Due diligence

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Due diligence is a business and legal term used to describe the process of researching an investment or other business opportunity based on independent sources, to avoid making poor investments, poor business decisions or even falling prey to a scam. While something of a term of art in the business world, due diligence is a good idea for pretty much anybody in any field where the acceptance of the unfamiliar is required. Establishments that rely on an individual's faith or trust, from politics to religion to pseudoscience generally don't espouse such diligence from their "faithful", since it can lead to rather uncomfortable questions. Due diligence tends to lead to a more detailed understanding of the weaknesses and strengths of any position.

Generally speaking, due diligence involves researching the risks one might be exposed to, learning enough about the field of investment to understand and explore the risks, and hiring professionals when necessary to help analyze the situation. Classic examples would be hiring a professional inspector to examine a house that one is considering buying, hiring a lawyer to go over any contract one is considering entering into, or the recommendation to have an independent mechanic you trust examine a (used pre-owned) car you are interested in.

Due diligence is often honored more in the breach than the observance, leading to much wringing of hands, gnashing of teeth, and looting of pension funds.

In purchasing decisions, the Latin term "Caveat emptor" is often mentioned which means "Let the buyer beware".

See also[edit]