Get Your Risk Management Strategy Summer Ready!
By David Parks
July 14th , 2023
Excerpt from Corporate Counsel Business Journal – Get Your Risk Management Strategy Summer Ready!
It’s summer in the Northern Hemisphere and many of us are probably receiving at least one email, phone call, or text message each day to get our car, grill, lawn, skin, hair, body [insert whatever might need “fixing”] summer ready! While this strategy, and risk management in general, tend to play on our fears, maybe it’s time to take a page from those who celebrate summer solstice and use a more hopeful and optimistic approach to managing the risks in our contracts, focusing on the benefits gained from asking questions, rather than the downside.
What is Contract Risk?
Contract management needs to be a critical part of any risk management strategy because every contract an organization creates (with vendors, customers, partners, employees, etc.) carries risk. There’s no way to completely eliminate risks if the organization hopes to grow, so awareness and management is key. After all, nothing ventured, nothing gained.
The six most common types of contract risk are financial, operational, legal, compliance, security, and brand. Financial risks are those associated with the loss of money, like missing a key renewal date and continuing a contract unintentionally. Other examples include contract terminations or penalties related to a missed delivery date. Operational risks are the potential risks an organization takes on when trying to meet contractual obligations, especially in nonstandard contracts. Legal risks include regulatory, compliance and dispute risks, like when an organization is non-compliant with government and industry regulations. Security risks are when an organization’s key data can be breached, stolen, damaged, or held for ransom in a cyberattack. Security risks can have financial, legal, and regulatory consequences, while brand risks influence how the public (including customers) perceive the organization’s brand. Many of these risks affect each other and can create an avalanche of bad news for an organization.
The Benefit to Asking Good Questions
There are many different approaches to contract risk management, and the process can be as complicated or simple as the organization needs. All, however, should include three foundational actions: identifying, assessing, and mitigating risks, as well as addressing questions about how the organization currently manages contracts.
Read the full Get Your Risk Management Strategy Summer Ready article at: Corporate Counsel Business Journal or learn more about Contract Logix
About David Parks
Dave Parks manages Contract Logix’s overall marketing strategy and initiatives including product marketing, demand generation, digital, content and public relations. He has over two decades of strong product and content experience, having served in senior marketing roles with Progress, Ciena, Lucent and Cascade Communications and as an industry analyst with the Yankee Group. Dave is a passionate marketer who loves creating content that answers people’s questions and delivers his audience value.