We at the Hedge Fund Law Report have heard operational due diligence defined – persuasively but expansively – as the rigorous evaluation of all non-investment aspects of the business of a hedge fund manager.  A robust consensus has developed in the hedge fund industry around the importance of operational due diligence, but there is less consensus on precisely what operational due diligence entails or how to conduct it.  The absence of uniformity in implementation, in turn, is likely a function of the fact that no two managers are exactly alike.  The term “hedge fund manager” encompasses a wide range of businesses in terms of strategy, sophistication, staffing, size and other factors.  Therefore, operational due diligence is often driven by principles, experience and best practices rather than hard and fast rules.  See “Legal and Operational Due Diligence Best Practices for Hedge Fund Investors,” Hedge Fund Law Report, Vol. 5, No. 1 (Jan. 5, 2012).  Hedge fund investors and managers must understand the operational due diligence process thoroughly, for different but related reasons.  Investors have to understand the process to make informed investments and avoid frauds, and managers have to understand the process to anticipate and accommodate due diligence requests from investors.  For parties in either category, the more you know, the better; you can never know enough; and what you think you know is constantly evolving.  To bring some clarity and coherence to this ambiguous but critical area, Corgentum Consulting, LLC (Corgentum), a firm that provides operational due diligence consulting services, recently hosted a webinar on trends, challenges and best practices in conducting operational due diligence on hedge fund managers.  Jason Scharfman, Managing Partner of Corgentum, conducted the webinar and covered, among other things: how to staff an operational due diligence team; trends and challenges that hedge fund investors face in conducting operational due diligence; and techniques that hedge fund investors can employ to maximize the effectiveness of their operational due diligence efforts.  This article summarizes the key points made during the webinar on each of these topics.