Have you ever been caught in a less than ideal situation due to lack of foresight? When it comes to business agreements, you face potential risks at every turn and many are affected by reactive error mitigation. Contracts are at the core of every business, outlining and enforcing your agreements - but if not carefully managed, can be the very cause of detriment. There are two staggering factors that contribute to contract risk: globalization and technology. Examples of these are differing laws, cultural expectations, political climate, customer expectations, and the risk of potential data breaches/loss of IP to name a few.
Imagine if these could be easily eradicated on the front end. The question becomes, how do you make sure that your contracts are secure? How do you get ahead of risks like unmitigated counterparty risk, weak enforceability, potential intellectual property leakage, loss/liability transfer in/out, restrictions on operating freedom, ambiguity/uncertainty, price/cost risk, strict obligations, regulatory compliance burden, and missing document references? The risk list goes on and on! It is crucial to form standard terms when creating contracts to avoid misunderstandings that transpire into matters of litigation. Additionally, as technology advances, you need to be aware of potential data breaches and loss of IP, as well as expanding regulations.
Now contracts need to be more articulate than ever to outline the differing laws, cultural expectations, policy climates and customer expectations. Contracts cannot be manually changed without lots of back and forth. Unfortunately, manual risk analysis can be a cuprite of subjectivity. The margin of error in manual contract analysis is largely due to varying opinions as not everyone sees the same level of risks in certain clauses. Streamlining these analytics provides insight and result in profits by providing consistency and an accurate reading of risk potential.
To put your mind at ease, you can consider a contract lifecycle management platform. You will improve your business management and avoid corrupt contracts that increase exposure to risk and potentially lead to losses. It can be game changing to utilize a contract management system that transforms information into data, reliably providing a Risk Score to optimize efficiency by using a preselected set of clauses and boiler plate language. By using artificial intelligence and machine learning, Al considers thousands of data points to create a more efficient contracting process. If you want to get ahead of your competition, you need to identify and mitigate your margin for risk with contract management.
Are your contracts at risk? Learn more about how you can use a risk scoring algorithm to mitigate risk. Click here to download our eBook.