Underwriting

The thorough evaluation of a loan, insurance policy, securities offering, or some other investment opportunity to determine the risk involved. Underwriting and due diligence are related because underwriting involves thoroughly evaluating a loan or securities offering to determine the risk involved. Due diligence is a key part of an underwriting process. During due diligence, the underwriter will examine financial, operational, legal, and other relevant information to determine the validity of the offering and assess the potential risks. The due diligence process helps the underwriter to make informed decisions and provide an accurate assessment of the investment opportunity, which is an essential part of the underwriting process.

See also: Due Diligence List