When evaluating the risks associated with investing in private markets and alternative asset classes, investors often focus on financial risk. However, there are several important operational risk assessments to consider, including reputational, regulatory, compliance, legal and more. At PKF O’Connor Davies, we help investors and general partners (GPs) identify, measure and manage these risks, focusing on targeted assessments and risk advisory services, tailored to each investment. Whether you’re evaluating a hedge fund, private equity investment or secondary transaction, our experienced operational due diligence professionals deliver the clarity and assurance needed to help enhance your investment risk management program.
Operational risk isn’t always visible in financial models — but it’s often where investments go wrong. From internal control failures to regulatory breaches, vendor mismanagement to cybersecurity gaps, operational due diligence is a critical part of investment risk management. In an evolving investment landscape shaped by regulatory scrutiny, interest rates and secondary market pressures, effective risk governance frameworks are essential to help protect your organization.
“We believe that operational due diligence processes should be tailored to each asset class and investment. Our approach is based on tried and tested experiences across thousands of assessments from hedge funds to private equity and digital assets to real estate.”
Meet Our Professionals
Our team brings decades of hands-on experience leading internal operational due diligence programs across asset classes and global markets. Clients benefit from comprehensive, end-to-end support — from initial assessments to detailed corporate governance analyses and remediation services. Our reporting is clear and actionable, highlighting strengths, gaps and key areas of operational risk and internal controls. We understand the needs of your organization because we’ve sat in the seats of allocators, leading operations and risk functions.
“We’ve sat in your seat — our specialists have led internal due diligence programs within allocators; we understand what truly matters to investors.”
Types of Investments
It’s important to understand the differences between primary and secondary fund investments. These differences create distinct operational risk profiles — making tailored operational due diligence essential in both contexts.
Primary Fund Investments – involve allocating capital to a newly launched fund. For this type of investment, allocators usually have full access to current information, offering documents and direct engagement with the manager.
Secondary Investments – refer to the purchase of existing fund interests from another investor. In this scenario, allocators may have limited access to up-to-date materials, shortened timelines and less transparency into the fund’s current operations.
Whether access and information are available or not, the need to effectively manage your exposure to non-investment risk remains. Identifying, measuring and managing these risks simply requires a more agile approach, leveraging experienced risk professionals to adopt targeted processes founded over decades of practice.
Types of Due Diligence
Before investing in private markets or an alternative asset class, it’s essential to conduct comprehensive due diligence across several key risk categories:
- Financial due diligence
- Reputational risk assessment
- Regulatory risk review
- Compliance due diligence
- Operational risk analysis
- Legal due diligence
Operational Risk Assessments
Operational risk can quietly undermine even the most promising strategy. From weak internal control environments to gaps in risk governance, we identify vulnerabilities that can compromise long-term outcomes. Our work spans:
- Corporate governance analyses
- Comprehensive corporate risk assessments
- Targeted compliance risk assessments
- Evaluation of operational policies and internal controls
- Vendor management and oversight
- IT infrastructure and cybersecurity reviews
Each engagement is customized, informed by institutional expectations and executed by professionals who understand the demands of investors.
Tailored Services to Fit Your Governance and Risk Objectives
We work with a broad range of clients, including institutional investors, family offices, foundations, wealth managers, endowments, emerging fund managers, secondary market allocators, fund administrators and other financial services firms — as well as others across the investment landscape. Our engagements are tailored to fit your specific goals, governance structures and operational needs.
No two clients face the same challenges. Whether you’re building a fund platform, strengthening your operational infrastructure and governance or managing risk in a secondary transaction, we deliver targeted solutions:
- Operational Due Diligence Reviews: Independent, in-depth evaluations of non-investment risks, customized to each investment’s structure and your timeline.
- Ongoing Monitoring and Targeted Reviews: Ongoing reviews to validate and refresh internal control effectiveness coupled with the ability to respond to targeted risk issues as they arise.
- Operational Due Diligence for Secondaries: Specialized reviews for secondary transactions, focusing on an agile approach to key risk areas in response to the challenges of limited GP access and information.
- Co-Sourced and In-House Program Design: Support to scale or build internal operational due diligence frameworks, grounded in technology and best-in-class operational risk governance.
- Emerging Manager Diagnostics: Support for managers building institutional infrastructure — with a focus on entity structuring, operational model design and implementation, vendor selection, tax and regulatory compliance, Chief Financial Officer (CFO), Chief Compliance Officer (CCO), Chief Technology Officer (CTO), Human Resources (HR) and other support functions.
Why Choose PKF O’Connor Davies for Operational Due Diligence?
Choosing PKF O’Connor Davies means working with a team that understands operational risk from the inside out. Our professionals have led in-house due diligence programs, managed operational functions at top-tier firms and advised some of the world’s most high-profile investors. We deliver clear, actionable insights — not just reports — and help align every engagement with your structure, goals and risk priorities. We offer premier operational risk services while leveraging our vast experience in audit, tax, cybersecurity and compliance for a truly integrated approach. Our flexible delivery model helps you get exactly the support you need — be it a full-scope review or a targeted assessment.
Whether you’re evaluating a new fund, preparing for institutional capital or strengthening your internal processes, our team is here to help. Contact us to schedule a complimentary consultation and learn how our operational due diligence services can support your goals.