Operational Due Diligence
A structured assessment by institutional investors of a fund manager’s operational risk, covering controls, service providers, key-person risk, and incident history.
Operational Due Diligence (ODD) is a parallel-track assessment institutional investors conduct alongside investment due diligence. Where investment DD assesses the strategy and performance, ODD assesses everything around it: the firm’s operational controls, third-party service providers, regulatory standing, key-person risk, business continuity, cyber posture, and incident history.
An ODD failure is often enough to disqualify a manager from a mandate even when the investment DD is strong.
ODD packs are nearly as time-expensive as DDQs and often share underlying source material. The firms that handle DDQs well typically struggle with ODD because the audience and the framing are different, the ODD reviewer cares about controls, not returns.