As we step into 2025, operational due diligence (ODD) is evolving to address new challenges. Emerging AI use cases, heightened cybersecurity risks, evolving ESG expectations, and the demand for operational resilience are reshaping how asset owners assess and manage risks. ODD teams must adapt to these complexities while staying ahead of future challenges. This blog explores key trends in ODD and provides insights to help organizations stay resilient and prepared.
1. Optimizing with In-House Teams, ODD Consultants, and Technology
As many asset owners continue to add to their ODD expertise, the interplay between in-house teams and consultants is becoming increasingly essential. Both boutique ODD firms and larger asset consulting organizations are expanding their ODD capabilities to meet this need, offering a wide variety of services across initial assessments, ongoing monitoring, and strategic projects. This dual approach allows asset owners to execute on complex investment mandates, which require them to be agile and possess a broad skill set to address new and evolving risks.
To further enhance efficiency and drive growth, ODD teams are turning to technology as a critical enabler. By centralizing and structuring datasets, asset owners can build robust ODD frameworks that bring data and insights together in one place, integrate artificial intelligence, and deliver on efficiency by automating workflows. These innovations empower teams to process vast amounts of data swiftly, identify emerging risks earlier, and deliver nuanced recommendations.
Platforms like DiligenceVault exemplify how technology can transform ODD processes without adding unnecessary complexity. While not intended as self-promotion, it’s worth highlighting that whether using DiligenceVault or another solution, the key takeaway is clear: adopting the right tools can be a game-changer in navigating the evolving ODD landscape with agility and precision.
2. Technology, Cybersecurity and Risk Management
The growing reliance on cloud technology, AI, and hybrid work models has expanded the digital attack surface, compelling ODD teams to adopt more sophisticated risk management practices. Cybersecurity is no longer a hypothetical concern – asset owners recognize that it is a matter of when, not if, a manager or service provider might face a cyber incident. As a result, due diligence now extends far beyond evaluating operational infrastructure to include assessments of its cybersecurity posture, governance of AI systems, and the robustness of its disaster recovery plans. By focusing on these areas, ODD teams can better mitigate digital risks and ensure the resilience of their investments.
We are observing clients dedicating due diligence projects in this area, with one of our users also getting an ethical hacking certificate to better understand the risks. Additionally, market and event-driven factors are prompting ad hoc requests for information. For example, clients are requesting AI acceptable use policy questionnaires and sending ad hoc requests, such as those for CrowdStrike outages, to inform their evaluations. This proactive approach underscores the growing complexity of managing digital risks.
We reference how DiligenceVault plays a pivotal role in addressing these challenges to emphasize the importance of leveraging platforms that streamline the identification, mapping, and mitigation of cyber risks. By centralizing data, enabling response flagging, and providing exposure mapping capabilities, such platforms empower ODD teams to act swiftly and decisively. Whether addressing governance issues, compliance, or operational resilience, using the right technology helps organizations anticipate threats and maintain the integrity of their investments.
Analytics on Technology Risk Assessment*
Source: *Illustrative Dataset – DiligenceVault Platform
3. Geopolitical and Macroeconomic Exposure Governance
Geopolitical risks, such as trade wars and global conflicts, alongside macroeconomic factors like inflation and interest rate changes, will have a significant impact on operational strategies. ODD teams must assess how well asset managers, and their portfolio companies can withstand these challenges while maintaining both strong returns and robust operational risk controls.
One recent example is the Department of Treasury’s Outbound Investment Program (OIP), which took effect on January 2, 2025. The OIP introduces new compliance requirements for investments involving China, Hong Kong, and Macau, including restrictions or mandatory reporting. Asset owners must ensure that their managers have implemented due diligence and compliance measures to navigate these regulatory challenges effectively.
To help our clients react to industry events, DiligenceVault offers a pre-built, digitized OIP survey that can be distributed to all asset managers with a single click, simplifying compliance efforts and ensuring teams have the data they need to address evolving regulatory requirements. Whether assessing geopolitical exposure or managing macroeconomic risks, leveraging advanced tools helps asset owners stay informed and resilient in an unpredictable landscape.
Digitized Outbound Investment Program (OIP) Survey*
Source: DiligenceVault Platform
4. Vendor / Service Provider Due Diligence
As asset managers continue to outsource key functions, vendor and service provider due diligence has become a critical priority for ODD teams. The rising frequency of cybersecurity incidents and the complexity of third-party relationships have heightened the need for robust evaluations of vendors’ security controls, financial stability, operational resilience, and regulatory compliance (e.g., DORA, SEC, APRA CPS230). This focus is especially important for vendors handling sensitive data or performing critical functions. To address these expanding risks, ODD teams are adopting proactive, data-driven approaches that ensure third-party risks are effectively mitigated and vendor business continuity plans are well-documented and readily accessible.
Platforms like DiligenceVault support these efforts by enabling firms to centralize vendor-related information in a structured and accessible format while linking them to the asset managers they invest with. This centralized approach empowers ODD teams to maintain real-time oversight of vendor relationships and strengthen their overall risk management framework.
Portfolio Analytics on Critical Service Provider and Vendor Relationships*
Source: *Illustrative Dataset – DiligenceVault Platform
5. Fee, Valuation, and Leverage Transparency
Fee and expense transparency remains a top priority for asset owners, who increasingly demand clarity on investment costs. This requires asset managers to provide detailed and consistent fee disclosures, prompting ODD teams to adopt more robust processes for evaluating cost structures and identifying hidden fees. Tools like the ILPA Fee Template and MIFID fee templates streamline the collection and analysis of fee data enabling ODD teams to compare asset managers efficiently and foster trust between asset owners and asset managers.
Audited financial statement (AFS) reviews are equally crucial for monitoring expenses and ensuring expense alignment with strategy and peer group. DiligenceVault simplifies this process with a prebuilt AFS template that helps organize expense data, identifies trends, and supports faster benchmarking.
Valuation transparency, especially in private markets, is also under heightened scrutiny as exits and distributions have declined. In 2024, the UK’s Financial Conduct Authority (FCA) began probing private equity firms’ valuation practices. At the same time, while the SEC’s private fund adviser rule was overturned, if the new SEC chair, Paul Atkins, decides to reinstate the private fund adviser rules, it would significantly impact valuation transparency for private funds.
Leverage transparency is equally vital, particularly as asset owners aim to understand the risks tied to financing arrangements such as NAV lines, subscription lines, and other credit facilities. ODD teams need comprehensive data on the terms, collateral, covenant structures, proportion of uncalled commitments tied to subscription lines, and repayment plans for these financing lines to assess their impact on portfolio returns and potential risks. Clear reporting of how leverage aligns with the fund’s overall strategy is essential for ensuring prudent risk management.
As we can see, the data burden for diligence teams is only moving in one direction – up!
Why are ODD Teams Adopting DiligenceVault in 2025?
To thrive in today’s dynamic environment, ODD teams must adopt technology that enhances their due diligence processes. As the need for transparency, continuous monitoring, and agility grows, modern ODD programs must extend beyond pre-investment due diligence to include ongoing risk assessments and adaptive strategies.
There are three key reasons why teams adopt DiligenceVault:
- Create Efficient Automation: Streamlining ODD workflows to improve efficiency and reduce manual tasks.
- Centralize Knowledge: Consolidating data, risk assessments, workflows, and collaboration into a single platform for improved accessibility and collaboration.
- Build Data-Driven Foundations: Establishing robust data management practices that lay the groundwork for transparency, insights, and reporting, including future AI applications.
DiligenceVault offers a comprehensive suite of technology solutions designed to empower ODD and oversight teams to drive efficiency and clarity, backed by a connected ecosystem of over 16,000 asset managers and service providers.
For these teams, investing in DiligenceVault isn’t just a technology upgrade. It’s a strategic advantage that positions them to navigate today’s challenges with confidence and clarity.
Asset Manager Oversight Through DiligenceVault’s Form ADV Module*
Source: DiligenceVault Platform
Conclusion
In 2025, operational due diligence teams face an increasingly complex risk landscape shaped by rapid technological advancements, geopolitical volatility, and operational challenges. The ability to adapt with agility and leverage data-driven insights is no longer optional. Quantifying the Value of ODD has never been more essential.
