failings being a contributing factor in other failures as well), rather than bad investment decisions alone (38%), and anecdotal evidence seems to imply that (i) the impact of operational risk is at least as pervasive in other (non-hedge fund) types of alternative investment funds, and (ii) that the impact of operational risk failings has not decreased since the Capco study. A 2008 book by Jason Scharfman of Corgentum Consulting suggests that operational risks are inherent contributing factors to all hedge fund failures. For example, a May 2009 derivative lawsuit relating to a feeder fund invested in a managed account that was exposed to Madoff’s split strike conversion strategy noted that “the Madoff story bristled with red flags that a financial professional firm performing an evaluation () and subsequent management and oversight, in good faith, could not have missed.” The clear implication of this statement is that in the absence of detailed and robust pre-investment and on-going ODD, investors simply missed the operational risks inherent in the structure. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Operational due diligence (alternative investments)」の詳細全文を読む スポンサード リンク
|