Amid the backdrop of recent high profile frauds, unprecedented market declines, poor hedge fund performance and resulting closures, hedge fund investors are placing heightened emphasis on due diligence.  In particular, investors are focusing in the course of due diligence on operational risks and business infrastructure.  Last month, independent financial advisory and investment banking firm Duff & Phelps Corporation created an Operational Risk Due Diligence (ORDD) practice to provide investors with an independent third-party assessment of their hedge fund managers’ operating policies and procedures.  The Hedge Fund Law Report spoke with Duff & Phelps Director Eric S. Lazear about the new ORDD practice; trends in operational risk due diligence; specific risks he has seen in the course of his practice (including risks relating to trading practices, valuation of illiquid assets, cash management, fund structuring and allocation of trades); and solutions recommended to institutional investor clients to address those risks.  The full text of the interview is available in this issue of the Hedge Fund Law Report.