As General Counsel, you must organize and track all contractual agreements in order to protect your organization from a whole host of liabilities, including fines, penalties, and litigation. Unfortunately, as your business grows, so do the number of contracts that must be created, negotiated and managed.
Contracts can protect your business interests, but they can also present a challenge in terms of compliance and other mitigating factors that can trigger changes in responsibilities, deadlines, and financial obligations. As your archive of contracts grows in complexity and influence, you and your team face a daunting challenge: making sure all opportunities and risks present in each agreement are identified and managed.
Calculating Your Contract Cost/Benefit
In many ways, contracts are the gatekeepers of your business relationships. When you enter into a contractual agreement, you not only establish the legality of your actions, you also define how all parties will behave, what obligations and responsibilities each participant will undertake, and what risks, costs, and benefits will occur upon completion or violation of the contract.
Avoid Costs with a Contract Risk Assessment
Whenever a contract comes to life, it automatically creates benefits and risks. It is well established that a robust contract management and risk assessment strategy will help your organization avoid costly mistakes while also improving operational efficiency and providing the opportunity to take advantage of all the opportunities available to increase revenue and expand operations. As far back as 2003, a study by the Aberdeen Group found that “ineffective control and management of supplier contracts costs businesses $153 billion per year in missed savings opportunities and increased risk.”
Today, those numbers are significantly higher, and the risk even more profound. Financier Worldwide posits that a substantial portion of the £185bn in losses and £46bn in litigation costs associated with the 2008 financial collapse can be attributed to “failure to manage and identify key collateral, provide ready access to key data on material entities, and present a comprehensive description of obligations and exposures, in addition to other delicate contractual information that previously was either not well understood or was inaccessible pending a firm’s litigation.”
Start with the Right Contract Risk Assessment Strategy
Implementing the right contract risk assessment strategy will not only help your organization protect its business interests, but it will also allow your company to seize a whole host of opportunities including streamlined workflows, increased operational efficiency, reduce costs, and new sources of revenue.
Understanding Contract Risk
For more information on initiating your own contract risk assessment, download our whitepaper, An Introductory Guide to Contract Risk Assessment. In this ebook, you will gain a better understanding of contract risk - what it is, how to manage it, and the tools available to begin a thorough contract risk assessment. You’ll also see why deploying a more effective contract risk assessment strategy can help you avoid some of the hidden liabilities and expenses (noncompliance, missed deadlines, auto-renewals) that may be lurking in his contracts and show how tools like contract management software can help automate this process. Finally, get insight into how an effective contract risk assessment strategy can provide new opportunities both in terms of increased efficiency and the change to boost revenue through renegotiations, accelerating stalled deals, and more.