Vetting
What is vetting?
Vetting is the process of thoroughly investigating a person, company, investment, or other entity to assess suitability, soundness, and integrity before making a decision. It aims to reduce risk by confirming facts, verifying claims, and uncovering material issues that could affect the outcome of a hire, partnership, investment, or other transaction.
Why vetting matters
- Prevents costly mistakes—financially, legally, and reputationally.
- Reveals inaccuracies, hidden liabilities, or fraud.
- Helps compare options objectively so better choices are selected.
Vetting can be time-consuming and costly, but the cost of not vetting is often higher. For example, organizations commonly spend several thousand dollars and a month or more to fill a position with a fully vetted candidate.
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Common vetting contexts and examples
- Hiring: Confirming resume claims, verifying degrees, checking references and criminal records.
- Board/leadership selection: Deep checks of background, experience, and past performance for senior roles.
- Supplier/vendor evaluation: Assessing operational capability, compliance, and business practices.
- Investments (due diligence): Reviewing financials, management, track record, and competitive position.
- Immigration and security clearance: Background checks for criminal history, associations, and other risks.
- Contracts and legal work: Lawyers “vet” contracts to identify pitfalls and liabilities.
The vetting process
A vetting process usually progresses from basic to deeper checks:
- Initial fact-checking
- Confirm basic information (identity, employment history, stated capabilities).
- Verification
- Validate credentials (degrees, licenses, certifications) and public records.
- Deeper investigation
- Credit and criminal checks, interviews with references or associates, site visits, corporate records.
- Assessment and decision
- Weigh findings against criteria and risk tolerance; decide whether to proceed and under what terms.
Vetting often becomes more intrusive as the level of risk or the importance of the decision increases.
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Vetting investments (due diligence)
Vetting an investment—commonly called due diligence—focuses on understanding and quantifying risks and potential returns:
- Hard due diligence: Deep analysis of financial statements, revenue drivers, liabilities, forecasts, and comparable companies.
- Soft due diligence: Evaluation of management quality, organizational culture, brand reputation, customer base, and market positioning.
- Key steps: gather financial records, interview management, review contracts and legal exposures, benchmark performance against peers, and assess exit strategies.
Individual investors are encouraged but not required to perform due diligence; for institutional investors and venture capital firms, thorough vetting is essential.
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Special topics
- Vetted credit check: A credit check evaluates a borrower’s ability to repay by examining income, assets, employment stability, outstanding debts, and credit history.
- Vetted in immigration: Applicants undergo background checks assessing criminal history, security risks, health, and other factors relevant to admissibility or citizenship.
- Fully vetted: Implies a complete and objective analysis has been performed and a decision reached based on that comprehensive review.
- Politics: Parties and appointing bodies vet candidates and appointees to ensure competence and expose potential scandals or conflicts that could cause problems later.
Practical considerations and trade-offs
- Time vs. thoroughness: Deeper vetting reduces risk but increases cost and time to decision. Balancing speed and risk is often necessary.
- Pre-vetted options: Some organizations and brokerages maintain approved lists of pre-vetted vendors or investments to streamline selection.
- Ongoing vetting: For high-risk roles or relationships, continuous monitoring may be appropriate rather than a one-time check.
Bottom line
Vetting is a structured approach to making informed decisions by verifying facts, assessing risks, and evaluating suitability. Applied properly, it reduces surprises and protects organizations and individuals from avoidable losses. Tailor the depth and methods of vetting to the level of risk and the consequences of a wrong decision.