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 through independent sources in order to avoid making bad investments, bad business decisions, or even falling victim to fraud. Although a term of art in the business world, due diligence is a good idea for just about anyone in any field where 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 encourage due diligence from their "faithful", as 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 you may be exposed to, learning enough about the investment area to understand and research the risks and, if necessary, hiring professionals to help analyse the situation. Classic examples would be hiring a professional inspector to check a house you are considering buying, hiring a lawyer to check a contract you are considering signing, or recommending that an independent mechanic you trust checks a (used) car you are interested in.

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

The Latin phrase "caveat emptor", which means "let the buyer beware", is often used in purchasing decisions.

See also[edit]