Due Diligence Matrix

The Due Diligence Matrix is a 2x2 matrix used to assess the potential risks and rewards of a business venture. It is used to help make decisions on whether to move forward with an investment or not.

At a very high level, the Due Diligence Matrix is used in the context of business, finance.

Due Diligence Matrix quadrant descriptions, including examples
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What is the Due Diligence Matrix?

A visual explanation is shown in the image above. The Due Diligence Matrix can be described as a matrix with the following quadrants:

  1. High Risk, High Reward: Investments with a high potential reward, but also a high potential risk (e.g. investing in a new startup)
  2. Low Risk, High Reward: Investments with a high potential reward, but a low potential risk (e.g. investing in a blue-chip stock)
  3. High Risk, Low Reward: Investments with a low potential reward, but a high potential risk (e.g. investing in a penny stock)
  4. Low Risk, Low Reward: Investments with a low potential reward, but also a low potential risk (e.g. investing in a government bond)

What is the purpose of the Due Diligence Matrix?

The Due Diligence Matrix is a 2x2 matrix used to assess the potential risks and rewards of a business venture. It is used to help make decisions on whether to move forward with an investment or not. The matrix is divided into four quadrants, each representing a different outcome. The top-left quadrant is labeled “High Risk, High Reward” and represents investments that have a high potential reward, but also a high potential risk. The top-right quadrant is labeled “Low Risk, High Reward” and represents investments that have a high potential reward, but a low potential risk. The bottom-left quadrant is labeled “High Risk, Low Reward” and represents investments that have a low potential reward, but a high potential risk. The bottom-right quadrant is labeled “Low Risk, Low Reward” and represents investments that have a low potential reward, but also a low potential risk.

The Due Diligence Matrix can be used to help make decisions on whether to move forward with an investment or not. For example, if an investment is in the “High Risk, High Reward” quadrant, it may be worth taking the risk if the potential reward is high enough. On the other hand, if an investment is in the “Low Risk, Low Reward” quadrant, it may not be worth taking the risk if the potential reward is too low.


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What templates are related to Due Diligence Matrix?

The following templates can also be categorized as business, finance and are therefore related to Due Diligence Matrix: Effort Impact Matrix, Gap Analysis Matrix, Growth Share Matrix, Kraljic Matrix, Outsourcing Matrix, Quadrant Analysis, Risk Analysis Matrix, Risk Value Matrix. You can browse them using the menu above.

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