Hedge Fund Operational Due Diligence: Understanding the Risks


Hedge Fund Operational Due Diligence:
Understanding the Risks

Jason Scharfman, Managing Partner,
Corgentum Consulting, LLC

Filled with real-world examples drawn from the author’s experiences dealing with the operational risks of a global hedge fund platform, Hedge Fund Operational Due Diligence: Understanding the Risks, clearly outlines a flexible framework to enable you to diagnose a hedge fund’s operational risks. This user-friendly, step-by-step guide shows you how to effectively detect and evaluate often-overlooked operational risk factors in hedge funds, such as multijurisdictional regulatory coordination, silo creation, operational drag, organizational nesting, and vaporware, to equip you with a complete understanding of the importance and benefits of a comprehensive operational due diligence program.


  • Features an analysis of the failed Bayou Hedge Fund Group, highlighting how operational risks can bring down an organization
  • Explains how to diagnose and analyze the operational risks that may be present in a hedge fund
  • Covers the primary, secondary, and blended operational risk factors present in the vast majority of modern hedge fund organizations
  • Offers techniques for the modeling of operational risk
  • Explores how to factor the results of operational risk analysis into the overall hedge fund asset allocation process
  • Recommended by CFA Magazine
  • Release date: December 3, 2008

Topics Covered Include:

  • Why should investors care about operational risk?
  • Preparing for an operational review
  • Case studies in operational failure
  • How to perform an operational review
  • Operational DragSM
  • Operational risk scenario analysis
  • Operational activism
  • Modeling operational risk

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Also available by Jason Scharfman:

Hedge Fund Governance: Evaluating Oversight, Independence, and Conflicts

Private Equity Operational Due Diligence: Tools to Evaluate Liquidity, Valuation and Documentation