Chapter 2

Evaluating Trends in Funds of Hedge Funds Operational Due Diligence

Jason Scharfman, Corgentum Consulting, LLC, Jersey City, NJ, USA

Chapter Outline

2.1 Introduction

2.2 Increased Focus on Operational Due Diligence

2.3 Chapter Goals

2.4 What is Operational Risk?

2.5 The Different Types of Operational Risk

2.6 Operational Risk in a FoHFs Context

2.7 FoHFs Operational Due Diligence Frameworks

2.8 The Madoff Effect

2.9 Deep-Dive Operational Due Diligence

2.10 Broadening Scope Reviews and Declining Checklist Approaches

2.11 The Increasing Role of Operational Due Diligence Consultants

Conclusion

References

2.1 Introduction

Due diligence is a core component of the overall funds of hedge funds (FoHFs) investing process.

While asset allocation ...

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