Compliance & Security Due Diligence

Vulnerability Exposure, Controls, and Regulatory Posture

Security due diligence covers three dimensions: vulnerability exposure (are there active security flaws?), control maturity (are security practices in place?), and compliance posture (do they meet regulatory requirements?). Each dimension provides different insight into risk.

Vulnerability assessment goes beyond automated scanning. We review authentication flows, authorization logic, data handling, and API security manually. AI-generated code patterns are specifically checked - broken access control, insecure direct object references, and missing input validation are common in AI-built applications.

Data handling practices reveal privacy culture. How is personal data collected? Where is it stored? Who can access it? When is it deleted? These questions have technical and procedural answers. Teams with clear data handling practices handle privacy regulations naturally. Teams without them face expensive compliance projects.

Quantifying Security Liabilities and Compliance Gaps

Active vulnerabilities are classified by severity and exploitability. A SQL injection in a public API is critical. An XSS in an admin panel is high. A missing security header is medium. Each is quantified by potential impact: data breach scope, regulatory penalty exposure, and reputation damage.

Compliance gap assessment maps current state to requirements. For companies claiming SOC2 compliance, we verify controls exist, not just documentation. For GDPR, we verify data subject rights are actually implementable, not just described in a privacy policy. Gaps between claims and reality represent both regulatory risk and remediation cost.

Security incident history is reviewed for patterns and response quality. Past incidents reveal attack surface. Response quality indicates operational security maturity. Teams that hide incidents during diligence are themselves a risk signal.

Code-Level Auth, API, and Data Flow Analysis

We examine application security at the code level, not just infrastructure. Authentication implementations are reviewed for session management flaws, token storage practices, and password hashing algorithms. Applications still using MD5 or SHA-1 for password hashing present material risk. We verify that JWT tokens carry appropriate expiration times and that refresh token rotation is implemented to limit the window of a stolen token. Authorization logic is tested for privilege escalation paths - particularly in multi-tenant applications where tenant isolation failures expose one customer’s data to another. API rate limiting, request size validation, and CORS policies are evaluated for completeness. File upload handlers are tested for path traversal and content-type validation bypasses. We specifically look for SSRF vectors in webhook implementations and URL preview features, which are increasingly common attack surfaces. For applications handling payment data, PCI DSS scope is mapped to determine whether cardholder data flows through the application or is properly offloaded to a tokenization provider.

Actionable Security Findings and Remediation Costs

The report quantifies security and compliance risk with specific findings, severity ratings, and remediation costs. Investors get clear input for risk-adjusted valuation. Acquirers get a post-acquisition security remediation plan with priorities and effort estimates. Each finding is actionable - not just identified, but paired with a resolution approach.