What does 'due diligence' entail in risk management?

In risk management, 'due diligence' refers to a comprehensive process of investigating and evaluating risks as well as compliance requirements within an organization or a project. This involves systematically identifying potential threats, assessing their impact, and determining the necessary precautions or controls to mitigate those risks effectively. The thoroughness of this evaluation is crucial, as it ensures that all aspects of risk are considered and addressed, allowing the organization to operate within legal and regulatory frameworks while safeguarding its assets and stakeholders.

While other elements such as monitoring past risks or implementing security measures are important components of a broader risk management strategy, they do not encompass the full scope of due diligence, which specifically focuses on the proactive assessment and validation of risks before they impact operations. Additionally, creating new risk regulations is typically the result of findings from due diligence rather than a part of the process itself.