Fundamentals of Risks Associated with Commercial Contracts Administration

Contract risks in business relationships are any uncertainties about the future that threaten the ability to accomplish a contract's mission. They can emanate from both parties and even from a third party. So, in the management of contracts note should be taken that risks are shifting from a compliance “management” to a “governance” perspective. It is always important to ensure that contract conditions and terms are met.

Course Contents

Day One

Components of a Valid Contract:

• Underlying economics of the contract
• Competent parties
• Legal purpose
• Offer and acceptance
• Consideration

Contract Risks and Why They Arise

• A Contract's lifecycle
• Common underlying causes of contracting risks
• Identify the risks
• Analyze the risks
• Evaluate and prioritize risks

Types of Contract Risk

• Cost overruns
• Quality failures
• Bad planning
• Ill-informed buying
• Deliberate contract manipulation
• Misinformation or miscommunication

Establishing the Context

• Balancing risks and opportunities in a commercial contract
• Costly or difficult commitments
• Acting in the best interest of own principal
• Ascertaining the business opportunities behind a contractual relationship
• choice of the right contractor and/or subcontractors
• Prudent control strategies to mitigate contract risks

Treat the risks

• Specific language of the agreement - the clauses
• Legal knowledge
• Equitable compensation against embedded risk
• Independent reviews

Day Two

Assessment of a Contract's Potential Risks

• Low, moderate, high, extreme
• How likely
• How frequently
• Possible effects
• Risk appetite and financing mechanism for unintended losses

Transfer of Associated Risk Exposures

• Indemnification
• Limitation of liability
• Waiver

Contract Insurance and Risk Cover

• Size and scope
• General commercial
• Professional
• Environmental
• Construction
• Fidelity

Financial Limitations of Aggravated Risks

• Death
• Bodily injury
• Breach of security
• Breach of confidentiality
• Infringement of intellectual property
• Data loss

Day Three

Making Sure the Contract Delivers

• Constant and quality information
• Regularly reviewing your contract
• Management of your suppliers

Risk Management in Key Areas

• Prevention of financial loss
• Disaster recovery
• Business continuity
• Corporate crisis
• Health and safety
• The Environment

Risk Sharing

• Subcontracting
• Outsourcing

Contract Review Checklist

• Corporate Policy for contracts Risk Management

Note: Available as Classroom Training as Well as Online Training