Due diligence and data value

By Peter Davey
October 22, 2020
9min read
Assyrian horseman as an auditor for due diligence sculpture

Due diligence used to be cool. It was a high end trade, running around the world on expenses, kicking the tyres, counting the cranes, before retiring to the long bar to drink slings. Then it started to become more complex, as we began to value the intangible and license the intellect, and calculate the possible losses against various risk measurements.

Role of Auditors in due diligence

Today it has become a full on commodity industry no longer confined to the lofty heights of the investment bank and the M&A advisor, but the frenemy of every manager and function across the organisation, descending like the Assyrian hordes dressed in the guise of auditors demanding we surrender our data and access to our systems and ways of working to confirm that we are working in an appropriately honest and ethical way.

For it is the audit community who provide ongoing due diligence functions to all areas of the business and ensures that we are moving forward rather than backwards, that we are getting what we measure and that we are vaguely holding to the norms and standards of transparency, accountability and responsibility expected by society and our sector. Of course some sectors are more heavily regulated and therefore have to negotiate higher compliance hurdles, think financial services, pharma and tech, for example, but today all businesses carry significant compliance costs.

In order to meet these challenges we require a high level of data to satisfy the audit machine. Auditors and analysts tend to take a backward looking approach to business, part of the nature of the specialism, all forecasts being based on past performance, and it is because of this that compliance tends to be viewed as a cost. Due diligence is seen as a process of backfilling to satisfy the needs of the auditor when it can be a driver of both innovation and change.

Due diligence as a change driver

To move into the innovation and change space, due diligence must be more closely allied with the risk function and strategy to drive functional alignment with current strategy and to ensure that we encounter fewer unknowns and avoid unintended consequences. The due diligence function offers the means by which organisations can develop continuous improvement programs and map results to outcomes in a more focused and measurable manner. In future organisations agility and the ability to pivot are crucial to success, and this is only achievable in organisations that ‘know where their towel is at’.  The role of due diligence in the pan galactic businesses of the future is to nudge the organisation towards providing repeatable ongoing value to the client base in addition to being able to demonstrate compliance and avoid regulatory action.

How Can We Help

Castlebridge helps organisations think about their data as a critical asset that has to be governed well to mitigate and manage data-related risks. This goes beyond just putting in the frameworks,  tickbox templates, and shiny software and includes education and training of staff at all levels in fundamentals of data and data management.

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