Reputational risk
24.09.2024 – Articles
Anthony Kwesi Hagan, LP-GP relationship expert and founder of Freedomization, details the ways in which LPs attempt to map out a GP’s character.
In addition to the determination of capital loss and excess volatility risks, the assessment of reputational risk is vital when evaluating investment opportunities. However, reputational risk is among the most difficult to quantify since no standard measurement system is available. In the quest to determine a manager’s reputational risk, past performance, verbal/written transparency, reference calls, organizational philosophy, cohort gossip, ethical signals, etc. are all fair game. Reputation is one of the first things to be considered when due diligence begins, but it can also lay latent and suddenly emerge based on interactions with the manager or discoveries made during the assessment process.