Originally posted in the May 2012 edition of Corgentum Consulting's Operational Due Diligence Insights.

1. Increasingly Complex Plan Testing
Evaluating a fund manager's business continuity and disaster recovery ("BCP/DR") planning is a
critical part of the operational due diligence process. As investors have continued to place increase
focus on BCP/DR planning, funds have responded by developing increasingly detailed plans. These
plans can often run the gamut from data backup and alternative backup power generation plans to
phone notification trees and alternative gathering locations. The best laid plans however, can be
useless if they are not properly implemented during a business disruption or disaster event. This is
where the role of plan testing comes into play. Funds that test their BCP/DR plans more frequently
are better prepared to deal with disaster events. A major risk related to evaluating a fund's BCP/DR
planning is whether or not the plan can be carried out once activated. Testing can come in many
different forms. There are technology based tests which solely focus on restoring the firm's systems
and hardware after a business disruption or disaster event. Other types of tests can be more focused
on the role played by the firm's personnel in the event of a disaster event. If a fund's BCP/DR plans
call for the ability for the firm's employees to access the firm's systems remotely should the firm's
primary office become inaccessible, then, one type of test could have employees attempt to connect
to the firm's network from outside of the office. Other types of tests can include more realistic
simulations where employees stay home for the day and try to continue operations or instead
continue working from a remote location. Investors should take steps during the operational due
diligence process to evaluate both the frequency and scope of a fund manager's BCP/DR testing.
Some key questions investors should ask include:
 Have BCP/DR plans ever been tested?
 If so, when was the most recent test?
 What kind of test was it?
 How was the test carried out?
 Who at the firm was responsible for evaluating whether the test was a success?
 How have your firm's BCP/DR plans changed as a result of test feedback?
 How frequently do you plan to perform such tests going forward?
Another key consideration, related to BCP/DR testing is whether or not employees have the
necessary information and tools to remain in contact after a business disruption or disaster event.
Some funds for example, provide employees with remote mobile devices. As part of BCP/DR
planning and testing, a fund may load each employees contact details onto these devices so
employees can utilize this information to contact others in an emergency.
Investors that invest with fund managers that have solid BCP/DR plans and test them frequently will
be less exposed to the operational risks associated with the inability of funds to continue operations
should a disaster ever strike.
Originally posted in the February 2012 edition of Corgentum Consulting's Operational
Due Diligence Insights.
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2. About Corgentum Consulting:
Corgentum Consulting is a specialist consulting firm which performs operational due diligence
reviews of fund managers. The firm works with investors including fund of funds, pensions,
endowments, banks ultra-high net-worth individuals, and family offices to conduct the industry's
most comprehensive operational due diligence reviews. Corgentum's work covers all fund
strategies globally including hedge funds, private equity, real estate funds, and traditional funds.
The firm's sole focus on operational due diligence, veteran experience, innovative original
research and fundamental bottom up approach to due diligence allows Corgentum to ensure
that the firm's clients avoid unnecessary operational risks. Corgentum is headquartered at 26
Journal Square, Suite 1005 in Jersey City, New Jersey, 07306. Phone 201-360-2430. For more
information visit, www.Corgentum.com or follow us on Twitter @Corgentum.
© 2011 Corgentum Consulting, LLC